Accepting free products constitutes income in terms of how the IRS defines income. Even if you are just mom blogging as a hobby, you still must claim the receipt of freebies as income.
This stinks, because if you are a hobby blogger, you don’t get the benefit of writing off your blogging expenses to offset that income. (Figuring out whether you are a hobby blogger or a blogging business is a whole other issue.)
Bloggers claiming freebies as income doesn’t come without precedent: In 2006, the IRS began cracking down on celebrity “goodie bags” handed out at awards shows like the Oscars. These goodie bags typically contained more than $100,000 worth of items.
IRS Commissioner Mark W. Everson released a statement that said, “As the world watches the glamour and glitz of the Academy Awards, it’s important to keep in mind that movie stars face the same tax obligations as ordinary Americans. We want to make sure the stars ‘walk the line’ when it comes to these goodie bags.”
The tax implications are identical for bloggers. Companies give both celebrities and bloggers free items for one primary purpose: publicity. So the full market value of the freebies you receive must be claimed as Miscellaneous Income on your tax returns. And before you ask, yes, this is true even if you do not receive a Form 1099-MISC from the company supplying the free items.
dummies
Source:http://www.dummies.com/how-to/content/how-tax-laws-affect-mom-bloggers.navId-380724.html
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