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Being taxed ~$2,000.00 for a RoadTest.

jkutzsch

Curious from the experience of others here.  I participated in a roadtest where it looks like the product is now going to cost me around $2,000.00 from "self-employed" taxes.  Needless to say this is unplanned.  Do other RoadTest participants in the US have suggestions on this?  Is this a common expected event?  My wife is pretty much saying my budget for anything is now blown.

  • in reply to jkutzsch

    John, I'm in the UK so for hobbyists like me it gets recorded via "self assesment". There's just one web form but you can pull in additional pages as necessary. I'll make some enquiries on blogging forums as there are definitely people out there who make an income from reviewing stuff.

  • I thought our customs charges (plus all the other "hanger-on" charges by them and the freight forwarder) were bad enough.

     

    I wonder if you registered as a 'company' for the RT's would you have to do the same.

    At least you'd be in a different tax bracket, and could claim costs, ie time, internet, computer, portion of house, etc to offeset it.

     

    Mark

  • in reply to rsc

    @rsc (you 3 character people are really hard to "mention".)   I saw that in T&C for the contests it does state something about taxes.  Something that people need to consider when competing for larger items.  :-) For instance first prize for the Safe and Sound Challenge is worth over $1500.  Not sure how much in taxes that counts.

  • in reply to Workshopshed

    Looking at various other mentions out there for the 1099-MISC it does seem to apply when you actually receive money for things such as blogging, editing, programming, etc...  Something you do that in turns gives you a payment in the form of funds.  Have other RoadTest recipients received 1099-MISC?  Maybe this is a newer process happening... 

     

    The fact that members here are world wide can make an interesting jumble of experiences.  :-)

  • I also received a 1099-misc for my design contest prize. Cost me about $200 in taxes.

    What really sucks is that Olympic winners have to pay taxes on the price of their medals    That doesn't seem right. Time for some tax reform!

    Scott

  • I do take payments for blog posts and reviews on my site and do declare that as additional income which is taxed.

     

    However, I'd never really thought about the value of the items for roadtest being a payment. I supposed if I counted those, I'd be giving even more of them away.

     

    For that much it's worth checking with an accountant. There's a possible game of skill element in that you have to submit your proposal to be selected but that might just be looked upon as tendering.

     

    One key thing to think about is the value of the item. It was never retailed so you want to look at the wholesale price as it's value.

  • I asked around and I was told that perhaps a 1099-MISC form is not the correct form to be used for what is being accomplished.  It sounds like what is trying to be done now is stating that E14 is bartering with a Member for services by providing a product.  No cash/monies are being exchanged which would be what the 1099-MISC form would be used for.  Instead a 1099b form would be used for bartering. 

     

    https://www.irs.gov/businesses/small-businesses-self-employed/barter-exchanges

     

    https://www.irs.gov/pub/irs-pdf/i1099b.pdf

     

    So confusing.  For instance the "Fair Market Value" for the 1099b, is that the retail value or something more appropriate.  And does a 1099b change the amount I owe, don't know.  1099-MISC better or worse then a 1099b, don't know.  :-)

     

    Luckily I live in a rural place, I was told that potentially I could have had additional municipal taxes added as well.

  • in reply to jkutzsch

    On a side thought, we may need to tweak the information for RoadTests to let people be aware of their Free product potentially costing them with taxes appropriate to their location.

     

    3. How much does a RoadTest cost?

    There is no charge to participate in the RoadTest program. Once you have been selected as a RoadTester, element14 will send you the product for FREE in exchange for your feedback.

     

    11. If I am selected as a RoadTester, can I keep the product I tested?

    Yes. That's the great benefit of being a participant in the RoadTest program. You get the product for free in exchange for your objective feedback.

     

    I can't even imagine the intricacies of tax forms for all of the Countries that participate.  Guessing there should be a general amount of value that is the required minimum before Element 14 has to file special tax paperwork on their side.

  • in reply to ntewinkel

    hmm, so maybe this is something new due to the 1099-MISC form being used?  Due to that being filed with the Government I can't argue this being a sample of a value worth $0.00 since it clearly is declared at $3,890.00.

  • in reply to jkutzsch

    Wow, that sucks. If you are generally an "employee", the only suggestion I can add is that as "self-employed" you are entitled to claim a lot of expenses related to making that self-employed income.

     

    For me (in Canada) I am allowed to claim part of my home expenses for my home office, depreciation on equipment (including my computer), and work related shares of cell phone and internet costs.

     

    If the government is pushing you into having to claim that self-employed income, then after expenses you could actually end up with a loss to reduce your overall taxes.