Question

Do I need to claim these amounts ?

Forum|Forum|6 years ago
August 8, 2019
1 reply
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Hello! I test products for a company, I pay out of pocket for the item and then they reimburse me the cost. I am

not making anything but do get free products. They send the payment to me through PayPal and it comes through as a mass pay payment. Is this something I need to file on my tax return even though the money I am receiving is reimbursement for the product ? Thank you !

LudwigVan_fan

I suggest you review this Publication from IRS.

https://www.irs.gov/pub/irs-pdf/p525.pdf

My opinion is yes, you need to include the reimbursements (but I could be wrong). You are receiving the reimbursement for providing a service of testing the product. Under Internal Revenue Code Section 61, gross income is defined (I'm quoting part of IRC 61)

(a) General definition Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:

(1)

Compensation for services, including fees, commissions, fringe benefits, and similar items;

(2)

Gross income derived from business;

Thus it would appear you are receiving compensation for providing a service. In my opinion, it becomes more of a question of how to report and whether the cost of purchasing the product to test would be deductible. My opinion would be that it would not be deductible.

Let's say you didn't buy the product, but the companies gave it to you in return for your testing it. You would income in the form of fair market value of the product in return for your services to test it (and presumably provide test results/reviews/ etc.) In this case you would have the income in the form of the product and no deduction.

To purchase the product, get reimbursement for the product in return for testing it is no different. You end up with the product at no cost in return for your services of testing. Thus, there is income involved here.

I would recommend visiting with a tax professional

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

**Disclaimer: Effort has been made to offer correct information; but due to the discussion forum limitations, the poster disclaims any legal responsibility for the accuracy of the poster's response**