Is a car or product I won or was gifted taxable?
Short answer
Usually, yes. Prizes and products you receive because of your content are generally taxable income at their fair market value, so a car you won or a PR package a brand sends you can count as income, even though no cash changed hands.
Otavio Mayole, Co-founder, DeCypher FinancialsUpdated
Prizes
A prize is reported at its fair market value, and you may get a 1099 for it. A car worth tens of thousands of dollars can mean a large tax bill with no cash to pay it from, so plan for that the moment you win.
If you use the prize in your business, like a car you drive to shoots, depreciation may offset part of it.
Gifted products
Products brands send you because of your content are generally treated as income at their value. If you then use them in your content, they may also be a business expense.
Other non-cash payments
Brands that pay you in crypto, gift cards or trips create income at the value you received.
What to do:
- Keep a simple log of significant prizes and PR items, with their value.
- Set aside cash for the tax on big prizes.
- Tell us, so we can plan for it before the year ends.