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View Full Version : Swagbucks and taxes


KatieR
04-21-2010, 06:10 AM
Since we're talking taxes....has anyone earned enough swagbucks to have it effect their taxes? I also wonder about such things. With my luck I'd earn a little and end up having to pay self employment tax on it or something. :banghead:

myfrugalfunlife
04-21-2010, 06:11 AM
I never thought of this before! I've earned a lot in gift cards but not all last year.....

minneapolisite
04-21-2010, 06:28 AM
If you make enough money to have to pay taxes at all, you should technically pay taxes on Swagbucks earnings, whether they are in the form of merchandise, gift card, or cash. There is an exception for "rebates" but the way Swagbucks is structured, I don't think it would be considered a "rebate" under US tax code.

myfrugalfunlife
04-21-2010, 06:35 AM
If you make enough money to have to pay taxes at all, you should technically pay taxes on Swagbucks earnings, whether they are in the form of merchandise, gift card, or cash. There is an exception for "rebates" but the way Swagbucks is structured, I don't think it would be considered a "rebate" under US tax code.

Could you elaborate-I don't work so I don't earn any money/pay taxes but my dh does-but he does not do Swagbucks just me-should I be looking into this?

minneapolisite
04-21-2010, 06:40 AM
Could you elaborate-I don't work so I don't earn any money/pay taxes but my dh does-but he does not do Swagbucks just me-should I be looking into this?

Yes. It'd be the same if you sold some unused items on Craigslist or got paid to babysit a few kids. The tax code says something along the lines of "all income derived from any source" (and then it goes on to list exceptions, credits, and deductions for like a million pages). Because you're married, you're considered one unit and any income each of you pulls in must be taxed. (There is the option to be married and file separately, but I think generally filing jointly is a better deal). Consult a real accountant or tax attorney though. I'm just a law student and I know just enough to be dangerous.

myfrugalfunlife
04-21-2010, 06:43 AM
Yes. It'd be the same if you sold some unused items on Craigslist or got paid to babysit a few kids. The tax code says something along the lines of "all income derived from any source" (and then it goes on to list exceptions, credits, and deductions for like a million pages). Because you're married, you're considered one unit and any income each of you pulls in must be taxed. (There is the option to be married and file separately, but I think generally filing jointly is a better deal). Consult a real accountant or tax attorney though. I'm just a law student and I know just enough to be dangerous.

:giggle2: I'll look into this-thanks!

norrahsmommy
04-21-2010, 07:22 AM
I wouldn't worry about it at all unless they send you a 1099 and only then I'd worry about filing taxes on it. :thumbsup:

and even then they'd have to have your social to tie it to you, and they don't so there really is no worry about it at all. :)

minneapolisite
04-21-2010, 07:24 AM
I wouldn't worry about it at all unless they send you a 1099 and only then I'd worry about filing taxes on it. :thumbsup:

It's unlikely you will get audited for evading taxes on Swagbucks. But it's still tax evasion. :blush:

norrahsmommy
04-21-2010, 07:38 AM
It's unlikely you will get audited for evading taxes on Swagbucks. But it's still tax evasion. :blush:

In Oklahoma you don't pay taxes to purchase a gift card, only the tax is taken when you use it, and if you use it online (like walmart card) then it doesn't have taxes added to it, so I don't really see how it'd be tax evasion, if you are using amazon.com cards (no tax on their products unless it's added in) because to buy a $5 giftcard at the store is $5 not $5.09 or whatever your taxrate is. In any rate- they get around having to send 1099's because in order to send one they need your social, and they only have to send one after a certain amount (for casino winnings it's $1200 for a 1099-anything under doesnt require one-) so I'd ASSUME that they have something set up in the way they function (loophole somewhere) so that they are not required to send tax forms to everyone.

I could be totally wrong, but I'm betting that they had their legal team scour through and find a loophole for them. :)

minneapolisite
04-21-2010, 07:48 AM
In Oklahoma you don't pay taxes to purchase a gift card, only the tax is taken when you use it, and if you use it online (like walmart card) then it doesn't have taxes added to it, so I don't really see how it'd be tax evasion, if you are using amazon.com cards (no tax on their products unless it's added in) because to buy a $5 giftcard at the store is $5 not $5.09 or whatever your taxrate is. In any rate- they get around having to send 1099's because in order to send one they need your social, and they only have to send one after a certain amount (for casino winnings it's $1200 for a 1099-anything under doesnt require one-) so I'd ASSUME that they have something set up in the way they function (loophole somewhere) so that they are not required to send tax forms to everyone.

