"Gift" tax thread... maybe.

Perhaps this could be stickied, then again, I can see this thread making it's way further down the DIY page in no time... I know a LOT of people would really like to know how this works and I believe I've figured it out. I've read a lot of misleading and ridiculously inaccurate estimates in other forums of how much will be paid in taxes on these "gifts," which led me to try to figure this out myself as I certainly don't want to spit a ton of this money back into taxes as some of these makeshift sources suggest. Perhaps this thread will clarify things and maybe others could contribute their knowledge of the subject, though if I'm not mistaken, DIYs just implemented this practice this year, so no one knows from personal experience what to expect come tax time.

Niutech's terms and conditions clearly state

[quote13e9084ff9]Note that a Gift will be considered income and it is your responsibility to report the receipt of the Gift to the applicable federal and state tax authorities. In addition, should the value of your Gift(s) total $600 or more, you will also be sent a W-9 that must be completed, notarized and returned with your Gift Redemption Voucher, as required by law.[/quote13e9084ff9]

So it can be understood that it is [b13e9084ff9]your[/b13e9084ff9] responsibility to report your gift as [b13e9084ff9]income[/b13e9084ff9] to the IRS when you file taxes. "Where?" you ask? I found a little more info here, but to sum it up, the site states

[quote13e9084ff9]Prizes and awards If you win a prize in a contest, drawing, or raffle, you must report it on Line 21 of Form 1040. If the prize takes the form of a car, merchandise, a gift certificate, or free services, the fair market value of the item is the value that you must report. There is a very narrow exception for prizes in recognition of past accomplishments (such as a Nobel, Pulitzer, literary prize, citizen-of-the-year award, etc.). You don't have to include the award as income if you were selected without any action on your part to enter the contest, you don't have to perform future services, and you transfer the award directly to a tax-exempt charitable organization or government unit.[/quote13e9084ff9]

The 1040 can be found here if you need a visualization. Line 21 is reserved for "Other income. List type and amount"

So, I've concluded, from my understanding (please correct me if I'm wrong. I'm still a little unsure of things) that the total value of the gift is to simply be added to your income for the year which may not even effect your return. Say you get a $2,000 gift card from Niutech... you make $20,000 by the end of the year. Well, when you file your 1040, simply put $2,000 in Line 21 adding $2,000 to our yearly income, making a total of $22,000, which is only your "adjusted gross income." and is not used to determine your tax bracket. It is your "taxable income" that determines your tax bracket, which is figured later in the 1040. I've only filed my own taxes a couple of times and don't have a lot of experience at it, but if I remember correctly, the $2,000 difference will likely not put you in a higher tax bracket... I could be wrong. Maybe others could elaborate.

You are correct, gift amounts simply increase your gross income, which is then reduced to AGI and then taxable income by deductions, either standard or itemized. Your taxable income determines your tax bracket and the amount of taxes you must pay. Also, US tax brackets are not fixed scales, i.e. if you are in the 28% bracket you are not taxed 28% on 100% of your income, but only that which exceeds the bracket threshold.

For example (using totally made up numbers for ease of illustration, since I'm too lazy to look up the actual brackets)

0% bracket up to $4999
10% bracket $5000 - $9999
15% bracket $10000 to $24999
28% bracket $25000 to $49999
31% bracket $50000 to $99999

Using the above totally made up numbers, if you have $52000 taxable income in one year (wages, prizes/gifts, etc. minus deductions) then you are only taxed at 31% on $2000 (the amount over the 31% bracket threshold), then you are taxed at 28% on $24999, 15% on $14999, 10% on $4999, etc. This is why they call them "brackets" and if you think about it, the term makes sense.

And yes it is your responsibility to report your prizes/gifts. HOWEVER if a site has collected a W9 on you, then they are almost certain (as any prudent business would) to report their payouts as a business expense deduction on their own taxes. When they do this, they send you a form 1099-MISC with your name, SSN, and prize value, and the IRS also receives a copy. So if there is a discrepancy between what has been reported as paid to your SSN, and what you claim on your taxes... BAM, it's audit time. And likely penalties and interest as well. So it would be in your best interest to report ANY gift income. Legally, of any value (it's all taxable, not just over $600), but especially for sites that you have submitted W9's for.

