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.
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.
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.
March 1 — Farmers & fishermen
File your 2018 income tax return (Form 1040) and pay any tax due Details
March 10 — Employees who work for tips
If you received $20 or more in tips during February, report them to your employer Details
March 15 — S Corporations
File a 2018 calendar year income tax return (Form 1120S) and pay any tax due Details
March 15 — S Corporation election
File Form 2553, Election by a Small Business Corporation, to elect to be treated as an S corporation beginning with calendar year 2018. If Form 2553 is filed late, S corporation treatment will begin with calendar year 2019.
March 15 — Partnerships
File a 2018 calendar year return (Form 1065) Details
March 15 — Electing larger partnerships
Provide each partner with a copy of Schedule K1 (Form 1065B), Partner's Share of Income (Loss) From an Electing Large Partnership, or a substitute Schedule K1. This due date applies even if the partnership requests an extension of time to file the Form 1065B by filing Form 7004
March 15 — Partnerships
Electing large partnerships: File a 2018 calendar year return (Form 1065-B) Details
March 15 — Social security, Medicare, and withheld income tax
If the monthly deposit rule Page 6 Publication 509 applies, deposit the tax for payments in February.
March 31 — Electronic filing of Forms W2
File copies of all the Forms W2 you issued for 2018. This due date applies only if you electronically file.
March 31 — Electronic filing of Forms W2G
File copies of all the Forms W2G you issued for 2018. This due date applies only if you electronically file.
March 31 — Electronic filing of Forms 8027
File Forms 8027 for 2018. This due date applies only if you electronically file.