How I filed 2022 Amazon Vine taxes - 1099 amount REVEALED
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- เผยแพร่เมื่อ 17 พ.ค. 2024
- 0:00 - Don't copy me
3:03 - I hope I get audited
4:48 - Principal business and code
8:01 - Accounting method
9:19 - Income & 1099
10:44 - Expenses deductions
12:37 - Why I did it
14:11 - Now we wait
I filed my 2021 taxes as a hobby and just recently got the scary letter saying I owed tons of money because it's not. It gave me a chance to respond so I did and explained WHY it was a hobby. They took that and closed the case lol. So if you are audited, it might take a little bit. Hope this works for you!
So u didnt paid anything ?
Was was ur argument in proving it was a hobby ?
How much worth of goods u recieved is in question ?
Good! I can't believe they think it could be a profitable business venture!?? How?? The seller gives away the item in the hope of getting at least one review! That's it. The vine reviewer literally has no obligation to do a single thing in order to receive the items. Amazon can remove access to the items whenever they feel like it and that's their only course of action should reviews fall below their desires.
doing my first vine tax year now, gonna try doing what you did hopefully no issues.
I appreciate your sincerity, honesty, openness, and courage. Your logic is well-explained. The key to your method comes from the "VALUE USED UP IN REVIEW PROCESS". It will be interesting to see how the IRS reacts to this. They may come back and say that you can use some depreciation amount less than the 100% depreciation you are effectively claiming.
You selected accounting method does communicate the uniqueness of your argument and it brings highlight, but I think "Cash" is the appropriate choice. "Cash" accounting only means that revenue and expenses are recognized when they are received/paid. The fact that no cash was received doesn't change the meaning of this common accounting phrase.
If you do get audited and they force you to refile, I suggest you keep records to clearly identify all related business expenses, including the business use of home. They will certainly put a dent in a potential tax burden.
I think it is hard to justify "value used up in the review process" unless you are doing destructive reviews--that is testing it to the point of failure so that you can comment on durability. You might be able to justify depreciation, though.
I'm also curious what you do with $50k worth of products in a year. One of the stipulations of the Vine program is that you have to hold on to the products for 6 months before you give them away or sell them. If you sell them, just like things you sell at a consignment store or yard sale, you owe taxes on that as well, and the fact that you were able to sell them invalidates your claim that the value was used up in the review process. PS, if you depreciate something and then sell it for more than the value you depreciated it to, you owe tax on the difference.
Someone experienced with running businesses posted something related to this recently to Reddit about running this as a review business, something you can run by your tax professional. You basically buy the items for the full ETV (as Amazon reports on the 1099-NEC), review them (thus using them), then sell all stock at the end of the year for its fair market value, which will be far less than ETV (and pay sales tax since it's a sale), then this amount becomes the profit you pay self-employment taxes on. The higher ETV from Amazon was just the cost of the initial product, negated by the fact that you essentially bought the product at that price. The post title is "Position Paper - Handling U.S. Taxes as a Vine Assessor and Reviewer" and it goes into things with a lot of detail.
I'm consitering setting up an automated web software service to organize, sort, track, and do the accounting of amazon vine items (so you can track them, depreciate the value of consumable or disposed of items and track the sale price of durrible goods.) My objective is for to automaticly sync a database to amazon vine orders and reviews, track the process, allow you to track the sale or disposal of items, and total the annual values to stick onto tax forms as well as crete cover letters for the IRS. I was just going to do this for me, but I'm thinkin this is actually a service others need. What is the interest level?
YES, PLEASE. I already track EVERY bit of info for every Vine order I place in a spreadsheet that keeps a running total of the cost of the items as well as their corresponding local tax rate per item so I'll know (or THINK I will know) how much in taxes I will be expected to pay for the items I received and reviewed. OR, and ANYONE please jump in here, especially if you've met with a layer or CPA who knows the rules), AM I supposed to be filing/paying these taxes directly to the IRS when I file my usual forms? Amazon's policies do NOT make this clear when they forced me to fill out the 1099 form before participation approval.
So it is all a scam? Do we have any options? Should we, like @HeidiMull fill out the form the way she did because THAT is what is expected of us?
OMG please someone smarter than me help a poor soul and the masses understand the process and obligations. It would greatly benefit ALL of us since there is no Vine Forum for us to discuss these things and other concerns.
@@user-lr4ll9sl2y as I will end up generating 2000+ item orders per year, I my new approach is to file as a c-corp. Treat total inventory as having zero value and then sell it using bulk liquidation auctions just like amazon/Walmart/etc.
List the 1099-NEC on 1120 line 10 as other income. Then on 1125-A line 5, list the same amount as an other expense. List gross receipts from bulk liquidation sales on 1020 line 1A. Explain to the IRS that it appears the items are being sold below cost, but that isn't actually the case. The company's business model is to evaluate promotional samples provided at no cost then sell them to inventory to be sold as used items. . blah, blah, blah.....
I really don't want to track every single item. Most of the items I order are either total junk or are household items or clothing, which the IRS explains in publication 561, "The FMV of used household items is usually much lower than the price paid when new. Household items include furniture, furnishings, electronics, appliances, linens, and similar items. ..... Such used property may have little or no market value because it may be out of style."
In other words, the IRS has already recognized that the used household items have little or no value. You need to keep them in a business under evaluation until you are ready to sell them or transfer them to yourself at the new lower FMV.
I would suggest to find the average bulk sale price for your lots liquidation stuff and apply that to the value of items you sell yourself from your c-corp. OR use a price list from goodwill or the like to price individual items.
