Giveaway Prizes
Products and prizes given away to followers for promotional purposes.
Tax Form
Schedule C, Line 8
Estimated Savings
$100-2,000/year
Income Level
How It Works
Products and prizes given away to followers as part of promotional giveaways are deductible as advertising expenses. This includes merchandise, gift cards, products you purchase for giveaways, and the cost of items from your own inventory used as prizes. The giveaway must have a legitimate business purpose.
IRS Rules & Requirements
- Giveaway must have legitimate promotional/business purpose
- Must document the business reason for each giveaway
- Can deduct cost of purchased items or fair market value of inventory
- Shipping costs for sending prizes are also deductible
- Keep records of giveaway announcements and winners
Real Examples
Gift card prize worth $100 for subscriber milestone giveaway = deductible
Products purchased as giveaway prizes totaling $500 = deductible
Shipping costs to mail prizes = deductible
Common Mistakes to Avoid
- Not documenting the business purpose of giveaways
- Deducting personal gifts as business giveaways
- Forgetting to deduct shipping costs
Pro Tip
Screenshot or save your giveaway announcements showing the promotional purpose. This documents that the expense was for business promotion.
Related Deductions
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