Also, you are allowed to devalue the gift value at tax time if you can prove fair market value of the gift is lower than that reported. You must document this with your tax records in case of audit, so be sure to save web printouts, catalog pages, sale papers, etc. to backup your value reductions.

And last but not least, the standard disclaimer do not take tax advice from an internet forum. Particular one that has nothing to do with taxes. Everybody's tax situation is different, so there is no possible way for someone here to tell you exactly what you will owe in taxes, without having access to all of your financial records and essentially doing your taxes for you. ;)

[b9682853599]Edit[/b9682853599] To fix what I misspoke about AGI, and to clarify that my example income figure of $52,000 was [i9682853599]taxable[/i9682853599] income, not gross income.

dont do tax info on this site, get it from a tax guy.

but for the best advice, you dont even have to pay taxes. look at willie nelson.

Awesome!

http//i135.photobucket.com/albums/q144/mistertomlinson/2006tax.jpg[" alt=""/img87960e4feb]

[quote6e3df64f73="dmorris68"]Using the above totally made up numbers, if you make $52000 in one year (wages, prizes/gifts, etc.) then you are only taxed at 31% on $2000 (the amount over the 31% bracket threshold)[/quote6e3df64f73]

I think you made a mistake. If you make $52,000 in a year (this is your [b6e3df64f73]total income[/b6e3df64f73]), not your [b6e3df64f73]taxable income[/b6e3df64f73]. This is where everybody's taxes are diferent. From your [b6e3df64f73]total income[/b6e3df64f73] ($52,000) you determine your [b6e3df64f73]taxable income[/b6e3df64f73] according to those variables presented on the 1040 (or whatever form you have to use) that differ from person to person. THEN, from your [b6e3df64f73]taxable income[/b6e3df64f73] you figure what tax bracket you'll fall into. So you may actually be in a lower tax bracket and therefor pay less taxes on your gift according to the above figures and examples.

[quote7969eaa94c="mistertomlinson"][quote7969eaa94c="dmorris68"]Using the above totally made up numbers, if you make $52000 in one year (wages, prizes/gifts, etc.) then you are only taxed at 31% on $2000 (the amount over the 31% bracket threshold)[/quote7969eaa94c]

I think you made a mistake. If you make $52,000 in a year (this is your [b7969eaa94c]total income[/b7969eaa94c]), not your [b7969eaa94c]taxable income[/b7969eaa94c]. This is where everybody's taxes are diferent. From your [b7969eaa94c]total income[/b7969eaa94c] ($52,000) you determine your [b7969eaa94c]taxable income[/b7969eaa94c] according to those variables presented on the 1040 (or whatever form you have to use) that differ from person to person. THEN, from your [b7969eaa94c]taxable income[/b7969eaa94c] you figure what tax bracket you'll fall into. So you may actually be in a lower tax bracket and therefor pay less taxes on your gift according to the above figures and examples.[/quote7969eaa94c]
No I was correct, I just didn't stipulate that $52000 was AGI. However you will notice I had already explained what AGI was

[quote7969eaa94c="dmorris68"]You are correct, gift amounts simply increase your gross income, which is then reduced to AGI (Adjusted Gross Income) by deductions, either standard or itemized. Your AGI determines your tax bracket and the amount of taxes you must pay.[/quote7969eaa94c]
My apologies for not say "$52000 [b7969eaa94c]AGI[/b7969eaa94c]." The numbers still stand. ;)

wait im a student never had a job do i have to do this?

