The IRS and Barter Explained

The IRS cares about your barter trades

The IRS cares about your barter trades. It may be hard to believe, but the IRS considers $1.00 in barter trade to be equivalent to $1.00 cash. The key point for you is, your barter trade is taxable income in the eyes of the U.S. government. You should not, however, let this knowledge put you off of bartering. In fact, barter is still one of the smartest money decisions you can make. The IRS interest in barter, though, is a great reason to join a reputable online barter club. The best barter clubs will handle the difficult part of the IRS paperwork for you, freeing you up to engage in pure barter bliss! So don't be afraid if you join a barter club and are asked for your social security number; it's likely not a scam (but always do your due diligence!). Rather, the barter club owners will track your trades and issue you a 1099 form in order for you to report accurately your barter "earnings" to the IRS.

How should the knowledge that the IRS will consider your bartering as taxable income affect how and when you engage in barter? For the most part, it shouldn't! Does the knowledge that the IRS will tax your income stop you from taking a new job? Does it stop you from buying a car? The IRS is just a fact of life. Awareness of its rules regarding barter is just good barter business.

There are things you can do to make the IRS work for you in barter trades, though. First, spend your barter trade credits on tax-deductible items. As with anything related to tax, if you can get a write-off, go for it! Second, donate your barter trade credits to a non-profit organization. You generally get better deals with your barter credits than you do with cash, so if you buy something with barter credit, and then donate it to a non-profit organization for its full cash value, it is entirely possible for you to accrue a very nice tax benefit while doing some good for someone else!

There are hundreds of categories from which to choose barter services, and thousands of members with whom to barter. Begin making your skills and unwanted possessions work for you. You can greatly enhance your life, even in a down economy. What are you waiting for? Begin bartering today!

The IRS and Barter Explained

By: Debbie DeSousa

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