Do Beermoney And Paid Surveys Site Users Have To Pay Tax?

by Menka Dimitrovska, Money Columnist

Published in Money on 16^th April, 2018

What is Beermoney?

Before I begin talking about taxes, I need to first explain what beermoney actually is. Beermoney is generally considered as extra pocket money, or a small amount of money that you make on the side, which can be used for non-essential payments.

Origins of the Term Beermoney

The term beermoney was first used back in 1800. It was used as a nickname for the allowance that was given to soldiers on a daily basis. Their allowance was 1 penny per day. This practice was used up until 1873, when beermoney was seen as the soldier's daily pay.

Nowadays, the term is used as a colloquialism for extra pocket money that are set aside for non-essentials, hobbies, luxuries, or for actual beer.

There are tons of job opportunities out there that allow you to make some extra cash, or beermoney. You can't really expect to make a decent living doing those, but you can make some extra cash to cover your hobbies and needs.

Ways to Make Beermoney

Here are a few ways in which you can make some extra money right now!

Run tasks for people (babysit, mow lawns, wash cars, do repairs and so on).
Do surveys for money and get paid in points, rewards or gift cards. One of those survey sites is PointsPrizes, where you can get free PayPal money and free gift cards doing online paid surveys and watching video ads.
Make $5-$10 on Fiverr doing different services for people, using the skills you already have.
Become a part time virtual assistant and get paid to schedule appointments, send emails, and do some light research.
Become a virtual call center agent and make money online, answering phone calls from the convenience of your home.
Sell your unwanted things on Amazon or eBay.
Sell your old clothes. Some sites include free shipping as well. Here are some websites where you can easily sell your clothes: eBay, Poshmark, ThredUp and Tradesy.
Sell used books, CDs and electronics.
Find a dog-walking or pet-sitting job.
Become an Uber or Lyft driver.
Receive free money giving your opinion on new video games, websites and products.
Rent out clothes, furniture, rooms or extra any extra space you might have.
Participate in medical studies.
Sell your hair.
Join focus groups.
Test out products.
Sell your photos.
Sell unused gift cards.

Taxes When Using GPT and Online Paid Surveys Sites

First of all, I want to highlight that I am certainly not a tax lawyer and this is not qualified tax advice. This is just some common sense information, based on my own research, and you'll need to get official advice from your tax lawyer about this, before filling your annual tax returns.

From a legal standpoint, you are required to report all income, including beermoney.

Beermoney is taxable and is considered as self-employment by the Internal Revenue Service, unless your employer sends you a 1099-MISC form, stating something else.

Money received for lawn mowing, babysitting, housecleaning, repairing computers or doing microjobs on GPT sites are all good examples of taxable income. It doesn't matter if you get paid $1 or $1000, each amount is taxable and should be reported.

All of these jobs are seen as self-employment, since you are doing them for the sake of making a profit. To the IRS, you are seen as an independent contractor.

You'll work with a lot of different companies in your lifetime, and you'll notice that different companies report taxes in different ways. Some report it as "other income", some under "prizes and awards", and then there are some that won't even send you a 1099 form - in that case, the money is considered as "self-employment income" and is filed as such.

All US-based beermoney companies may be required by law to report your income to the IRS, if you make more than $600 in a year with them. Note that in practice most foreign companies, and in fact many US companies, probably won't bother to send you a 1099 form.

However, even if you earn less than $600 - or it's a foreign company - and they don't send you a 1099, you still need to report your income, no matter how low the number may seem to you. Ultimately the responsibility is on you.

Basically what this means is that you need to pay taxes no matter how low the amount of money is. The company or website you're working for may fill out a form for you, and if not, you can do that yourself - it may be better to avoid the self-employment income category.

Do I Pay Taxes On Small Amounts Of Beermoney?

According to the IRS, all income tax should be reported. Even if you didn't make enough money to be sent a 1099-MISC form (you earned less than $600), you are still required to report any amount you earned. Whether or not you will be required to pay those taxes will mainly depend on your specific situation.

It's a common misconception that if you've made less than $600 per employer, or if you don't receive a 1099-MISC that you don't have to file and pay taxes. There is no such thing as a minimum amount that you can exclude from your gross income.

All the money you earn as an independent contractor or from side jobs and microtasks is considered a self-employment income which is taxable and needs to be reported.

Are Gift Cards and Bitcoin Gifts Taxable?

The simple answer is yes, and here is why...

IRS legally regards gift cards as taxable because all cash or cash equivalent items cannot be excluded from your income.

Gift cards and gift certificates that can be redeemed for goods, and merchandise or have cash value are not seen as de minimis and are therefore taxable.

De minimis are gifts or awards that are excluded from taxes for employees. Some examples of de minimis include:

Holiday and birthday parties for employees
Retirement gifts
Tickets to a sporting event or to a show
Occasional fares for busses, or parking tickets
Flowers, fruit baskets, or other small gifts
Birthday gifts, and so on.

Sadly, as you can see gift cards are not on the list, but as I said before, although you are obligated to file taxes, if the sum is too low, you may not be required to pay anything.

You need to pay taxes when using virtual currency as well, and that, or course, includes Bitcoin. Payments using virtual currencies to service providers or independent contractors are taxable and you need to report them following the self-employment tax rules.

What if I'm A Non-US Citizen and Live Outside the United States?

Amazingly US citizens have to pay US tax everywhere in the world - even if that means they have to pay tax twice on the same income!

For those of us lucky enough to have been born outside the United States, things are much simpler. The reporting requirements placed on beermony companies is likely to be far less stringent. Most likely the emphasis will be placed entirely on you to fully declare all your income into your country's tax return system.

However, if the company paying you is based in the United States, you may be required to file a W8-BEN form, in order to claim tax exemption rights under a treaty. Usually they will make the whole process of doing that relatively simple, using an online form.

Also, the details of your local tax rules are likely to be somewhat different. For example, perhaps a small amount of gift cards might be exempt from taxes in your country.

Ultimately the principle will remain the same though: Yes, you are required to declare all your income, even if you've already spent it all on beer!