It usually comes with the gig— influencers tend to receive a significant amount of gifts or free products in exchange for a mention on a page or a post. However, because the federal government considers these goods income, they will need to be included on a tax return. Unfortunately, many influencers do not understand their tax obligations when it comes to these freebies, which can result in a lot of issues for them down the road.
That is why below we will go over everything that influencers should know about gifts, freebies, and taxes.
Tax Laws Regarding Gifts
If you earn money for your efforts as an influencer, you must pay taxes on that income. The same goes for receiving free gifts. According to Internal Revenue Service, if a product is worth more than $100, and an influencer receives it as a gift, they will have to pay taxes on it. If the good is worth less than $100, they will not need to include the item in their return.
Things to Consider When Accepting Gifts as an Influencer
As an influencer, there are things that you can do when you receive gifts, promotions, or freebies that can help you when it comes to tax time:
Keep Detailed Records
Keep a detailed list of all the products you receive throughout the year. This means writing down not only the product name and the company you got it from but its current market value as well. This will help determine whether you must declare the products when your tax returns are due.
Consider Giving Away Some of the Products You Receive
Another tactic influencers may want to consider doing with gifts they receive is giving them away so that they can write them off as an advertising expense. However, for further information regarding this option, consider discussing it with an accounting or financial professional to help you understand how this process works.
Say No To Free Stuff
While receiving gifts is a huge benefit as an influencer, there are downsides to getting these freebies. To make sure that your taxes remain manageable, consider only accepting gifts you know you can use, ones that relate to your work, or those that you can write off.
Additionally, to make sure you do not receive any unsolicited gifts, provide detailed guidelines asking brands to contact you before initiating any delivery of products or things. This way, you can review each good before you decide if it’s worth the tax implications.
Let Ardent Guardian Help You With Your Taxes
At Ardent Guardian, our team can provide you with various services to help your business flourish, including financial, accounting, and outside legal counsel services. This means we can help you not only figure out your taxes when it comes time to file them and look for ways to maximize your deductions, but we can also come up with a business plan that can help map out your financial strategy going forward.
Don’t wait any longer to get the tax help you need. Contact Ardent Guardian today or call us at 703-592-6774 to arrange a consultation with our team.