While as the officer of a corporation, you are generally an employee and cannot use a 1099-NEC to give inventory to yourself, your kids, spouse , friends and family are not employees. You can give them $599 worth of non-employee-compensation per year before you have to issue them a 1099-NEC. And you should have the products owned by the business while they are evaluating them so when you give them products, it is at the used value.
Thanks so much for your courage in this situation. I hope the IRS is forced to decide on this gray area one way or another.
Thank you for taking the time to share your experience with the rest of us. As a new vine participant I too have so many questions and concerns. Thanks!
Just wondering did this work out Did they audit you?
It's an interesting approach. One thing that occurs to me is that even if an auditor says it's ok, until the irs actually has a policy on it, it's still a total grey area and will continue to be at the whim of whomever is deciding at the time.
One idea that i had was just deducting normal business expenses, then deducting the discount that most items have (that Amazon doesn't include when figuring the value), and then deducting the further loss of value from using the item (not sure what category that would be in). But yeah, it's really confusing, because we're forced into treating it all as income when it's not.
That's a good point. Until it's actually cut and dried in the policies it would be up to each individual auditor? Ugh. That makes sense though.
It's totally confusing. That's an interesting idea to deduct all those various things. I'd think you'd need to document the discount on the main page for each item. As for deducting loss of value, I've had the notion of having an appraiser professionally assess the value of all my Vine junk LOL
@@heidimull Post your letter form the IRS confirming this. "Talked to an auditor" is 100% MEANINGLESS.
@@heidimull Yeah, unfortunately i think that's the case. I know it's barely worth saying, but amazon could probably structure the program differently so it wasn't counted as income. They could also do a better job at assessing the real value of items. I thought about trying to organize viners, but i imagine that would be close to impossible for many reasons, not the least of which would be that amazon could just replace us. Anyway, yeah, i think the deductions i mentioned have merit. The rub is that you would have to declare as a business to get write-offs and I'm just going to go the hobby route for now. I'll let you know if i ever decide to try the write-offs idea.
In the meantime, thanks for posting about the process you're going through. Btw, if you continue the social media thing, i think you have a better chance than many to make it.
- Take care
@@teo2975 No way they will pass this unless they just don't even look, but even if someone looked at it and accepted it, I doubt it could be a defense for anyone else to do the same. Only tax law has authority.
@@dylanemeraldgrey From what I understand, you pay 15% more in taxes, if you go the self employment route. That is not true of the hobbies one. You only pay the state and federal taxes that are what your state has.
The problem I see is that I'm not sure that the products received via the Vine program can actually count as Nonemployee Compensation since there is no contractual obligation in the Vine participation agreement for the Vine Voices to review any of the products received. The program is set up so that the incentive to review is not the receipt of the individual products themselves so much as it is the ability to remain a member of the Vine program or to up one's status within the program. In other words, the actual compensation is the continued non-paid involvement in the program which has no taxable value. Furthermore, even if one was to consider the product as compensation for the review, what would that mean for any products not reviewed? Can their taxable value count as compensation without the quid pro quo of the review? If I don't review anything, I will get kicked out of the program but I will still get to keep the products received regardless - so what were those products compensation for?
It's also key to remember that Amazon has not paid for these products, but that the products have instead been provided gratis by the sellers as part of a paid arrangement to Amazon. Can someone be liable for taxes on a business expense a third-party supplier will most likely report as a deduction?
Excellent points. I do know that when I visited the IRS and also several CPAs I've spoken with have said Amazon is "doing things right", but they might have been assuming Amazon is sending us these products from their own pocket rather than the seller's pocket.
The no contractual obligation to review does make things interesting. I'd argue that there is a requirement to review in order to receive more compensation, so like with a typical job if you don't show up to work for a week or two you might not have a job anymore regardless of what specifics are in your contract.
With Vine, practically speaking, you must review in order to continue receiving items. Contractually, you're right you don't have to. What were the products we received compensation for if we haven't reviewed? They seem more like promotional items....my guess is the seller writes them off under advertising costs? So we receive a free product in hopes that we'll talk about our experience with it, on and/or off Amazon.
Which would bring me to: we are literally expected to pay (in taxes) for the privilege of helping a company advertise their product.
@@heidimull Thanks for your follow-up. I do need to correct one point of mine after re-reading the agreement this morning. Participants do agree to write the reviews as part of their responsibilities within the agreement, even if Amazon's separate 50% rule makes such obligations loose at best. Not sure how I missed that but my apologies for the mislead on that.
That said, the thing that differentiates a typical job from this arrangement is that a typical job is based on a direct agreement to exchange taxable compensation for the work that is done. There is clear understanding between the parties of what counts as compensation. Amazon, however, never directly references the "promotional offers" (Amazon's words) as compensation for the reviews in their agreement; instead, the reviews are only referenced as being a requirement for participation in the program. Which brings me back to my original point - the participation is the compensation, and that has a non-taxable value without payment. Without direct agreement between parties that the promotional products are the compensation for the reviews, I'm not convinced Amazon can accurately reference the promotional items as such from a legal or tax-based standpoint.
FWIW, I do think a solid argument could be made that, depending on the state you live in, the Vine items received may be applicable to local sales taxes, especially given the value of many of the items. But that is a different matter with a significantly different financial impact on participants.
@@joeshlabotnik5764 seller's pay to have the products put in the program, so Amazon is being compensated.
@@flutey28 That is exactly my point. From a tax standpoint, Amazon should be the party responsible for the nonemployee compensation on these items since it is part of their contracted arrangement with the seller. Somehow they are offsetting that responsibility to Vine members, but I'm not sure that is being done is a fully legal way.