[quoteda30bc8b17="michae229"]wait im a student never had a job do i have to do this?[/quoteda30bc8b17]
Doesn't matter if you're a student or not, or if you've never had a job -- if you have enough income from all sources, you must file a tax return. Income isn't just wages from a job. However if you don't have a job, are considered a dependant on your parents returns, and don't have any earnings to speak of from other sources (including freebie sites), then you probably will fall below the threshold required to file a return. Although you would be surprised how low that threshold is, so you might want to check into it. If you're a high school student still living at home, your parents might be doing this for you -- I always filed my kids' returns for them when necessary, and just had them sign it, they never knew about doing their own taxes until they moved out. )

The problem for "students" is not federal and state taxes. If you are making $4,300 and under, you are exempt from federal income taxes. Most states are slightly higher than $4,300 when it comes to their own income taxes, so again you will be exempt from that. I think the problem area would be in the FICA and Medicare portion of taxes, which ALL are required to pay regardless if you're 1 or 100....

[quoteb75524e0e4="paulleywaulley"]The problem for "students" is not federal and state taxes. If you are making $4,300 and under, you are exempt from federal income taxes. Most states are slightly higher than $4,300 when it comes to their own income taxes, so again you will be exempt from that. I think the problem area would be in the FICA and Medicare portion of taxes, which ALL are required to pay regardless if you're 1 or 100....[/quoteb75524e0e4]

There is no FICA or medicare to pay on gifts. Unless for some strange reason you want to show this income as self-employment income.....

Man is that some great news. I honestly thought there was, but I have yet to consult my accountant friend. Thanks alot for the information....

So long story short, if you're a student, and you know you won't be making $4,300 even including the gifts, than you're all set?

Lucky bastards... I got a friend in Arizona who's getting a Macbook Pro and hasn't had a job all year. As stated above, I don't think you are even required to file taxes for $2,000, but if you did, you would owe hardly anything! I on the other hand, will probably have to spend $200-300 for taxes... I think.

[quote7ef53496d5="mistertomlinson"][quote7ef53496d5="dmorris68"]Using the above totally made up numbers, if you make $52000 in one year (wages, prizes/gifts, etc.) then you are only taxed at 31% on $2000 (the amount over the 31% bracket threshold)[/quote7ef53496d5]

I think you made a mistake...[/quote7ef53496d5]

Is that a joke? Dmorris never makes mistakes.

I don't mean to be a jerk... I just want to look intelligent, but I really think he did make a mistake... he says,

[quotef46b728163]Using the above totally made up numbers, if you make $52000 in one year (wages, prizes/gifts, etc.) then you are only taxed at 31% on $2000 (the amount over the 31% bracket threshold)[/quotef46b728163]

So he's saying you make $52,000 in 1 year (doesn't say, [bf46b728163]taxable[/bf46b728163] income is $52,000, but implies your total yearly income is $52,000 including wages, prizes, gifts, etc.), according to the chart, you would be taxed 31% on the amount over $50,000, but your tax bracket is NOT determined by your yearly income ($52,000 as he suggests), but by your taxable income (would be less than $52,000 after completing most of the 1040)

lol

[quote5c137d19d8="mistertomlinson"]I don't mean to be a jerk... I just want to look intelligent, but I really think he did make a mistake... he says,

[quote5c137d19d8]Using the above totally made up numbers, if you make $52000 in one year (wages, prizes/gifts, etc.) then you are only taxed at 31% on $2000 (the amount over the 31% bracket threshold)[/quote5c137d19d8]

So he's saying you make $52,000 in 1 year (doesn't say, [b5c137d19d8]taxable[/b5c137d19d8] income is $52,000, but implies your total yearly income is $52,000 including wages, prizes, gifts, etc.), according to the chart, you would be taxed 31% on the amount over $50,000, but your tax bracket is NOT determined by your yearly income ($52,000 as he suggests), but by your taxable income (would be less than $52,000 after completing most of the 1040)

lol[/quote5c137d19d8]
LOL, did you not read my post above? [b5c137d19d8]I had already explained what AGI is.[/b5c137d19d8] AGI is your taxable income. That is what I assumed you would understand my example to be referring to, after already explaining that point. I then followed up your first claim of my mistake by pointing this out, again. It seems you missed that both times...

I seriously don't mean to be a jerk... and it seems as though this is becoming an argument... I don't want that... I love you! lol

[bb3e73ed3f7]1040[/bb3e73ed3f7]

http//i135.photobucket.com/albums/q144/mistertomlinson/Dmor.jpg[" alt=""/imgb3e73ed3f7]

Taxable income is not the same as adjusted gross income... it is the taxable income that is used to determine the tax bracket... but, who's keeping up with this anyway...

