Understanding Taxes on Incentives: What You Need to Know | Expert Insights

[iamtamnur]

Hi all....did a search and didn't come up with anything so I thought I'd ask here. Do we have to pay tax over any incentives we earned? My new consultant was curious and I said I hadn't thought about it as I think my deductions will far outweigh my income but thought you guys could maybe shed some light. TIA!

 

[ljeffries]

You do pay tax on incentives. It will all be broken down on your 1099.

 

[KellyTheChef]

Products earned for free are all noted on our end of year forms from PC.

But...items that I earned for free go under my income, but come right back off again when claimed as a business expense!!

I have not earned any trips yet, so I don't know how that affects your taxes...

 

[pamperedlinda]

Products earned for free are all noted on our end of year forms from PC.

But...items that I earned for free go under my income, but come right back off again when claimed as a business expense!!

I have not earned any trips yet, so I don't know how that affects your taxes...

Oh, I didn't realize I could do that too! What do you use as a receipt?

 

[chef_kimmo]

I do the same thing as Kelly as every product I have earned and PC dollar has been an investment in my business.

I have earned level One three times which I have gotten the certiciate (previously you could choose to get a hotel room) and I purchase items that I can deduct. Of course any electronic item including tv, stereo, cd player, mp3 player etc can all be tax deductible since we use them for our businesses.

 

[lockhartkitchen]

PC sends you an itemized list of "gifts" given, anything you earned. I list things as a business expense-even jewelry in the past because I use these to promote my business. I end up showing a loss each year.

 

[krzymomof4]

Just be careful with showing a loss. After 3 years, I think, you get red flagged by IRS for an audit.
They way it was explained to me is they do that because why would anyone stay in a business when they weren't making a profit.

 

[KellyTheChef]

Leslie~

My CPA was all over that for me...the first few years I showed a loss, then one year I think we figured all of the numbers so I MADE about $20!! He said it didn't matter how MUCH you made...just that you don't have a LOSS. I am sure there are restraints (like you said...perhaps every 3 years?) that you need to be aware of!

 

[DebbieJ]

I do what Kelly does. The 1099 is my receipt.

 

[jrstephens]

I do this same thing. I did not have a loss last year and do not think I will this year no matter how much I search for deductions. We will see though.

I need to buy a new printer, so, that will help me out!

 

[iamtamnur]

Thanks, guys. I knew you'd have answers for me!