I think the problem you may run into is that you are keeping the items, therefore, the value of those items is your compensation for being in the program. This is according to Amazon, "In certain locations, some products ordered through Amazon Vine are considered as income and are subject to taxes. It is your responsibility to ensure any taxable income is correctly reported." It's similar to winning prizes. You have to pay a tax on the value of the item, be it a ticket to a concert or an automobile. I think you're mixing up that the income is for your paid review, but that's not the case. Your income is the value of the product. That's what Amazon bases your "income" on. Otherwise, they could send out products, ask you for a review, you write the review, and then you send the product back, and you get paid a flat fee. But you're keeping the product, so the value of the product becomes your income. That's how I see it. Does anyone else see it this way? I hope you're right, though, because that's a lot of money to pay taxes on.
Thanks for sharing. I'm at 1/10 your volume and could probably handle it if I were flagged. Two years ago I got a 1099 late for $1000 review job and filed an amended return. I cost me $300 total. I could probably survive a $1500 taxes, penalties and fines if for 2 years I got to keep my returns or at least not have $1000 come out of my return. I'll discuss it with my wife. One question though; after 3 years of losses isn't the business reclassified as a hobby?
Thank you for keeping us informed about this
Thank you for the disclaimer for us not to try this ourselves until you figure it out completely. I hope this works out but I get it if it doesn’t. It’s such a confusing thing and it sounds like a many people and professionals have differing opinions on it. I know if it works out a lot of people would be helped by it.
Value of items $55,267 value of review items used up in review process $55,267...........I'm laughing so hard at this rn get ready to pay $8000+ in taxes because the irs not about to let that one fly past. There's no way the items lose 100% of value by you reviewing them, I do agree they clearly lose value because now they are used items, but they still hold fair market value based on the value of the items in used condition. You cannot count your form of profit ie the items amazon lets you keep as an expense lol and yes they do still count as inventory if you plan to sell them. If you plan to keep them then you owe taxes on all of that $55,267 as you never had any intent to sell them. Items are only inventory if you plan to sell them. You can really only claim they lose value due to being used if your reselling them, if your keeping them which clearly you are then the fair market value is what its selling for on amazon or the ETV.
I admire your tenacity. and think you should go into law. You're super smart and a critical thinker, and those are the two traits you need.
I would do two things differently. I wouldn't use the code you used, unless it's the closest to what we do. Amazon reviews are not entertainment, more informational. So perhaps something closer to technical writing would be appropriate.
The second thing I would consider is depreciation. In order to adequately review a cake you have to eat the cake, leaving nothing left to depreciate. Ordering a $1200 mattress-you have to use it for say 3 months in order to adequately and responsibly review. What is the value of that mattress at the end of 3 months. In other words what is the fair market value of a used mattress? Considering there are laws in some states that don't allow you to sell used mattresses, you may find that it has no resellabe value, so it's depreciated by $100. A $1200 sofa on the other hand can be tested for the same 3 month duration, and at the end it does have a value. Let's assume that it depreciates by 75%. You are the responsible for taxes on $300 (full dollar amount less depreciation).
Not all items would share that 75% depreciation. Some like jewelry may retain close to 100% value after the review period. Others are consumables (toothpaste, toothbrushes, etc) that we almost always gets of $0 ETV, but there still might be products that have an ETV from $1 to $100. In a sense, we're asking the IRS to build a depreciation table based on item and review period. Some things will have a much shorter review period than others. Many interesting questions there.
You cannot depreciate income, only assets. Since you are receiving a 1099, IRS will consider it as income. There is definitely a sense of wrong in the way this is treated. I've been working on this with my accountant, and his general thought is, you report the 1099, then you owe the taxes.
I admire You SO Much!
That brings up a good question, what about it being classified only as a barter, I don't think that there is any stipulation to suggest that you accept price of tax as payment for the barter. And it would not be taxable under bartering, I don't think. I am sure that there are other systems out there that use a principal like this. It would be interesting to understand what those situations are like
Edit* also if the company pays taxes on the product, is it not subject to being subjected to, too much taxation if you accept terms as-is?
A business expense, in this case, would be something like purchasing a special cable for an electronic item you received. You can claim the cable as the business expense but not the value of the electronics you received as payment for services.
The thing is, there is no actual payment for a service. Unless you mean how amazon continues to allow you access to the list of items that sellers have shipped to amazon already in the hopes that they get reviewed.
The vine program for reviewers does not require any reviews to be done whatsoever. Not even one. The only consequence of taking stuff and doing no reviews is potential loss of access to the lists.
@@tvtoms But, if you don't do reviews, they, first put you in Vine jail. Then, secondly, if you still don't do reviews, you get kicked out of the program.
@@ClairettaAnderson yeah, vine jail then ultimately disinvited. It's probably rare that someone accepts the invite and lets it go immediately by doing nothing.
Next year when I do my taxes I will list it as a hobby. They used to have a deductions option under hobby which has been taken away, so if I did have deductions I would subtract that from the gross to put down as a hobby. I can't think of any deductions though. One item I received was completely broken from the factory and I thew it away, maybe that would be a small deduction.
99% of us already list it as hobby. If you did not in prior years it just shows you are deeply infant as to tax law on this
@@teo2975 I wasn't in the Vine program last year.
Very helpful
If you do not have extensive documentation of challenges to estimated value I strongly suggest you immediately amend your Federal and State returns to take the entire amount as hobby income so you are not exposed to self employment tax. And learn your lesson by paying the Federal and State taxes on the $55,000 which will probably be on the order of $14,000. If you don't have it, work out a payment plan with the IRS.