You know what? You're right. Touche. oops I had the terms mixed up apparently. I guess too many years of using tax prep software instead of filling the form out manually like I used to has fogged my memory of the terms.

Despite the mistake in terminology though, I still was assuming that you realized the numbers I used were post-deduction, taxable income, even if "AGI" didn't accurately describe it. So the example I gave is still valid with regards to explaining how the brackets work, even if I wasn't clear that the $52,000 used in the example was "taxable income." But good call on the AGI vs. taxable income distinction.

All the more reason why you shouldn't take tax advice on a freebie forum, and why I always try to disclaim any advice I give. ;)

[quote966d4d70fc="JKirk"]Is that a joke? Dmorris never makes mistakes.[/quote966d4d70fc]
Guess I'm not the only one feeling foolish at the moment, eh? P

Actually, I was just testing him to see if he was really paying attention to the details. Yeah. And he passed. So... yeah. Carry on.

... and yeah, I now understand that the figure ($52,000) you chose was to be used to determine the bracket but was simply not specified as "taxable income." It's cool. Perhaps this thread is already clearing things up for people already...

Nope, I'm confused as hell now.....

[quotee2b6b75f85="paulleywaulley"]Nope, I'm confused as hell now.....[/quotee2b6b75f85]
I've edited my first post in this thread (post #2) to fix the AGI mistake and to clarify that my example figure of income was taxable income. It should be more clear now.

i think it was pretty clear already in this thread, dont get TAX ADVICE from a freebie help site!!!!!!



in that case, dont pay taxes, look AT WILLIE NELSON.

I haven't paid taxes in... Well... hmm, I've never paid taxes.

Two years I could have gotten refunds (like $12 and $6 or something) but I was too lazy to file for it.

[quotea919a1f92b="kdollar"]i think it was pretty clear already in this thread, dont get TAX ADVICE from a freebie help site!!!!!!



in that case, dont pay taxes, look AT WILLIE NELSON.[/quotea919a1f92b]

The purpose of this thread is not to give "tax advice," but to educate people and give an [ba919a1f92b]idea[/ba919a1f92b] of what can be expected from these W-9s come tax time. As dmorris68 mentioned above, everyone's taxes can be different and we are not providing instruction on how to file your taxes, we are simply trying to give people a better understanding.

yea i dont want anyone running off with "ideas" and do something stupid and come back and be like "wtf guys, you told me my $10000 in freebie gifts wouldnt matter", you may say they wont, but theres a lot of dumb people.

Yeah these threads are just asking for someone to get screwed over. Taxes are really complicated especially if you are adding in this type of crap. Best bet, have a professional do them for you, thats what I do...

Ah fuck it then... let people wander around dumb founded wondering what they got to do... BAM... AUDIT!

[quotebd75c385a3="mistertomlinson"]Ah fuck it then... let people wander around dumb founded wondering what they got to do... BAM... AUDIT![/quotebd75c385a3]
H&R Block...

Hows it work out for someone under the age of 18 but currently employed & doing freebie sites that are over $600 ?

[quotee830755457="solidious"]Hows it work out for someone under the age of 18 but currently employed & doing freebie sites that are over $600 ?[/quotee830755457]

As the thread says, your income from freebie sites figure in with the rest of your income.

And "under 18" doesn't matter from a tax perspective. If you're 13 and earned enough income, you'd still have to file. I've been filing taxes since I was 15-16 years old (a LONG time ago ;))

The only tax thing that being under 18 really affects is your parent's ability to claim you as a dependent without proving you're a full time college student. Being able to claim you lowers their tax liability, but then raises yours because you can't take the standard deduction for yourself anymore (you can only get credit for yourself on one persons' taxes).

wait, so acording to the first few posts above, I dont have to pay taxes if I dont have a job, am a college student, and still a dependant?

