Resources:
Why YOU Should Care:
If you receive gift bags (or “swag”) from business conferences, you should know they are considered income.
What is a gift? Why is a gift bag different?
The IRS defines a gift as something given to you out of affection with no anticipation of reciprocity. For example, your mother may give you a gift on your birthday because she loves you. She doesn’t explicitly expect you to return the favor.
A gift bag, despite having the word “gift” in the title, is quite different.
First, there’s no real affection. The company or brand contributing to the gift bag is interested in you as a potential business relation – someone who will perhaps review and spread the word about their product. Often, they’ve had to pay the conference hosts to get their item in the gift bag in the first place.
Also, while there is no outright expectation of reciprocity, the brand providing the swag would be thrilled to have you as a future customer or evangelist for their product. This is a very different relationship than that between you and your mother at your birthday party.
Claiming Gift Bags as Income
The amount of the items received or gift certificates redeemed should be claimed as income on the tax return for the year. The amount to be claimed is the fair market value of the item received. This is the amount you’d pay if you were to buy the item at a store.
As these items are income to you, you can also claim charitable deductions for the amount donated if you give your gift bag contents to charity rather than keeping them yourself. Either way, the full fair market value should show up on your tax return.
