Tips for Bartering

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If you have traded goods or services in exchange for other goods or services, you have bartered. Bartering can take place informally between individuals or businesses. It can also be done formally through barter exchanges – individuals or organizations whose members contract with each other, or the exchange, to barter goods or services.

Although you may not have exchanged money when bartering, you still have to pay tax on the income you would have otherwise earned for the bartered goods and services.

Deductible Expenses

If you are in a trade or business, you may be able to deduct expenses you incur to perform the services you barter such as any materials required for you to perform the services or create the goods. These expenses are deductible only if you do not include them elsewhere on your return.

Recordkeeping

If you participate in a barter exchange and complete barter agreements, you should receive Form 1099-B or similar documentation from the barter exchange reporting the value of the goods and services you received.

If you do not barter though an exchange, then you will want to keep records of the value of the items/services both given and received for each transaction and you may be required to file a 1099-MISC.

Claiming Bartering Income on Your Tax Return

When bartering, you claim the market value of the goods or services you receive as income on your tax return for the year in which the bartering took place. The value of the goods or services can be an amount you and the person you are bartering with agree upon, unless it can be proven otherwise (such as through the open market).

If you participate in a barter exchange, you may have received trade/barter dollars in exchange for your goods or services instead of receiving goods and services in return. Trade dollars are equivalent to U.S. dollars and should be reported as ordinary income just as if you sold your goods or services for cash. Barter income is typically reported on Schedule C unless the barter involved an exchange of something other than services.

TaxAct will walk you through the steps for reporting your barter income and complete the appropriate tax forms for you.

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Upcoming Tax Dates

January 1 — Everyone
Federal Holiday (New Year's Day) Details

January 10 — Employees who work for tips
If you received $20 or more in tips during December, report them to your employer Details

January 15 — Individuals
Make a payment of your estimated tax for 2018 if you did not pay your income tax for the year through withholding (or did not pay in enough tax that way). Use Form 1040-ES Details

January 15 — Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in December 2018

January 15 — Farmers & fishermen
Pay your estimated tax for 2018 using Form 1040-ES Details

January 21 — Everyone
Federal Holiday (Martin Luther King, Jr. Day) Details

January 31 — All Employers
Give your employees their copies of Form W2 for 2018. If an employee agreed to receive Form W2 electronically, have it posted on a website and notify the employee of the posting.

January 31 — Individuals who must make estimated tax payments
If you did not pay your last installment of estimated tax by January 15, you may choose (but are not required) to file your income tax return (Form 1040) for 2017 by January 31. Filing your return and paying any tax due by January 31 prevents any penalty for late payment of the last installment. If you cannot file and pay your tax by January 31, file and pay your tax by April 15.

January 31 — Payers of gambling winnings
If you either paid reportable gambling winnings or withheld income tax from gambling winnings, give the winners their copies of Form W2G.

January 31 — Social Security, Medicare, and withheld income tax
File Form 941 for the fourth quarter of 2018. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter timely, properly, and in full, you have until 02-10 to file the return.

January 31 — Certain small employers
File Form 944 to report social security and Medicare taxes and withheld income tax for 2018. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is $2,500 or more for 2018 but less than $2,500 for the fourth quarter, deposit any undeposited tax or pay it in full with a timely filed return. If you deposited the tax for the year timely, properly, and in full, you have until February 10 to file the return.

January 31 — Farm employers
File Form 943 to report social security and Medicare taxes and withheld income tax for 2018. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the year timely, properly, and in full, you have until February 10 to file the return.

January 31 — Federal unemployment tax
File Form 940 for 2018. If your undeposited tax is $500 or less, you can either pay it with your return or deposit it. If it is more than $500, you must deposit it. However, if you deposited the tax for the year timely, properly, and in full, you have until February 10 to file the return.

January 31 — All businesses
Give annual information statements to recipients of certain payments you made during 2018 Details

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