[quote80d3eb1064="kidd2108"]wait, so acording to the first few posts above, I dont have to pay taxes if I dont have a job, am a college student, and still a dependant?[/quote80d3eb1064]
As long as your total income from other sources (included freebies) falls below the threshold.

But don't listen to us either consult a tax professional, or just get a form 1040EZ and start filling it out. There's nothing to it, it's a single page. At some point it will say whether you need to file or pay anything.

[quoteb93e6f9265="dmorris68"][quoteb93e6f9265="kidd2108"]wait, so acording to the first few posts above, I dont have to pay taxes if I dont have a job, am a college student, and still a dependant?[/quoteb93e6f9265]
As long as your total income from other sources (included freebies) falls below the threshold.

But don't listen to us either consult a tax professional, or just get a form 1040EZ and start filling it out. There's nothing to it, it's a single page. At some point it will say whether you need to file or pay anything.[/quoteb93e6f9265]

Thanks, I told my dad and he has no clue what to do. I told him we probably have to ask a profesional.

I found a neat little tax calculator. It'll give you a better idea...

I've received more in Freebies than I will have made from my full-time job by the end of the year. shock (

Fuck taxes...

f' taxes, i dont cuss.

So I talked to an accountant yesterday, and was asking him about what tax bracket I should expect to be in regarding all of the money and gifts I've received from these sites. I told him I sent in a W-9 for all the sites. He said that it would be filed as a self-employment tax and not a gift, because you had to do something in order to receive the gift. It wasn't just your dad giving you money or something, it was in a sense earned, hence the reason for the W-9. So I guess I am to be expecting a 1099 at the end of the year as well, and probably putting me around a 30% tax bracket for all of the gifts.

Anyone have any defense to what he said? I really hope it's not true based on what you all have previously said, but he's a tax guy and does it for a living. Maybe there is something I missed telling him. Any ideas or suggestions?

Just to let you know
Any site that pays you more than $600 is legally required to give you a 1099
does not matter if it is in cash form or in prize form

And technically by law even if you make only $20 from a freebie site you are required to report it as you are supposed to report all income no matter how little I know I actually recieved a w2 for a whole whopping 1.36 and my account said I had to file it waste of paper and stamp that was lol

Anyways depending on how much you make in freebies it can indeed change your tax bracket a friend of mine is already over $12,000 for the year in freebie income and this has drastically changed her income bracket

But if your talking a thousand or two it probally wont change it much

And just as a side note - because you did earn this income you can also deduct the costs of all trial periods and shipping and handling and any fees you incurred for each transaction you did to get your free gift
And depending on how much you earned in freebie money you could consider this a job in sense and deduct home office expenses



I dont know which of you were asking about being a student and not employed - Now although you were not employed this is technically considered self employment as you did indeed do something to earn this
So if your total earnings/prizes are over $800 you need to file
Your parents can still claim you on your taxes
I dont know your exact situation but here is a little yes/no deal to tell you if you need to file
http//www.irs.gov/individuals/article/0,,id=96623,00.html

My asumptions were based on what was said here

[quote372ea4ee0d="trader"][quote372ea4ee0d="paulleywaulley"]The problem for "students" is not federal and state taxes. If you are making $4,300 and under, you are exempt from federal income taxes. Most states are slightly higher than $4,300 when it comes to their own income taxes, so again you will be exempt from that. I think the problem area would be in the FICA and Medicare portion of taxes, which ALL are required to pay regardless if you're 1 or 100....[/quote372ea4ee0d]

There is no FICA or medicare to pay on gifts. Unless for some strange reason you want to show this income as self-employment income.....[/quote372ea4ee0d]

I guess this guy is defintely wrong then based on the above information?

No no no... this isn't actually gift tax. If it were truly a "gift," I am pretty sure we wouldn't have to file shit. I read this somewhere, but have forgotten the site. It is the gift giver who would have to pay taxes on the gifts, but only if the value of every gift given in a year's time, totals over $12,000. The receiver could agree to pay taxes for the "donee," but obviously that is not the case here because we are never asked to volunteer such a thing. A W-9 was just as the accountant said Paulley.