If you have very well documented, on each product, significant divergence from fair market value and list price that amazon calculates for your Estimated Taxable Value and IF you have documented destructive testing, and if you have spent money on legitimate expenses, for example a voltage tester for batteries, you could reduce your estimated taxable value of the goods or the income. But I doubt you will by more than 15% to 20%. Which means your self-employment hit by using a Sched C business income/loss that you are using will be a wash compared to the much easier option of going with Hobby income and no self employment tax.
The IRS does not allow fkery. It is quite possible to use a Schedule C to take down the actual taxable income by 20%, maybe 50%. There is nothing wrong with it if you can fully document each line item. but 100%?
I've considered something like she describes, but saw that using Schedule C (and paying sales tax, since they get sold at the end) would make the tax rate many times higher than hobby income. So a lot of depreciation would need to occur to even break even. I'm not so sure it would even result in much tax savings, and the paperwork would be far higher than just writing a number in hobby income on the normal 1040 and being done with it.
Hope to see any updates on this situation for you as they unfold. If you end up not being audited and run into no issues with how you filed, that will definitely be helpful to know.
I’d viewed your vine video from the beginning, where you’d stated that the things you’ve order was for you home, and now you deem all worthless. My question is do you still order items from vine ( as needed ) to help with your mental stability?
The idea that your “business” of doing reviews grants you $50,000 worth of merchandise but no value is dubious. I think, if it was audited, it may be a major problem. However, I agree with you that you shouldn’t have to pay taxes on the original purchase price of those items since you cannot “sell the items” new or even used for six months. However, I think s reasonable auditor would think that you would be responsible for the taxes of the resale value of the “used items” although a bit strange of course… I think paying tax on the used resale value would be realistic and legal than just paying zero. Assuming a retail value of $50,000 it might bring the taxable income down to 20,000 or less but not down to zero. Anyway, it’s unlikely even at $50,000 that you’ll get audited but it will be interesting to see what happens. I do think that being paid in merchandise is a very odd situation, but I do think you’re getting some value from it and not zero so there’s some tax to be paid but it’s not fair to pay the retail value of those products I do agree with that.
And I am very aware that the value of all that merchandise is not anywhere near $50,000. It’s a bunch of junk and maybe a few nice things but you have decided to order and be reimbursed for those items so it’s not like Amazon force you to review all those products it’s your choice but yeah I actually am a new vine member and I’m not gonna review more than $600 worth of merchandise because I don’t wanna deal with taxes , but this video is good thanks gave me the idea of reporting just the resale value let’s say on eBay versus the full value which I do think is legitimate but I think reporting zero is going to be a flag.
You seem to be posting based on your “feelings” rather than knowledge of tax law.
For some reason, most of you are taking Amazon’s word and diligently paying taxes when these 1099s are unlawful. She’s at least intelligent enough to recognize that and challenge it.
1. This is not a contest. Winning a contest means you pay taxes.
2. There is NO CONTRACT between you and Amazon, or you and the seller. Amazon does not own the product, so if you were providing a service, it would be to the sellers, not Amazon. And you aren’t required to write a review. They send promotional products in the hopes of a review. This is not considered self-employment. If, however, you’re getting items from Vine to resell, that would change things. But that’s not a lot of people.
3. These are promotional products, free, without contractual obligation to provide any service in return. “Expectation” or “hope” is not the same as obligation. In law, definitions matter. In this case, these items are gifts and thus the sellers should be paying gift tax.
There’s no reason we should be paying anything, or receiving a 1099 NEC implying we’re a contracted employee when we literally don’t work for Amazon, the seller, or anyone else. No contract. No service.
People need to push back. I’m shocked there’s not a lawsuit already, but most people shrink. Keep going, love. You’re on the right side of this issue. Your biggest hurdle is convincing the IRS of that.
Since you deducted the full amount, did you still owe any percentage for self-employment? Also, did this work out for your state taxes as well (so far)?
Thank you for doing this work. It is valuable to all of us. I would love to have this as a "career." I think you are totally on the right track. The key will be in your documentation of all of these products. being able to prove that you used these products for your review. Reviewing every single products. The key word and tricky phrase from Amazon is about the items not being yours until after 6 months. Which means to me providing a follow up review at six months especially for big ticket items. And, for the really big stuff doing a review at one year would probably make the case even stronger that you are a professional product reviewer.
I am new to the program, so I will try to hold myself to say under a few thousand for 2023. My goal for 2023 is to get those 100 items reviewed so I can get to the Gold tier. Once I get that opened up, then I will consider how I move forward. Mostly, I'm curious if I can sustain that level of activity.
Thank you again for being so thorough and taking such a huge risk. May the Lord Jesus give to you & your family whatever the Blessed Virgin Mary is asking for you.
Doing a little deep diving myself. This type of compensation seems to fall under Restricted Property. Pub 535 discusses property transfer as payment for services and how Amazon should treat this type of payment. And Pub 525 gives us guidance on how & when to determine FMV for Income purposes at the time all restrictions are removed. I think between the two you can make the case that Amazon has placed restrictions on how we must use the product given to us inorder to participate in the program. It then behooves us to do our reviews and keep records of these products. At the end of 3 and six months, we can then declare that most of these products have little to no FMV. If you want to avoid taxes, run this like a business.
If you just want it to be a fun hobby where you get a 60% discount on products, then by all means have fun and pay the full taxes.
