Read all posts in Book Reviews Read all posts in Entertainment Read all posts in Parenting Read all posts in Personal Read all posts in Travel Image Map

Bloggers and Taxes: A Few Questions and Thoughts

bloggers and taxes

I hesitate in writing this blog post, only because I could be inviting unwanted scrutiny and snarky “How dumb are you?” comments.  But it’s on my mind, and if blogging isn’t for sharing honest thoughts and questions, then what is it for?

I suppose I’ve remained willfully naive on the issue of taxes and blogging as my blog has grown because – well, let’s face it – taxes are like a big, fat, greased-up elephant that you can never quite manage or get your arms around.  And even thinking about them makes my head hurt.  Blogging, on the other hand?  Blogging I enjoy.  Working with companies, being the first to review new products?  I enjoy that, too.

But I never factored in the age-old truism:  you can’t get something for nothing.

According to several sources, online and off, the products I have received for review are considered taxable income.  I have to claim the fair market value (not the discounted price I can find at Amazon, etc) of those products as taxable income.  Which – for me – now means I get to pay for the pleasure of blogging.

You see, I don’t sell ads on my blog, I don’t write posts-for-pay.  In fact, aside from the occasional gift cards or credit (which, ironically, I *did* figure on claiming, because it’s more intuitively understood as income, or increase), I make no money whatsoever from my blog.  The money I make online is because of work I do for other sites.  And again, that cold, hard cash registered in my brain as income.  The products?  Not so much.

It makes sense now, it really does.  And if I’m being honest, I’ve been peripherally aware of those “Bloggers and Taxes:  What You Need To Know” panels at blogging conferences.  The same panels I’ve purposely avoided in exchange for the “How to Work with Companies” panels, which clearly suited my interests more than talking about the financial spiderweb (and potential penalties) of doing something I love so much.  The information has been there, I just haven’t been paying attention.

One question I have (among many) is this:  who in their right mind wants to pay for the pleasure to blog?  I guess I understand now why the big push to monetize.  Because the blogger who is doing things on the up-and-up needs to at least recoup the cost of having to pay taxes on the products she’s received, and if she isn’t getting paid for reviews (which many are not), then she’s got to make money elsewhere to make the whole thing worth it.  I’ve always shied away from “monetizing” because I want my blog to feel like MY blog, and – for ME – ads and affiliates feel like an invasion of my space.  I guess now I get to pay out of pocket for taking that high road.

I have another question, and it’s in regards to companies sending products to bloggers.  Companies are so careful now to include FTC-friendly disclosures for bloggers to publish with their posts.  I’ve had company reps get back to me within an hour or two of publishing a post in which I forgot to put that wording, asking that I edit my post to include it.  I understand they are covering their backs.  But when – or will? – those same companies include the fair market value of the products they are sending, with a reminder that the blogger record and claim such information for tax purposes?  Companies claim they don’t have the necessary budgets to pay bloggers for reviews – and there are many (including myself) who wouldn’t want the money anyway, since taking money for a review creates questionable credibility – but couldn’t they at least provide bloggers with the tools and INFORMATION to do things legally and responsibly?

I know, it’s not a company’s responsibility to help or educate bloggers.  We should all be doing our own due diligence.  It’s a blog-eat-blog world out there.

This has all hit me like a ton of bricks overnight, and I’m staring with dread at the four boxes of products I’ve received just this week, and the list of upcoming campaigns in which I said I would participate.  I’ve had a love-it/hate-it affair with reviewing products anyway, and now in addition to those uncertainties, I’m just feeling plain dumb.  And soon enough, I’ll be feeling plain broke, too.

ps:  You better believe I’ll be doing a generous amount of wincing as I write the product-related posts I’m due to write later today.  The ironic juxtaposition of content is not lost on me.

468 ad
  • http://lifeinapinkfibro.blogspot.com life in a pink fibro

    Interesting points you raise here. I’ll have to investigate if our laws down under are the same. So far I have nothing to worry about – no product reviews, no ads, nothing. But we’re having a blogging conference in March and I think it’s worth at least an information sheet on this. Thanks!

    • http://treerootandtwig.com Stacey @ Tree, Root, and Twig

      I’d love to see this talked about more and more and MORE at blogging conferences! It’s like a whisper in a room full of shouts. (the shouts being more about “how to work with companies,” “how affiliate programs work,” etc) Thanks for your comment, Allison!

  • http://www.milehimama.com Milehimama

    Yes you have to report products as fair market value, but don’t forget to balance that with deductions – hosting, domain registration, depreciation, camera (if you use for blogging), mileage if you pick up products or go to try out services (like when I reviewed a movie for pay – mileage to and from theater is deductible), feedblitz, postage, etc. And items that just pass through you – that you give away – are not counted as income. For example I’m giving away Preggers maternity hose but I won’t have to count the value of what I give away (just the ones I keep and wear).

    And if you have a product you don’t use, you can always donate it and get a charitable deduction which is at least something to lessen the blow.

    • http://treerootandtwig.com Stacey @ Tree, Root, and Twig

      Lisa, I really appreciate your comment here, and all the helpful tweets you sent yesterday. Just wanted to give you a great big “Thanks!”. :)

  • http://www.thismamacooks.com/ Anne-Marie Nichols

    I was told by a tax attorney that “fair market value” is the cheapest you can find the item for and not the manufacturer’s suggested retail price (MSRP). So let’s say the grill you received to review was $500 at Lowe’s, had a MSRP of $700, but was only $399 on Amazon. You can take the Amazon value, but just make sure to have documentation, like a print out of the product page on Amazon’s site, for your tax records.