Here is a quote from about.com.

[quotea1e3c9008c]Form W-9 is the IRS form used by a company to request your taxpayer identification number. You may get a blank Form W-9 to fill out if you or your company are hired to provide services to another company. Most often, Form W-9 is sent to independent contractors, consultants, and other self-employed workers.[/quotea1e3c9008c]

... in other words, Freebie companies are trying to make it easier on their asses! They don't want to pay the "gift tax," so they consider our contributions, more or less, WORK! So, they don't have to pay taxes! These are not at all "gifts." We are actually working for them... our actions are considered a form of employment and these freebies are actually considered "income." When I realized this, I was a little bitter. Now we can really start bitching when a freebie site fucks us over because, in a sense, this is a job. We offer our services for their payment. It's one thing to be placed on hold or not get credit for an offer (when you've abided by the rules, though this has never happened to me, per se) when trying to receive a free gift... no big deal... the damned thing was free anyway, but not getting paid for work is completely different! If I am expected to treat this like a job and pay taxes, they'd better god damned well treat it that way too and pay me or FULLY investigate any blemishes pertaining to my performance (as you know they could care less if you believe you're innocent).

Ok so things are starting to make more sense now, and it definitely does suck this can be considered a gift, but it's nice to at least know up front. Isn't the self-employment tax something like 15.3% for your FICA and Medicare combined. That would hold enough over if they are under the Federal Income tax number by the end of the year. I think the new rate untaxable rate for the fed is $5,150 correct? If so, that portion is untaxed correct? I need to figure what it is for the state of Maryland as well so I can get that tax rate worked out.

As far as deductions though. We should be able to deduct the money in which we spend on doing these sites correct? I don't see why not, it is something that is part of our job or work, so it should be able to be written off. Also mailing unused gifts back should be written off. Our cell phone minutes for calling companies to cancel. Our computer for doing the offers. High-speed connection as well. I'd think these things are all fair game to use. What do you all think? I'm trying to hang on as much money as I can. Now I don't have receipts for all of my stuff, but I tihnk I could make a pretty good conservative estimate.

[quote0465859544="paulleywaulley"]Ok so things are starting to make more sense now, and it definitely does suck this can be considered a gift, but it's nice to at least know up front. Isn't the self-employment tax something like 15.3% for your FICA and Medicare combined. That would hold enough over if they are under the Federal Income tax number by the end of the year. I think the new rate untaxable rate for the fed is $5,150 correct? If so, that portion is untaxed correct? I need to figure what it is for the state of Maryland as well so I can get that tax rate worked out.

As far as deductions though. We should be able to deduct the money in which we spend on doing these sites correct? I don't see why not, it is something that is part of our job or work, so it should be able to be written off. Also mailing unused gifts back should be written off. Our cell phone minutes for calling companies to cancel. Our computer for doing the offers. High-speed connection as well. I'd think these things are all fair game to use. What do you all think? I'm trying to hang on as much money as I can. Now I don't have receipts for all of my stuff, but I tihnk I could make a pretty good conservative estimate.[/quote0465859544]

I suggest you people seek advice, even from a second accountant. NT and other freebie sites are businesses and the "gift" you receive from them is a business expense. For accounting purposes, and since the IRS requires us to report the gift, the freebie sites collect our SSN's. They use the expense of paying to us the gift(as well as their other expenses) to offset the income the receive from advertisers and the sale of our information to third parties. Yes, a W9 is filled out, but that does NOT mean you have to file this as self employment income. Here's a direct example a car dealership is running a promotion "buy a car and we'll give you a trip to xxx destination valued at $1000." This is a gift for making a purchase; just like we receive a gift for making purchases from freebie sites. You are supposed to report the "vacation" as misc income just like everything else. But you did not "work" for it.

Additionally, you cannot offest the income of the gift with the cost of doing the offers. Use the same example above with the car; a 20k car purchase as an itemized deduction to offset a 1k incentive to make the purchase. NOT.

A W9 is simply the form used to verify your SSN with the gift provider and the IRS. It is used to report ALL types of miscellaneous income; not just income from services or work rendered.

