I have to get this off my chest, my two cents about why I understand the whole point behind claiming product reviews, but why I think it’s going to cause an issue when it comes to claiming them as “income“. As a blogger we are required to claim the products we receive for free as income because reality is the product is our payment to write a post sharing our honest opinion about the product.
I get it, the IRS wants to get their part in the tax area, totally understand that. The big businesses are dishing out free products to bloggers in exchange for a review which means it’s a marketing expense write off. Big business (or small) saves money on taxes because they now have all these wonderful write offs. The IRS is seeing these write offs and then realizes they are missing out on tax dollars from these products that would normally be listed as sales and wants someone to pay taxes on that money, in comes the bloggers.
Bloggers come in a variety of shapes, sizes, and income levels. Some bloggers have a full time job and do blogging on the side, most of the bloggers I read along with are stay at home or work at home parents, which usually means we are not making that much money. Some work at home parents are banging in the bucks, good for you, but personally I make enough to barely cut ends meat at this point in time.
As I am about to become a single mom of three I see the fact that I get to claim product reviews as income a great way to boost my Schedule C this year, but at the same time I see it has a tax nightmare if I didn’t have so many other tax benefits such as three children, being a home owner, etc etc. The problem that I foresee with this whole products as income scenario is that our country is in a recession right now, but we are going to let bloggers claim individual items as income, making their Schedule C’s appear as if they are making a certain amount of money.
Loans are then a possibility for some of these bloggers because well after all they have $10K in free products, which looks like income … so add that to their household income and BOOM you have a nice chunk of income as it appears on paper. The problem I see is that this is false income, reality is products are not cash in hand, they are materialistic items that you can’t resell at the value they are worth. I have a Wireless Printer I received and it’s worth maybe a little over $100 but if I were to resell this item I would barely be able to get $50 for it if I was lucky!
Point is products are not cash in hand income, so reality is your income is not going to be accurate. Does anyone else see this issue coming up in the future? I mean heck I could take in $30,000 in product and then add my home business and earned revenue from my blog into it and appear as if I am doing alright with myself … but reality is that would not be the case. Get what I am sayin’?
Total Disclosure: I wouldn’t take in $10K or $30K in product because that would be setting myself up for a writing nightmare! I was just saying a scenario (of course if it were just a few items, maybe I would - why not?! LOL).
Originally posted here
at Happily Blended my personal blog.