The IRS has not issued clear guidelines on how approximately 27 million influencers in the U.S. should report income and expenses, causing confusion for both the influencers and their accountants. The ambiguity particularly revolves around free products received through endorsements, which may either be classified as taxable income or gifts. Researchers analyzed tax laws and spoke to accounting firms to highlight the lack of direction from the IRS, last addressed in 2006, and the potential scrutiny influencers face regarding their lifestyle expenses.
The lack of specific IRS guidance on how influencers should report income and expenses leaves 27 million Americans uncertain about their tax obligations, exposing potential pitfalls.
Our research indicates that influencers face particularly ambiguous tax treatment regarding free products received for endorsements, complicating their understanding of taxable income.
While some experts consider freebies as taxable income, others argue they may be treated as gifts, highlighting the inconsistency in tax treatment for influencers.
Analytics of communication with various accounting firms specializing in influencer taxation have revealed significant uncertainty in how influencers should approach potential tax deductions.
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