While this may feel like work to those of us getting these freebies, the IRS will definitely not classify this miscellaneous income as EARNED income.

PLEASE, seek additional financial advice before you make a very costly mistake and file this income as earned income. Make sure your accountant understands the process of what we do.

Hmmm... I am starting to think I am wrong. After reading trader's post, I decided to do a little more reading. I was under the impression that the W-9 was issued to people who performed certain work for companies... I realize what was stated is that W-9s are USUALLY issued to workers, but are also used for prizes and awards, etc. Oops. But my problem now... We will also receive a 1099-Misc (miscellaneous income) form for filing, where we will directly assess the gift's value and tax alone. Will we still need to file the gift on our 1040? On the 1040, the "other income" line is where I understood the gift's value was supposed to go, in which case it is taxed the exact way the rest of your income will be taxed. It is simply added to your total gross income... any ideas.

[quote6469aeed5f="mistertomlinson"]Hmmm... I am starting to think I am wrong. After reading trader's post, I decided to do a little more reading. I was under the impression that the W-9 was issued to people who performed certain work for companies... I realize what was stated is that W-9s are USUALLY issued to workers, but are also used for prizes and awards, etc. Oops. But my problem now... We will also receive a 1099-Misc (miscellaneous income) form for filing, where we will directly assess the gift's value and tax alone. Will we still need to file the gift on our 1040? On the 1040, the "other income" line is where I understood the gift's value was supposed to go, in which case it is taxed the exact way the rest of your income will be taxed. It is simply added to your total gross income... any ideas.[/quote6469aeed5f]

Bingo! Sometimes the easiest explanation CAN be the correct one; even with the IRS. It is JUST miscellaneous income.

You guys see? This is why we shouldn't be giving tax advice on the forums -- all sorts of bad advice is being given out (I've even done it, and I've been doing taxes for over 20 years).

It is not true that receiving freebie gifts is automatically considered self-employment, although some sites put it on their 1099's that way. However you don't have to claim it as self-employment EVEN if it's noted that way on the 1099. Read the 1099 instructions for more info, or contact a tax professional (preferrably one who understands how marketing promotions work).

I'm tempted to lock this thread before it creates even more confusion.

Despite this thread's congestion and innacuracies, I believe it will make things worse if someone doesn't bring attention to this issue. I can guarantee you a LOT of people are just gonna disregard the 1099 and not worry about it. That will certainly be more troublesome than reading this thread for a general idea of how things may work... maybe I'm wrong.

Anybody receiving a 1099 is made fully aware it is being reported to the IRS and that it must be included on their taxes. If they use a tax preparation software, or a tax service, they will be asked for any 1099's. So if somebody chooses to ignore/trash a 1099 and not report it, then frankly they're pretty stupid, or too lazy to follow the instructions presented to them. But this isn't the proper place to try to educate them.

Aren't we to pay taxes on gifts though? If so how do I know which bracket I'd fall into?

My best advice is to fill out a 1040 for practice. There are sites that do your taxes for you free, but only if you don't file them... I believe irs.gov has an advertisement for TaxAct or something like that, maybe you could check it out.

dmorris68 (or anyone who may know the answer to this question), since you seem to be pretty educated on this subject, I was wondering if you knew (as this is the big question for me), are these gifts taxed the same as the rest of your income or are they subject to their own special taxing... because I can't imagine being taxed as much on a gift as I would on ordinary income... it just doesn't seem fair. It's bound to be a little less...

No, it's same as any other income. The IRS doesn't distinguish between "types" of taxable income, either it's taxable or it's not. There may be special consideration or deductions given to some very specific types of income, I'm not sure, but I've never experienced it. Gifts for certain just tack on to your gross income like anything else, which is then reduced to AGI and then taxable income.

Blasted!

Do these gifts fall under the wages, salaries, and tips or the other income category?

[quote7577f69969="paulleywaulley"]Do these gifts fall under the wages, salaries, and tips or the other income category?[/quote7577f69969]
Other income IMO. I still say talk to a CPA even if its just for advice if you plan to file yourself...