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Sharon over at Mom on Dealz has graciously shared her series Ask an Accountant with The Frugal Navy Wife. Sharon is married to an experienced accountant and while it is not tax season we always have questions. If you have a question email Sharon at email@example.com with the subject line “Ask an Accountant”
Do I have to claim Swag bucks credits or referral credits awarded to me from daily deal sites?
There has been no precedent set for blogs so the answer and depends on how aggressive or conservative a position you and your accountant would like to take. Per IRS guidelines, any and all compensation for services should be reported to the IRS as income.
For an aggressive position, you could argue that the credits are a reduction in the price (your cost) and therefore would not be reported as income. The reduction in price reduces the cost to you and subsequently reducing the amount you can deduct as an expense. You could also argue that these credits are “de minimis” and not feasible to keep track of for tax purposes.
For a more conservative position, you would report the credits as other income based on the accounting method you use (cash vs. accrual). I assume most blogs are using the cash method (this is another topic for another day, and there are certain criteria for which method to use). Even though you are not receiving “compensation for services” you are still getting “economic benefit” from the credits.
*Please keep in mind this post is for informational purposes only and answers given are very general. Do not rely on this column for definite tax answers as many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.