Gift cards and taxes?

Question

Hi. I kinda fell into a side gig unrelated to my current work. I am already self-employed. I was willing to do the work for free, but the person whom I'm doing the work for wants to pay me money. I don't really want to add more income onto my self-employment taxes so I've asked them for a gift card(s) instead. Do I have to claim income from a gift card? Is there a limit to the amount the gift card can be? Can they still deduct the gift card as a business expense when doing their taxes? The "work" would be regular so could they continue to "pay" me with gift cards throughout the year?

Would it make a difference if the gift card was from a family member? She approached me to do a favor, I told I would. She asked me how much and I told her I'd do it for free. I did the work but now she insists on paying me. I'd rather get a gift card as a thank you vs having to claim the income. Oh well.

Answer 1

A gift card, or anything else of value, that you receive in return for work is treated as income. If they just took you out to dinner or something though, you could probably just ignore it as income.

Answer 2

You have to claim the gift cards as income, same as if you were paid with cash or a check. You can deduct the business expenses you incur in earning those gift cards, though.

Answer 3

No -this is not legal - and you are to pay income taxes on any income - including bartering income. This will cost you if you are caught defrauding the IRS

Answer 4

no its a gift..if we did have to do that then we would have to claim all our christmas gifts and birthday presents and every present we happen to get and besides when you buy the gift card and purchase something with it, you pay taxes whe n you buy the stuff

Answer 5

no