Bartering occurs when you exchange goods or services without exchanging money. An example of bartering is a plumber exchanging plumbing services for the dental services of a dentist. You must include in gross income in the year of receipt the fair market value of goods or services received from bartering.
Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business or Form 1040, Schedule C-EZ (PDF), Net Profit from Business. If you failed to report this income, correct your return by filing a Form 1040X (PDF). Refer to Topic 308 for information on filing an amended return.
A barter exchange is an organization with members who contract with each other (or with the barter exchange) to exchange property or services. The term does not include arrangements that provide solely for the informal exchange of similar services on a noncommercial basis.
The Internet has provided a medium for new growth in the bartering industry. This growth prompts the following reminder: Barter exchanges are required to file Form 1099-B (PDF), Proceeds From Broker and Barter Exchange Transactions, for all transactions unless an exception applies. Refer to Bartering in Publication 525, Taxable and Nontaxable Income, and the Form 1099-B Instructions, for additional information on this subject. Persons who do not contract with a barter exchange or who do not barter through a barter exchange, but who trade services, are not required to file Form 1099-B. However, they may be required to file Form 1099-MISC (PDF). If you exchange property or services through a barter exchange, you should receive a Form 1099-B. The IRS also will receive the same information. If you receive income from bartering, you may be required to make estimated tax payments. Refer to Form 1040-ES (PDF), Estimated Tax for Individuals, for more information.
If you are in a trade or business, you may be able to deduct certain costs you incur to perform services that you barter.
Refer to Publication 525, Taxable and Nontaxable Income, for additional information about bartering. Please refer to our Bartering Tax Center page for more information on bartering income and barter exchanges.
Page Last Reviewed or Updated: February 27, 2014