    But yes, I agree that I’d like to start receiving 1099s for anything I receive, whether it’s a trip or a product. It would make preparing taxes much easier, especially for accountants who have no idea what this blogging thing is all about.

  • http://www.facebook.com/julie.pippert Julie Pippert

    Check into this: the items received, if not required for you to do any business (such as write a review) are given to you as gifts, for you to do with as you will. It *must* meet the qualifications as barter to qualify for taxes. There are a lot of complexities involved in this, including questions about (a) did you write about it, (b) was the write-up aka service required in exchange to receive the good aka product, (c) is it a product you would use normally, and (d) do you continue to use the product in your every day life and/or did you return the product?

    Also, you need to earn over a certain amount per year for it to matter. I incorporated (LLC and DBA are also valid) and all is received through my business. But also go read Mrs. CPA, who is an expert in this: http://www.mrscpa.net/mrs_cpa/2009/01/blogging-and-taxes-part-1.html

    This is also useful: http://www.wicproject.com/pondering/blog-taxes/

    But I do strongly suggest, if you plan to continue to grow, especially in our fair state, that you investigate LLC and DBA.

    • http://treerootandtwig.com Stacey @ Tree, Root, and Twig

      Julie, you are – as usual – a fount of critical knowledge. I *always* appreciate your input and commentary! Thank you so much for the links and the feedback. I’ve been doing a ton of research on at least filing a DBA in Harris County, which seems like the most simple and immediate thing I can do to stand myself up and handle things as a business. Because I don’t see any immediate threat of being sued and actually have zero assets (don’t own a home, cars are leased through husband’s work, etc), I don’t see that an LLC is necessary at this time. I’ve been doing my research like crazy, and at least it’s getting a little clearer in my addled brain. :)

      As for companies and paperwork, I really don’t get it. There’s just a HUGE disconnect between how companies are handing out products and how bloggers are supposed to be handling them in regards to taxes. Especially with the larger review networks. Why can’t there be some sort of policy or notification when signing up that reminds bloggers this is a professional transaction, and that products received may be required to count as taxable income? I saw a tweet go out from a review network yesterday looking to get bloggers to sign up. The tweet said, “Get free products for review!” (you could practically hear the “oooh, aaaaah”) Well, they’re not exactly “free,” you know. With marketing like that, no wonder this whole issue never crossed my mind. And I’m sure for countless bloggers, it hasn’t crossed theirs, either.

  • http://www.thismamacooks.com/ Anne-Marie Nichols

    I’ve also had the discussion with tax people that you can also take the “used value” of a product. On the grill example, if you find a used one on Craigslist for $200, then you can say that’s what the value of the product is that you kept after you used up the “newest” doing your review. Again, print it out and keep it in your tax file!

    This gets confusing when you try to figure out food products. Is the value the cost of the food? Or did you use up the value during testing and reviewing and it’s worth nothing? The problem is that most tax pros have different interpretations depending on how conservative they are. Even the IRS doesn’t exactly know for sure and will give you different answers. Frustrating!

    Julie, thanks for the links. Those were very helpful. I have a LLC for my freelance business and for my main blog as a subsidiary. Luckily where I live, it’s very easy and inexpensive to do – around $50. In other states, it’s several hundred dollars, which can be a burden if you dont’ make much money with your blog.

    • http://treerootandtwig.com Stacey @ Tree, Root, and Twig

      Anne-Marie, I truly appreciate the time you took to comment on this post. It seems like there a ton of articles and support from other bloggers and many other aspects of blogging, but there is a great big black hole as far as this is concerned. Your perspective and experience have been very helpful!

  • Lauralee

    I was wondering can’t you donate the products you review (the non-food ones) and then write that off as donations to maybe counter some of the taxes?

    • http://treerootandtwig.com Stacey @ Tree, Root, and Twig

      That was mentioned in one of the other comments above, and it’s definitely worth checking out. Thanks for the suggestion!

  • http://www.thismamacooks.com/ Anne-Marie Nichols

    Lauralee, since you were given “stuff” and then turn around and donate or giveaway the “stuff” then it’s ZERO on your taxes – you got something of value (income) and then you gave it away (donation). You cannot take a tax deduction for the donation unless you also declared the income.

    At least this is how I understand it. I’m not a CPA, tax attorney, etc. and just sharing what I’ve been told.

    • http://treerootandtwig.com Stacey @ Tree, Root, and Twig

      Ah, yes, Anne-Marie – that does make sense. Thanks for the clarification as you understand it!

  • Jeffchele

    I have to argue about this on the barter system, if you barter both parties have to report the barter but when you receive products for review both parties are not reporting this. 

    Receiving products for review is not considered barter according to the way the tax is written up. You need to report a barter and have both sides giving up something of value and both need to be able to report this value. What value does the company give for your side of it, how much is the advertising worth to the company? I think this would not work if the the government was going to try and get back taxes on stuff you did not report as received for blogging. How much do they consider your writing worth to the company and how do they even this out for both sides. 

    I just don’t see how the government could possibly go after you with some kind of definite value for your writing, they have to use both sides of their barter situation and one side is not going to be available easily to them when the company sending the products is not telling the government they are sending it to you.