@@LisaKnobel hi Lisa, thanks for this commentary. Can you expound on your ideas here, relative to how the value comes to zero at your time intervals. I keep my spreadsheet which includes the ETV and the actual value based on any coupons, discounts, etc. at time of order. I am already a small business owner and may be able to offset with storage facility, etc, but I want to know what particular elements of each transaction/review should be comprehensively documented to achieve a zero value or close to it, if possible. Does 525 reveal this?
@@itsmillhouse for e it comes down to could you actually turn around and sell this junk anywhere? Probably very little of it has residual resale value after 6 months of use.
Now some things I get and they even have zero value to me because they do not fit or do not work. Not even sure why Amazon has to send 1099s when they don't even own the product. Or the got it for free. Are the vendors sending Amazon 1099s for full market value? Not likely. At a minimum it would be at their cost.
Certainly Amazon does not want that info revealed. Amazon is just covering their asses and getting a sweet write off or something for product that is not even theirs.
@@LisaKnobel This is very helpful.
Hi, I just finished my first year with Vine, it is tax time and I need to file, what have you all figured out since this video came out?
I review and then keep the items or give them to friends and family, I have not sold a single item.
I'm looking for how to file to pay the state sales tax they say I owe from the goods I received.
Any info would be great.
This is a great video. You remind me of myself, quite a bit...I just received my vine invitation and also just found out about the tax part. So far you have stated this doesn't effect EBT or WIC benefits? Would this effect TANF benefits or Section 8 voucher assistance? I know I will have to do my own research but am wondering if because it doesn't effect EBT or WIC benefits that the same will hold true for TANF and section 8 benefits.
Jennifer, please don't use the info in this video to guide you. YES, vine 'income' will affect EBT, WIC, and any other benefits. The IRS considers this as income and has been very clear about it. This is not a rule specific to Amazon Vine but is a regulation the IRS has had in place for many years. Amazon will send the IRS a 1099-NEC if you take at least $600 in products and your benefits coordinator will be alerted of the income. And you cannot write off the ETV of these items as an expense. That's not how this works. Several accountants are having chuckles over this video, and it's unfortunate. Heidi seems like a very nice person but is misguided. She admits that she is testing the waters here. It can take the IRS a couple of years to catch up, but they will. She isn't the only one who ended up in a panic after misunderstanding the consequences of the Vine program. Some people have already lost benefits, including disability and housing. Jennifer, please stick with 0 ETV items such as skincare products as long as you are still receiving any type of benefit. Consult a local qualified tax professional if you have any questions.
Assume it affects ALL benefits. Tread very carefully and seek someone knowledgeable in the field.
@@user-bb1by2mn8r On the other hand if you run a marketing business and need to buy props for a photo or video shoot those props would be a tax deductible business expense. If a manufacturer sent you their product to shoot an advertisement would the product be considered payment? In that case, the product might be considered a "consumable" in that case. Of course, you may see other professional reviewers given products that must be returned making clear the product isn't payment.
The strange area in this case is the product is payment. Amazon states that so that declaration makes it clear. So it may be safer to consider it as payment. On the other hand, you can't perform the service without receiving the product and that's why there's debate.
But I do think it's safer to consider it as payment. Only when someone doing otherwise gets audited will there be a precedent set. Of course the IRS may be waiting for a much bigger income report to do that so even not getting audited isn't a clear answer. Perhaps a gold reviewer reporting a hefty six figures would be that case.
Greetings and thank you so much for taking the time and effort to make and share this video with us. I too am a Vine Voice and this tax season will be my first filing with the Amazon info and forms. Your video has definitely helped me to understand more about the process and what it looks like and requires.
The terms and conditions are confusing and what forms need to be included and why is also unclear. I did receive my 1099-NEC form but have NOT yet filed my taxes. I've read most of the comments below and am wondering what they mean for my situation. Since I did not purchase them items, there is no Sales Tax. And I live in a state where there is no State Income Tax.
Does that mean I own nothing and have no forms to file? That doesn't seem right, but at the same time, according to the rules, it does. Can anyone please help me understand how all this works and what I need to do? I'm sure any assistance will benefit me and many others with the same questions. Do I go see a consumer rights lawyer? Do I need a CPA? Do I even need to bother with the Form 1040, Schedule C -OR- Amazon's 1099-NEC form since *i* am NOT an independent contractor because I am not getting paid (or receiving any other incentive, monitarily or otherwise). I am simply providing a review on a product they chose to send me for no cash value.
I thought this program and journey would be exciting, informational, helpful, and beneficial to me and my readers. So how does this taxing policy (or lack thereof) make any sense? If anyone would care to comment, explain, commiserate, please feel free to do so with my sincere thanks and appreciation!
I'm in the same boat as you.
So how did it work out ? Can we get a update
Here's my biggest question/concern about what you're doing... I do get and agree with you that you have to use the items to provide a review, and that diminishes the value. But how do you rationalize completely zeroing it out? Unless every item you ordered was 'consumable' (candles that were burned, food/pet food that was consumed, etc.) you are still left with physical objects you now own, and can make use of or resale. Again, I can totally agree with deprecating the value to some degree... but to zero it out seems wrong.
Thanks for asking this, it's a great question, I'll address it in a follow up video as it's an extensive answer!
She can if filing a Schedule C as a business do the following
1) contest the estimated value. She will need to document this
2) document destructive testing or loss of value by testing.
