Disclaimer: This article is based on my research and experience. I am not a CPA or tax expert, and this should not be considered professional advice. Please do your own research and consult a professional if needed. This is merely a roadmap for reference.
The Tax Conundrum for Vine Members
In Vine member groups, taxes are a hot topic to avoid. Mention it, and you’re likely to be met with downvotes. However, I hope this information helps some of you avoid hefty tax bills.
The Issue
Amazon assigns an Estimated Taxable Value (ETV) to every item. At the end of the year, they issue a 1099-NEC with the total ETV. This leads many to believe that because you received products, it counts as income and must be taxed. Essentially, if you are a Vine member, nothing is truly free; you’d pay between 20% and 50% in taxes on every item. This belief is incorrect.
Understanding the Facts
- Amazon doesn’t own the products: Except for Amazon Basics items, products are owned by vendors and only warehoused and fulfilled by Amazon.
- No requirement to leave reviews: You can order items freely at first. After a few months, if your review rate falls below 60%, you’ll be put in “Vine Jail,” preventing further orders until you catch up. There are no further consequences if you decide to leave the program.
- You are not a contractor or employee of Amazon: You don’t qualify as either.
- No monetary compensation: You receive no payment for reviews or the items themselves.
Why the Confusion?
In 2022, IRS rules required companies to issue 1099-NECs for aggregate payments over $600. This includes product value if items are used to generate income, such as through blogs, YouTube reviews, or sales after the 6-month moratorium. This led Amazon to issue 1099-NECs for anyone receiving over $600 in products.
The Real Tax Situation
If you don’t monetize your reviews, you don’t have income to report. At worst, the items fall under the “Gift” category, but the value can be considered used up in the review process. Here are two useful videos:
- Heidi Mull – How I filed 2022 Amazon Vine taxes – 1099 amount REVEALED
- Money Struggle Success – Amazon Vine Income The IRS & What To Do About It
Community Reactions
Participating in Vine Reddit groups and Discord channels has shown me that bringing up taxes is a surefire way to start an online war. Any deviation from the accepted viewpoint is met with fierce resistance and downvotes. It’s simply not worth the headache to post this in those groups. Unfortunately, reason and logic often take a backseat to feelings and what people “think” the rules are.
While tax laws might not be flexible, they do leave room for interpretation. A well-articulated argument can sometimes succeed. I believe the IRS bulletin on bloggers and influencers was necessary because they were making money from their items. Being seen with a product as a celebrity or influencer gives it advertising value, making it a form of compensation.
For Vine members, there is no quid pro quo. We receive items essentially as gifts, without making money from them. This distinction is crucial in tax law. The specificity in the bulletin targeting influencers and bloggers almost excludes our Vine arrangement. I’m confident that this interpretation is correct.
Filling Out the 1040 C Form
Below is how I fill out my 1040 C form:
Personal Information
| Field | Entry |
|---|---|
| Name of Proprietor | Your Name Here |
| Social Security Number (SSN) | Your SSN Here |
| A (Principal Business or Profession) | CONTRACTED PRODUCT REVIEWER OF CONSUMER HOUSEHOLD AND PERSONAL ITEMS |
| B | 711510 (Independent artists, writers, & performers) |
| C | Blank |
| D | Blank |
| E | Your Home Address |
| F | (3) Other (Specify: NO CASH RECEIVED) |
| G | YES |
| H | (Checked if a member on or after Jan 1, 2023) |
| I | NO (This could vary) |
| J | Blank |
Part I: Income
| Field | Entry |
|---|---|
| 1 | 0 |
| 2 | Blank |
| 3 | 0 |
| 4 | 0 |
| 5 | 0 |
| 6 | The amount on your 1099-NEC |
| 7 | The amount on your 1099-NEC |
Part II: Expenses
| Field | Entry |
|---|---|
| 8-26 | Blank |
| 27a | The amount on your 1099-NEC |
| 27b | Blank |
| 28 | The amount on your 1099-NEC |
| 29 | 0 |
| 30 | 0 |
| 31 | 0 |
Part V: Other Expenses
| Field | Description | Amount |
|---|---|---|
| First Line | EST. VALUE OF REVIEW ITEMS RECEIVED; VALUE USED UP IN REVIEW PROCESS | The amount on your 1099-NEC |
| 48 | The amount on your 1099-NEC |
Conclusion
This is how I plan to fill out my forms. Consult your experts and decide if this approach is worth the possible exposure. For more information, call the IRS at 1-800-829-1040.
Comments
Brand new to Vine as of this month, appreciate your information here. I plan to stay under 600 ETV this year, but might end up exceeding… at the end of the day we are all responsible for what the IRS deems our tax burden to be and I appreciate your insight. I will incorporate your advise into my tax planning at some level.
Author
Enjoy it. I may be completely wrong, and it may bite me. I don’t think so though. After 40 years in business and lots of research, I’m pretty confident. Only time will tell though.
There is an old story about a guy who saved his whole life to go on a cruise. Sat on the deck, and enjoyed the scenery, but ate crackers and canned foods he had brought along. On the last day he discovered the food and entertainment were all included, and he missed out because he didn’t do the proper research. I think this is much like that. A lot of people are eating cheese and crackers, when there is a full buffet they have qualified for right around the bend.
Just my take.
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This makes far more sense to me than the other approaches I’ve seen, all of which seem to operate under the belief that being taxed on the ETV as though it’s cash income is correct. I’m curious, have you run your plan by a CPA?
Author
No I haven’t. I did speak to an IRS agent though, and they confirmed what I am doing jives. I recommend taking the time to call them. I think you will find it enlightening.