Can You Write Off Products You Review on Your Taxes?
Learn when reviewed products qualify as tax write-offs, how to document expenses properly, and the tax implications of gifted or complimentary items.
Reviewing products can be costly, especially when purchases are made specifically for evaluation. Many content creators and business owners wonder if these expenses can be deducted on their taxes. The answer depends on whether the purchase is directly related to income-generating activities and meets IRS guidelines.
Tax deductions follow strict rules, and not all product purchases qualify. Understanding when a write-off is allowed, how to document expenses, and how to handle gifted items is essential to avoid IRS issues.
Qualifying Requirements for Product Write-Offs
To be deductible, a product purchase must be an “ordinary and necessary” expense under IRS guidelines. This means it should be commonly used in the industry and directly related to generating income. A tech reviewer purchasing the latest smartphone for evaluation would likely qualify, whereas a casual buyer with no business purpose would not. The IRS relies on Section 162 of the Internal Revenue Code to determine whether an expense meets this standard.
The timing of the deduction depends on the accounting method. Under the cash method, which most small businesses and independent contractors use, expenses are deducted in the year they are paid. Under the accrual method, the deduction is recorded when the expense is incurred, even if payment happens later.
If a product has a useful life beyond a year, it may need to be depreciated rather than deducted in full. Section 179 of the tax code allows immediate expensing for certain business assets, but limits apply.
For items used for both business and personal purposes, only the business-related portion is deductible. The IRS requires a reasonable allocation based on usage. For example, if a content creator uses a camera 70% for business and 30% for personal use, only 70% of the cost can be deducted. Keeping records of usage, such as tracking hours or business-related projects, helps justify the deduction.
Distinguishing Business from Personal Purchases
The IRS does not allow deductions for personal expenses, so it’s important to separate business and personal purchases. The key factor is whether the item is used to generate revenue or support business activities.
Intent alone is not enough; actual use matters. A gaming chair bought by a streamer who reviews it and uses it exclusively for content creation is different from one purchased for general home office use. If an item serves both business and personal purposes, a reasonable method must be used to allocate the cost. Tracking usage, maintaining logs, or using industry standards can help determine the percentage of business use.
The nature of the business also plays a role. A beauty influencer who regularly tests and reviews makeup can justify purchasing cosmetics as a business expense, whereas someone who occasionally posts about beauty products without a structured business model may have difficulty proving the deduction. The IRS may scrutinize deductions for items commonly used outside of business settings.
Documentation Essentials for Tax Purposes
Thorough records are necessary to substantiate deductions and protect against audits. The IRS requires clear evidence that an expense was incurred for business purposes, including receipts, invoices, and proof of payment. A credit card statement alone is insufficient; documentation must show the date, vendor, amount, and description of the item purchased.
Beyond receipts, keeping a written record explaining how the product contributes to business activities strengthens the legitimacy of the deduction. A content creator reviewing electronics should document when the item was acquired, how it was used in content production, and any revenue generated from related work. If the purchase is tied to a specific project or campaign, contracts, sponsorship agreements, or earnings reports can further support the deduction.
Digital tools can simplify recordkeeping. Accounting software like QuickBooks or FreshBooks categorizes business expenses, while cloud storage solutions keep receipts and supporting documents accessible. The IRS accepts digital copies as long as they are clear and legible, making scanned receipts or smartphone photos a viable alternative to paper files.
Accounting for Gifted or Complimentary Items
Receiving complimentary products for review presents different tax considerations than purchased items. The IRS generally treats gifted items as taxable income if they are provided in exchange for services, such as creating content or writing a review. Under Section 61 of the Internal Revenue Code, gross income includes all income from any source, meaning that if a company sends a product with the expectation of promotion, its fair market value (FMV) must typically be reported as income.
Determining FMV requires assessing what a consumer would reasonably pay for the item in an open market. This is usually based on retail price, but if the product is not widely available or has a fluctuating value, alternative valuation methods may be necessary. For high-value goods, such as luxury electronics or vehicles loaned to influencers for extended periods, the IRS may scrutinize whether the recipient has effectively gained control over the asset, potentially leading to tax liability even without outright ownership.
Reporting the Deduction on Returns
Once product purchases have been classified as business expenses and properly documented, they must be reported correctly on tax returns. The method of reporting depends on the taxpayer’s business structure.
For sole proprietors and single-member LLCs, deductible expenses are reported on Schedule C (Form 1040) under the appropriate category, such as “Supplies” or “Other Expenses.” If the product is a depreciable asset, it should be listed under Section 179 on Form 4562 to claim immediate expensing if eligible. Multi-member LLCs and S corporations typically report deductions on Form 1065 or Form 1120S, with expenses flowing through to individual owners via Schedule K-1. C corporations deduct business expenses directly on Form 1120.
If a product was received as compensation rather than purchased, its fair market value must be included as income on the return. This is typically reported as business income on Schedule C or as “Other Income” if not directly tied to a specific revenue-generating activity. Taxpayers who receive numerous gifted products may need to issue Form 1099-NEC to themselves if the total value meets reporting thresholds. Failure to report taxable items can result in penalties, interest, and potential audits.