Taxes and Blog Giveaway Winnings

Hi, there, giveaway lovers! Now that you’ve got your W2′s and 1099′s gathered up and you’re thinking about filing your taxes, you might be wondering what to do about all the gift cards and swag you accumulated over the last year. It’s my uncomfortable duty to inform you that you are required to report your giveaway winnings to the IRS as income.

Yes, I know that’s a bummer. My little book of nifty quotes says one should never be the bearer of bad news, lest someone confuse the messenger with the message. Oh, well. My email address is to the right. Send the hate mail there.

If you win a substantial amount of money and stuff through blog giveaways, though, I really recommend keeping track of that and reporting it. It’s the honest thing to do. Besides, the IRS doesn’t like cheaters, and they have ways of making you sorry.  Of course, they have to catch you first. I’d be lying if I said I didn’t consider leaving that information off my tax return, especially considering how much more likely I am to be audited for reporting it.

(This is where I would normally get out my soapbox, wrap myself in an American flag, and tell you exactly what I think of the IRS and its labrynthine, impossible to navigate laws, and the big, greedy, freedom-stifling government it feeds, but I’ll spare you that rant. My husband gets to hear that at dinner several times a week, and assures me I don’t need to blog about it. Anywho…)

If you didn’t keep track of what you won, or you didn’t win very much, I guess it’s a little late to think about that now. You ought to be thinking about doing that for the next year, though, if you plan to keep winning.

I record my winnings and various payments for blog services (because blogging is also a hobby for me, albeit a tiny bit profitable) in a spreadsheet, like so:

I just list the item won/service paid for, cash value, date won/contracted for, whether I recieved it or not, and who the contact is for the giveaway/transaction. As you can see from the little bitty numbers on the bottom, my total winnings/earnings for the year came to $4863 this year. Not too shabby, considering how little time I had for such things last year. Something tells me I’m going to get even less this year. Can’t say I’m upset about that, since this cost a bit in taxes. Not that I’m complaining! It was worth it to me, and I still came out way ahead. It’s a rule of mine not to enter giveaways for things I’m not willing to shell out the tax payment for. That way I don’t end up taking in more stuff than I can afford.

I think and hope (since it’s what I did) that you’re supposed to report winnings on giveaways as hobby income, rather than gambling or lottery income. My thinking is that it would only be considered gambling or lottery income if you paid to participate. I’m not a professional, so please don’t take my word for any of this. Call an accountant if you have questions. I’d hate to see you in trouble because you listened to me instead of doing your own homework.

Any other giveaway enthusiasts here who are pulling in enough to feel it necessary to report it to the government? How are you keeping track of your winnings?