What Is Bartering?
Bartering is the trading of one product or service for another, usually without the exchange of cash. This could be through a barter-exchange company, or more informally through two individuals or on a one-on-one basis. An example of bartering is a dentist exchanging dental services in return for auto repairs at an auto repair shop.
Do You Have To Pay Taxes When Bartering?
Yes. The IRS considers goods or services received from a barter agreement to be income for both sides, just like cash. Barter exchanges, according to the IRS, even have their own unit of exchange, which is valued in U.S. currency for the purpose of information returns. Earning “trade” or “barter dollars” through a barter exchange is also considered taxable income.
How Do I File For Bartering?
You file for bartering depending on how the transaction occurred:
- If you are participating in a Barter exchange, you are required to file Form 1099-B.
- If you are participating in Bartering without the use of an exchange, you may be required to fill out a Form 1099-MISC.
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