3) take expenses. For example a light meter to test lumens, a storage unit t keep things for six months.
that can all be done but it will be very hard. As you note her just starting out with blanket declaration of no remaining value is a huge problem. I urge her to amend this return to hobby. the taxes and small penalty so far will likely be
@@teo2975Yeah the only deduction you can take off the bat is that it losses its value due to being used, the items would then be counted at the fair market value of the item in used condition and not new. One could simply look up every vine item on ebays sold list and see what the fair market value of said item is now that its used and subtract that from the ETV. That should be 100% legit and legal in the eyes of the irs one would think. Other then that if you keep the item they still hold the fair market value and that value is counted as income.
idk if she is just too naive to understand that or is legit just looking for a loophole to get out of this being counted towards her taxable income. I'm thinking its a bit of both. As someone who runs a small online retail business full time its easy to understand the fair market value of the items and know that items or cash it's all counts as taxable income. I'm donated free items for my business all the time I still have to count those items in either the value of my inventory and or those items have zero deductible cogs once sold as I paid nothing for them.
If she really wants to avoid all the taxable income from amazon vine items, truly believes that all the items are trash, not usable by her after her review, and she really only orders them just to review then trash them "business use" she keeps claiming lmao. She could simply donate all the items to a non profit once she is done reviewing them and then non of them would count towards her income. Yet she would rather knowingly evade taxes and commit a felony in an attempt to get the items 100% Scott free.
Its kinda hilarious the amount of people that think these "free" vine items should not be counted as taxable income. Ya'll should probably not be vine reviewers if you don't agree with the terms, conditions, and tax accountability involved in the vine program. Just opt out or donate all the items after the 6 month period if you don't want to pay the taxes its honestly that simple.
Thanks for posting this as I and many others are also pondering this. Here's what I've gleaned and surmised:
The IRS considers income as anything received of value for services rendered.
If you run a business, expenses you make for the business are a business deduction. For example, if you shoot video for a living then buying camera equipment is a business expense.
So people are grappling with whether the fact that the products received are actually a business expense since they are a must-have to write a review.
As per the above example, if I shoot TV or Social Media advertising (and this can even be photography) buying the props for such advertising would also be a business expense.
I wanted to lay out the considering people are grappling over.
I also don't know how the IRS would rule but one might consider that you can't do the reviews without the products. What makes this unusual is that the products are also payment.
Also, the question is whether this is a hobby or business. If it's a hobby deductions can't exceed income. However what if it's exactly even as it would be in this case.
On the other hand, I believe a business has to show a profit for three out of five years in order to allow for some years to have a loss. But, the big but, in this case it's exactly even so it's not clear how the IRS handles a "net zero" situation.
It's also possible the IRS may not audit to avoid establishing a precedent that others can then use. They may look for someone with a much higher income from Vine to establish that. Of course, this is also speculation.
Also, some people receiving social services are concerned that Vine products as income will put them over the threshold for those social services.
So they may not audit you but might audit someone else. This is the frustrating thing about taxes and you'll even have disagreement among accountants and perhaps one reason the IRS may not be clear is they don't want to set a precedent (yet). Sigh.
Thanks for doing this though as it does show the issue and you point to one avenue one can take with awareness of the risks involved. Laying out the thinking is important and appreciated.
I’m new to the Amazon Vine program and live in Canada. I remember you saying in one of your videos that people from Canada and the UK do not have to pay taxes for items they receive from the Vine Program. Can you please confirm if this? 🙏🏼
I’m trying to find info on this but the only thing I’ve come across addressing income tax for Canadians from the Vine Program are your TH-cam videos.
Also thank you for talking about the Amazon Vine Program publicly. All of the information you provide us viewers are so helpful! 😊
I only know what I've been told by Vine participants from other countries, so I'm not able to confirm it for certain. I might talk a lot about taxes but I'm no expert, especially in other countries' taxes! SO While it's what I've heard, I'd hate to tell you you're fine and then to be wrong.
If I were you I'd join one of the Vine groups and ask, because that way you can find fellow Canadians advising you what they do. It is SO much easier to do Vine when you can talk with other folks about it. I made a video about the various groups here: th-cam.com/video/H2C_7u2Plog/w-d-xo.html
I wonder if you claimed all received goods are "used"?
I just had another thought about larger $$ of vine items. The feds charge a penalty for under paying taxes, and businesses pay estimated taxes to avoid the penalty. I wonder if that penalty would be applied to vine items. I doubt that anyone makes estimated tax payments through the year on vine items.
I have paid estimated taxes in the past for self employment that was not Vine. It's pretty easy to do! Most people work a job besides Vine or have a spouse they file with jointly who works, so it can work out to just have extra withheld instead of paying estimated taxes.
At this level of vine income 90% of people need to have been filing quarterlies.
The penalty is applied to the tax you owe during the year, not the actual item that caused the tax. And yes, I for one make estimated tax payments. It's simple and it saves having to pay a penalty later, when you discover you owed tax back in March, that you didn't pay. However, as one of the commenters below states, you can just change your W4 at work, if you have a job, and THAT withholding is considered to have been held over the year properly, and there'll be no penalty for taxes you didn't pay in Vine, as long as your W4 withholdings are enough.
If there's a business tax code for some sort of general "marketing" activities, that'd work better. The writing side of what you've selected is clearly meant to apply to novelists, poets, etc.
Hence the grey area. The value of all writing is subjective. I might not like a particular style of poetry or an authors style.
Also you can't dismiss the value in writing reviews. I have on many occasions decided against ordering a particular product or from a particular company due 100% to the reviews.
So there is value and time and effort.
I owed $11,700 in taxes. Definitely a learning lesson for me. lol
How much was the total estimated value if you don't mind me asking?
