Swag Isn’t Really Free, Says the IRS

Photo (cc) by David Reber's Hammer Photography

Got swag? The IRS wants to know about it.

That’s right. Swag, apparently short for “stuff we all get,” must be reported on federal income tax returns. The taxable income reported should be equal to the fair market value of what’s in the gift bag.

Why don’t the goody bags count as gifts rather than income? The TaxProf Blog says, “These gift bags are not gifts for federal income tax purposes because the organizations and merchants who participate in giving the gifts bags do not do so solely out of affection, respect, or similar impulses for the recipients of the gift bags.”

Although you weren’t likely one of the “lucky” recipients of an $85,000 Oscar swag bag, you could still get hit up by the IRS. According to Reuters:

If you go on a golf outing, where the organizers offer a prize for a hole-in-one, and you win, you’ll owe tax. And if you’re salesperson of the month at your job, and get a trip to Hawaii, ditto. Even if you take home $1,000 from the church raffle, you have a tax issue.

So that iPad you won in a raffle? You most likely need a 1099 tax form for it. Cheaper “gifts,” under $600, typically fall under the $600 required reporting amount for 1099s, Reuters said.

If you’d rather not deal with the IRS and its 1099 forms, you have a few options:

  • Just say no. Refuse the gift.
  • Redemption. If you are the recipient of a gift certificate or trip voucher, it only counts as taxable income when it’s redeemed. So if you hold it until it expires, you don’t have to report it.
  • Donate it. You can give it away to a qualified nonprofit organization. While you’d still have to report it as income, you’d be able to count it as a charitable deduction.

As long as you don’t ignore the gifts, you won’t have the IRS hounding you.

What do you think about the IRS taxing these so-called gifts? Share your comments below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
36 Things That Will Be Obsolete Soon

The writing is on the wall for dozens of things we have grown up with.

10 Ways Retailers Trick You Into Spending More

Think you’re a savvy shopper? Find out how retailers persuade you to dig more deeply into your wallet.

How to Save Up to 70% on 7 Everyday Purchases

Stop getting sucked into paying a premium when good alternatives are available at huge savings.

17 Surprising Things You Can Sell for Extra Money

From your closet to the beach, the trash you find may be someone else’s treasure.

10 Colleges That Offer Free Tuition for Seniors

These schools let retirement-age students study, tuition-free, while earning college credit.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

Is This Treatable Condition Causing Your High Blood Pressure?

Researchers say too many doctors are overlooking this potential source of hypertension.

13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

6 Legal Documents Retirees Need — but Don’t Have

Few retirees have all of these documents that are crucial to their golden years — especially during a pandemic.

Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

11 Huge Retirement Costs That Are Often Overlooked

Does your retirement budget account for all of these costs?

7 Tricks to Cleaning Your Bathroom Faster

These tips can get your bathroom sparkling with little time and no elbow grease.

7 Bank Accounts With Extra Perks for Seniors

These accounts offer exclusive discounts and other perks — including interest — to older customers.

11 Generic Products You Should Buy at Costco

Not all generics are worthwhile, but these are among the best from Costco’s Kirkland Signature brand.

Do This in the Car If You Want to Avoid COVID-19

It takes just seconds to take this simple preventive measure.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.