I could be totally wrong, but I'm betting that they had their legal team scour through and find a loophole for them. :)

You are talking about SALES tax. We are talking about INCOME tax. All US citizens have to pay federal income tax, and most citizens have to pay state income tax. Buying a gift card for yourself with your own money is not "income," but EARNING a gift card (like you do through swagbucks) IS income.

Just because you don't receive a 1099 does not mean you don't have to pay taxes on income. Again, consult a real tax attorney or accountant. I'm sitting in tax class right now and chatting on DS, so that tells you just how diligent a student I am. :giggle2:

norrahsmommy
04-21-2010, 10:11 AM
You are talking about SALES tax. We are talking about INCOME tax. All US citizens have to pay federal income tax, and most citizens have to pay state income tax. Buying a gift card for yourself with your own money is not "income," but EARNING a gift card (like you do through swagbucks) IS income.

Just because you don't receive a 1099 does not mean you don't have to pay taxes on income. Again, consult a real tax attorney or accountant. I'm sitting in tax class right now and chatting on DS, so that tells you just how diligent a student I am. :giggle2:

I am talking about regular taxes too- I'm sure that their lawyers have found a loophole becasue if they were to pay one person for a certain amount of giftcards (or whatever you get on swagbucks)- they would HAVE to send a 1099 to those people, but they would also have to require a social security number for that paperwork, so there is some loophole that is in place to make it not a taxable income.

minneapolisite
04-21-2010, 10:19 AM
That is inaccurate. I'm not going to go into it further because I'm not qualified to give legal advice. I'm just basing my statements on the tax code itself and the things that my tax law professor has said in class.

I will leave it at this: according to the tax code, you must pay taxes on all income from any source derived (with a few exceptions, and I am 99% sure there is no exception for Swagbucks). You have to pay taxes on income, regardless of whether or not you have a 1099 form for that income. If you do not pay income tax on income (including Swagbucks) you are guilty of tax evasion. Whether you want to do the "loophole" dance is up to you, but be aware that (to my knowledge) there is no LEGAL "loophole" that allows you to NOT claim your Swagbucks income on your taxes.

Again: I'm just a tax law student, not a licensed tax lawyer! :)

tcmt81
04-21-2010, 11:59 AM
Read this http://www.irs.gov/newsroom/article/0,,id=175963,00.html

It is a common misconception that if a taxpayer does not receive a Form 1099-MISC or if the income is under $600 per payer, the income is not taxable. There is no minimum amount that a taxpayer may exclude from gross income.

All income earned through the taxpayer’s business, as an independent contractor or from informal side jobs is self-employment income, which is fully taxable and must be reported on Form 1040.

Use Form 1040, Schedule C, Profit or Loss from Business, or Form 1040, Schedule C-EZ, Net Profit from Business (Sole Proprietorship) to report income and expenses. Taxpayers will also need to prepare Form 1040 Schedule SE for self-employment taxes if the net profit exceeds $400 for a year. Do not report this income on Form 1040 Line 21 as Other Income.

Independent contractors must report all income as taxable, even if it is less than $600. Even if the client does not issue a Form 1099-MISC, the income, whatever the amount, is still reportable by the taxpayer.

Fees received for babysitting, housecleaning and lawn cutting are all examples of taxable income, even if each client paid less than $600 for the year. Someone who repairs computers in his or her spare time needs to report all monies earned as self-employment income even if no one person paid more than $600 for repairs.

....

Prizes and awards

Subject to certain exceptions, the cash value of prizes or awards won in a drawing, quiz show program, beauty contest, or other event, must be included on the tax return as taxable income.

Taxpayers must also report the fair market value of merchandise or products won as a prize or award, as taxable income.

For example, both a $500 cash prize and the fair market value of a new range won in a baking contest must be reported as other income on Form 1040, Line 21.