0:14 "Up to three years to find how it turns out." Don't you love the IRS, keeping everyone in suspense all the time about possible problems with filings from years ago?
2:38 Right, we want to pay taxes on the actual value of the products after review, which is far less than the ETV Amazon assigns.
@@DL-ep5uk It's really the sellers paying Amazon to have the reviews done. Since the products come from the sellers, technically they are the source of the "income" of them to reviewers. Amazon just gets paid to administer the program. So they are really just a middleman and it's odd they have to report the taxes. They never owned the product sent out.
I love your dedication to the things you are passionate about, in this and with things on stream where you have displayed great intelligence/understanding. I believe in your pursuits and hope it works out!
Thank you, Essmid! Always good to see you around.
Hi essmid! We meet again!
@@limbytes Greetings, traveler! I sense this will not be the last time our paths cross!
Good video, good information. I wonder what IRS would do if claimed that all items are tested to full inoperability so that in your review you could document how much use a consumer is likely to have from that item. Example, you get a golf bag and in your review you use and also loan it out to many for testing purposes, because after all, no one can golf EVERY DAY for a year, right? and you let others use it until it breaks, or becomes unusable. Now you have something of zero value and you can accurately document in your review that "this product lasts x hours/days/weeks under regular use..." or something like that. Now you don't ever have anything to keep, depreciate it all.
It's been 10 months... any word from the IRS?
thank you for being the guinea pig on this
You seem like a really nice person and I know how easy it is to get caught up in Vine. You took over $55k in vine products last year and apparently didn't understand the implications on your tax return - and state benefits. You aren't the first and won't be the last.
Flaws in your report that are going to bite you later - maybe sooner.
1. You agreed to pay the taxes owed before you were permitted to place an order with Vine.
2. Vine tax FAQ states clearly that the full ETV of the product at the time of your order is taxable. Not after. Usage has no bearing. You legally agreed to these terms.
3. Items do not depreciate 100% just because you used them once. Even if they did, see #2.
4. The IRS requires Amazon to issue 1099s to Vine members. Vine was not always taxed. The IRS wasn't happy with that and they corrected it. Other similar companies are also required to issue 1099 forms to reviewers. Therefore, the IRS is fully aware and not confused by this requirement.
5. This is called non-monetary compensation. It has always been taxable and is not unique to Vine or similar programs. If you ask a CPA or IRS employee again, be sure to tell them it's non-monetary compensation. They will recognize that instantly.
6. You state that you are legally required to test a product to review it. There is no such law.
7. If you win a car you pay the tax on it. If you drive the car it does not depreciate by 100% so you still pay the tax on the full retail amount of the prize. But again, see #2.
8. You mention inventory. Vine items received are never considered inventory. Inventory on your Schedule C refers to products you purchase for the purpose of resale. Again, Vine items are payments in the form of non-monetary compensation.
9. Submitting your return and receiving the message that it was 'accepted' only means the electronic submission was successful. It takes a while to get reviewed.
.. I really do think you are a good person and are in a bind. But this could be perceived as tax evasion. You are also at risk of losing your state benefits that are helping your family through a difficult time. Your safest bet is to quickly file an amended return before this circles back around to you. The IRS will let you work out a payment plan. A lot of people dropped out of Vine after realizing the financial implications of the program. It's something to consider.
I wish you the best of luck.
Nope, I went into this with eyes fully open. I have been in touch with representatives of state benefits from the very beginning and have it well documented in my file. My other videos explain this.
1. I am paying all taxes owed. Taxes are owed on net income, not gross income. Net income is after business expenses are deducted.
2. I am not contesting ETV.
3. These items do not fall under IRS depreciation.
4. The IRS did not like Amazon pretending they weren't giving any value. Amazon corrected that with the 1099. Receiving a 1099 doesn't mean you owe taxes on that amount. That is your gross amount, before business expenses. The IRS is not familiar with individuals claiming deductions with Amazon Vine, and when I went to their office multiple times they were in fact confused and told me flat out they had no answers because it was too complex.
5. Again, I am not contesting the value.
6. Look up FTC review disclosures. "You can’t talk about your experience with a product you haven’t tried."
7. If you win a car, using the car is not a condition of winning it.
8. I mentioned they cannot be counted as inventory but thanks for reiterating that.
9. I am fully aware of that, hence why I said this could take a while.
Tax evasion is deception and hiding things. On the contrary, I visited my local IRS office several times to seek clarity on this, and I have presented things very clearly on my tax forms. All benefits agencies have all the information including ETV in their notes, which I update anytime I make contact with them for any reason, and I have them put in their notes that they are saying it is still acceptable.
I'm aware this could go very badly, but I think someone needs to be brave enough to risk it going badly in order for things to change.
#2 seems irrelevant. Amazon and you can't set your own terms as how taxes are paid. Just IRS rules/law determine what way(s) it can be reported (e.g. hobby, Schedule C). If Vine items must be reported as 1099-NEC, then Amazon must report them as it.
So has the IRS mailed you anything, about your taxes?
Just that it's been accepted and everything. I'd have to go look at it again for exact wording but just basically that it's been approved.
However as others have pointed out that doesn't necessarily mean anything, since they could still audit me years down the road.
It takes them months and months to process things. You have to be very patient with them. All the more reason to be sure you file correctly so your error doesn't take a year to be discovered then it cost because you did the math wrong or something.
@@heidimull"Accepted" does not mean "approved." It means your SSNs match, your names, etc., are spelled correctly, and that there is no glaring ERROR in math, which is not the same thing as a disputed tax position.
