Do influencers pay taxes on gifts? Unraveling the mystery
Most gifts that brands give to you are not going to be considered taxable income. That means, you likely don’t need to claim it on your tax return. Phew! But there are some caveats we’ll discuss below of when these gifts are taxable.
If you are an influencer or content creator, it is likely that you will receive gifts from brands. Some of these will be pure thank you gifts and others will be gifts with the hope that you will review or promote their product. So, do influencers pay taxes on these gifts?
When do you need to pay taxes on gifts?
Anytime there are strings attached to a gift, that gift will need to be recorded as income. For example, a hotel recently reached out to a client and said, “Hey, we would love to put you up in out hotel for a few days if you agree to post about it on your Instagram.”
In other words, the only way they would “gift” the hotel stay is if my client agreed to post about it.
In the words of the IRS, this is considered barter income. A brand is giving you something in return for you providing a service. On your taxes, you will need to record the “fair market value” of that gift. So in my client’s example, we needed to see what a comparable stay at the hotel would cost and record that as income.
But that doesn’t mean you can’t also take deductions associated with these “gifts”.
In my client’s case, she was able to deduct the cost to fly to the hotel, the Uber rides, her food during the stay, and other related costs.
When are gifts tax-free?
If a brand just sends you a gift with no strings attached, you don’t need to claim that as income.
For example, a cosmetics brand sent a client a sampling of products. My client didn’t ask for the gift and it was not received contingent upon my client posting about it. Therefore, she didn’t need to claim that as income.
Most gifts you receive probably fall in the tax-free category. Brands don’t want to deal with the taxes of barter income, so most will just send you a nice gift with the hope, but not requirement, that you will give them a shout out on your socials. Even if you do post about the gift, you still don’t need to claim the gift as income.
Conclusion
Most likely you will not need to pay taxes on gifts you receive from brands. So you don’t need to worry too much about that. But of course, we are going to recommend that you talk with a tax professional (hopefully us) to be confident that your gifts are tax-compliant 🙂
