Let's verify your activity. It sounds like you decided to review products for Amazon and in return you were allowed to keep the products. If that is true, then you were being compensated through product for your service of reviewing it. A receipt of a product is the same as a payment.
I understand your questions but as stated, you are not allowed to offset the income by what you could have purchased the same products at a lower price. What you can do is to use any expenses that you had out of your pocket to earn this money. Transportation, supplies, office space if applicable. If you have no expenses then you will report all the amount reported to you.
Next you must decide if this is a business or a hobby. In the case of a hobby there is no ability to reduce the income by any expenses.
You can decide if it is hobby or business income. This IRS link will help you: Business or Hobby?
Key elements:
- A hobby requires you to report the income you received and under the current tax law, Tax Cuts and Jobs Act (TCJA), no expenses are allowed to be used to reduce the money collected even if you itemize deductions.
- A business allows you to deduct the costs necessary to obtain the income. The law explains that 'you must be engaged in the activity to produce a profit'. The test under IRS tax law is that you must show a profit three out of every five consecutive years to be considered a business.
Once you decide what type of income this is you can use the links below to see how to report.
Self employment tax is 15.3% of any next profit in addition to your personal income tax.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