Taxation is theft, so saying "I want to pay my fair share" is like offering to donate to a mugger on the street so they won't rob you at gunpoint later.
You actually don’t have a contract. You’re a non-contracted reviewer.
I think you are going to be audited, sooner than later. To receive 55K and not pay any taxes must be a big red flag. I think Amazon was legally forced to report vine items to the IRS, Amazon did not do that on their own accord, and it was because the feds want tax money on products received for free. The big question is, how large of a house do you have to store $55,267 worth of stuff!?
I can't wait to do my video walkthrough to show you what a supposed 55K value of stuff looks like. Gotta time it with the toddler's nonexistent sleep (he's been awake since 2am and it's afternoon now...) LOL
@@heidimull We all known almost all of it is Chinese junk worth on average half of its list price. But that is -- on average. If you are just going to claim everything you got is worth literally zero, it is likely you will be going to jail for evasion.
@@heidimull That will make for a cool video. I have been gathering some clutter since I joined Vine. Worse is I save the shipping boxes lol. I do agree with you that things from vine shouldn't be treated like cash income.
@@DAS-Videos Keeping the boxes would be SO MUCH lol.
Will share more Re: it being treated as cash income later...
@@teo2975 Nah, the most they will do is send her a correction and a bill. I doubt she will even be audited.
I do not have the guts you have. I hope it pans out for you. PS from what I'm reading the IRS can go back as far as they want on taxes, but don't generally go back past 6 years. I had heard 7 was the max.
That's really good to know, thanks! I had heard three years but I hadn't double checked that so I really appreciate the info.
I must give you credit to figure out a rational way to make the total taxable amount a deduction, and if it works out, you will be known as the person who figured out how to report vine items to the IRS. All of us will use it if you don't end up getting a bill for $6,632 dollars :-)
It will be a lot more in unpaid taxes and legal bills. And there is already a rational way: Millions of people are paid as NEC, and many people are paid compensation in non cash items before Vine ever existed. Unless you are going to reduce value by over 20% you are way better off taking it income as hobby and preventing a large self employment tax hit. Once you go down the road of a schedule C you must pay self employment taxes in addition to income taxes.
And you cannot just say" the stuff is junk, let me show you a video of the stuff" and declare it as zero. The IRS will not see that as a good faith error.
It certainly is possible, in some cases, for people to be reducing average value from vine by maybe 50%. And possibly take expenses as well. But you are going to have to have fully documented it. The probative burden will be on the filer. And to just declare everything a zero value is going to result in the IRS baring its substantial teeth at you.
It's almost tax time for the 2023 year. This will be a popular video.
But you're not being paid so it's not a employment contract. It's more of a volunteer thing. But with vibe being part of your channel content... its a very grey area.. the items being given are more of a gift catagory. Not payment for services.... silly that its taxed
The IRS considers anything of value to be payment. Even "barter" income is considered income by the IRS. Amazon considers it payment which is why they require a W9 and send a 1099.
Ms Mull, I strongly suggest you take this video down. One can sympathize with you not knowing tax law, but the IRS will not sympathize. You cannot simply declare this INCOME as zero value. There are things you can do but it is clear you have not talked to a business tax attorney. Not an HR Block guy, not an "auditor" you claim to have "spoken with." But an tax attorney that deals with small business as a focus.
You are going to end up paying MORE taxes, penalties and legal fees than you would have if you simply declared the $55k as a hobby.
You seem unaware of the simple fact that you declared it as a schedule C business means instead of paying say 25% income tax you are going to ALSO pay 15.3% Self Employment Tax making your taxes on this $ 55,000 be over $22,000 (55kx40%) instead of about $13,750. PLUS legal fees that could be $20k to $50k
You look like you are sitting on a functional chair from amazon vine. Are you going to claim that is worth $0?
Thanks for your concern! I super appreciate it. I've spoken with a wide variety of tax professionals regarding this matter, including in person appointments with the IRS themselves, who said the situation was "too complex" for them to provide answers (yes, seriously).
If it blows up in my face, you get to tell me you were right and laugh at my demise if you wish. If instead it pans out, then a TON of people are helped in a massive way.
As for the chair, that's a great example. Anyone familiar with business deductions already knows the answer but I'll address it in a follow up video, thanks for asking it!
Why should the video be taken down? She's not hiding anything from the IRS. They will see her return and act accordingly. She will even report the result. What more could the IRS want? What more could we want?
"You are going to end up paying MORE taxes, penalties and legal fees than you would have if you simply declared the $55k as a hobby."
I think she's filing this way out of principle, not utility. Of course it's easier to just go along with things in life, take the path of least resistance, but that's not a principled life.
@@heidimull They don't put IRS specialist agents (people familiar with complex issues) in citizen-facing positions. Of course they said it was "too complex," because 1) they aren't trained in that specific area and 2) decisions other than very basic questions are handled by people who are knowledgeable enough to be bound by the decision they pass on to you.
Now as far as how long they can go back: generally 7 years. *IF* they have reason to believe you are committing fraud, they can go back to the very first tax return you ever filed, in your entire life. I doubt they will think you are committing fraud, though. I think they will consider you somewhat confused, and without professional representation sitting there next to you when you are questioned, they're not going to be too impressed by your arguments.
My background is years of working as a CPA (yes I know we're a dime a dozen)......but my special background is that I worked in a CPA firm in which I was the ONLY employee who had not previously been an IRS agent. We had regular agents, supervisors and CID (the ones with the guns) on staff. Suffice it to say, I learned a LOT. Some of the best years of my life. Good luck!