Call us: (724) 359-5022



Bartering For Dollars

  • By Lauri Paxton
  • 21 Apr, 2015
Have you ever traded services in exchange for a product or service?A professional service may trade for such things as a cleaning service, landscaping or plumbing. This is called Bartering and the IRS considers this income. If you barter, you should be aware that the value of products or services from bartering is taxable income.
A direct barter is negotiated between two people for exchange of a particular service. A barter exchange such as Green Apple Services requires a membership, but offers a variety of services to choose from such as: vacations, office supplies, professional services and restaurant meals. There is an agreement or process in place to value goods and services exchanged. The organization becomes the organizer of a marketplace where members buy and sell products and services among themselves and the service facilitates the barter in exchange for a fee.

The IRS states the following about bartering:

  • Bartering income.Both parties must report the fair market value of the product or service they receive as income on their tax return.
  • Barter exchanges.A barter exchange is an organized marketplace where members barter products or services. Some operate out of an office and others over the Internet. All barter exchanges are required to issue Form 1099-B, Proceeds from Broker and Barter Exchange Transactions. Exchanges must issue a copy of the form to its members who barter each year. The exchange must also file a copy with the IRS.
  • Trade Dollars.Exchanges trade barter or trade dollars as their unit of exchange in most cases. Barter and trade dollars are the same as U.S. currency for tax purposes. If you earn trade and barter dollars, you must report the amount you earn on your tax return.
  • Tax implications.Bartering is taxable in the year it occurs. The tax rules may vary based on the type of bartering that takes place. Barterers may owe income, self-employment, employment or excise taxes on their bartering income.
  • Reporting rules.How you report bartering on a tax return varies. If you are in a trade or business, you normally report it on Form 1040, Schedule C , Profit or Loss from Business.
Did you receive a 1099 for your bartering services? Remember, the IRS matches all those 1099s with your tax return. So if bartering services resulted in you receiving a Form 1099-B, don’t ignore it.
Regardless if you’re using a direct barter service or a barter exchange, as a business owner you need to be mindful that you don’t barter too many of these types of services. Becoming out of balance through the use of too much bartering or couponing can cause a cash flow crunch in available money to run your day-to-day operations. Bartering is a great way to receive additional products or services, but just like a Groupon or any other type of sale, it’s important to limit your business liability to insure continued profitability.
By Lauri Paxton 16 May, 2017
As summer approaches, you are either the type of business that thrives or pulls back for the slowdown of summer. Summer is a very hit or miss time for businesses depending on what industry you are in, and where you are located.
By Lauri Paxton 15 May, 2017
The American taxes are a pay as you go system. This means that taxes are to be paid throughout the year. Many employees do not realize this, because as an employee, your employer is withholding taxes from your pay check to continuously pay your taxes for you throughout the year.
By Lauri Paxton 11 Apr, 2017
Like many Americans, you most likely have been squirreling money away for years to prepare for the day that you will be able to retire.  We always tell people that you are never too young to start to save for retirement.
By Lauri Paxton 10 Apr, 2017
Are you one of those who are quickly approaching the deadline to file your taxes on April 18 th ?  Don’t panic because you are not the only one.  If you are avoiding filing your taxes based on not being able to pay the full amount you owe, you may want to rethink your strategy.
By Lauri Paxton 16 Mar, 2017
The phone rings. You see a number that you don’t recognize, but pick up the call anyway. An agent claiming to be from the IRS says that you owe back taxes and threatens to arrest you or file a law suit against you if you don’t make an immediate payment over the phone. Thousands of Americans faced this exact situation in 2016. This is a prime example of an IRS scam.
By Lauri Paxton 15 Mar, 2017
If you are one of the thousands of people who started to drive for ride share companies such as Uber or Lyft, then this may be the first year that you are filing your taxes as self-employed. You have enjoyed the ability to make your own schedule, work when you want, and make decisions to help improve your income. But what does all of this mean for your taxes?
By Lauri Paxton 13 Feb, 2017
When you go to your doctor there is a baseline where your medical team will start to determine if you are healthy or if you are in need of medical attention.  Vitals such as blood pressure, temperature, weight, cholesterol etc. are monitored regularly.
By Lauri Paxton 10 Feb, 2017
As the New Year has gotten underway and you finish your tax preparation, it is time to look ahead to the remainder of 2017 and beyond. While all of your company’s financial information is fresh in your head, it is a good time to look back at how far you have come and plan for the next few years.
By Lauri Paxton 20 Jan, 2017
As an entrepreneur you have probably found that traveling is an inevitable part of growing and running your business.  How you spend your time traveling can have an impact on your productivity.  Whether you are running down the street to a meeting or traveling across the country to work with a client, smart and efficient traveling can help to better use your time and keep your company growing.
By Lauri Paxton 19 Jan, 2017
Are you one of the 55 million people in the United States that freelance for a living or freelance as a side job? According to the Monthly Labor Review, the freelance surge is the Industrial Revolution of our time. Some common freelance jobs include technical jobs, professional services, graphic design and professional writing. If you are one of those people who work for themselves, do you consider yourself a business owner or do you consider your side job a hobby?
More Posts
Share by: