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Trying to determine SSTB

CPARUN1
Level 1

Taxpayer A has a social media site with 50,000+ followers where they post links to product deals and sales.  Every time someone clicks those links, Taxpayer A get a commission.  Most posts are along the lines of “check out this deal on Legos!” but occasionally they will try a product and post a video about it (with a link to a deal). Is this income from a SSTB? 

Taxpayer A is not a celebrity receiving an endorsement nor is she an "influencer." 

I would not classify Taxpayer A as a “consultant” since she does not have clients and she doesn't provide professional advice. It seems to be a gray area with the IRS. Does anyone have experience with clients involved in this type of business? 

Obviously, I'm trying to avoid SSTB classification because the taxpayer would phase out of the QBI deduction.

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5 Replies 5
qbteachmt
Level 15

"nor is she an "influencer." "

influencer
/ˈinflo͝oənsər/
noun
  1. a person or thing that influences another.
    "he was a champion of the arts and a huge influencer of taste"
    • Marketing
      a person with the ability to influence potential buyers of a product or service by promoting or recommending the items on social media.
      "influencers can add serious credibility to your brand"

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"Level Up" is a gaming function, not a real life function.
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BobKamman
Level 15

I have known people who started successful sales careers by going door to door selling encyclopedias, or cell-phone plans.  What's the difference between them and "influencers" ? 

I subscribe to online editions of several  newspapers that have product reviews, with links to those they recommend.  They get paid if someone buys from that link.  Are newspapers now SSTB's?  

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qbteachmt
Level 15

Examples:

You have enough traffic on your site/page/insta that you are offered ad placements and that results in click-bait income, even though your website/insta/whatever is (how to quilt, showing odd shaped fruit, singing, dancing, whatever). Basically, you are a Billboard.

Compared to:

You upload content and get paid for that content, such as Legos gives you product and the box opening and review video gets you paid or you get paid to use specific products in the quilting videos. You are not a seller of the goods, neither as a distributor or your own finished products (quilts). That means you are the paid influencer.

It seems to me if a person makes some pretty pennies from this, that is likely because they are good at influencing. That's what they are being paid for. It always hurts when you have to pay taxes on a whole lot of money you earned because you are good at something. Just ask any professional athlete.

 

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"Level Up" is a gaming function, not a real life function.
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Terry53029
Level 12
Level 12
“Catch-all” category

The only category your client might fall into (assuming she is over the income limits) would be catch - all, and based on what you say it seems to me she is not in any category, and would be entitled to the QBI. Just my opinion. See link for full list,

 https://proconnect.intuit.com/taxprocenter/tax-law-and-news/professional-services-guidance-for-the-q...

 

 

Any trade or business where the principal asset is the reputation or skill of one or more of its owners or employees, as demonstrated by:

 

  • Receiving fees, compensation or other income for endorsing products or services.
  • Licensing or receiving fees, compensation or other income for the use of an individual’s image, likeness, name, signature, voice, trademark, or any other symbols associated with the individual’s identity.
  • Receiving fees, compensation or other income for appearing at an event, or on radio, television or another media format.
BobKamman
Level 15

@Terry53029   

  • Receiving fees, compensation or other income for endorsing products or services.

If Intuit pays me a fee for endorsing TurboTax, it would fall into that category.  But if I recommend that people buy TurboTax and post a link to an Amazon page where it can be ordered, it's Amazon that will pay me a commission.  Does that make me an influencer for Amazon?  And in the case of Amazon, they will also pay me a commission on anything else you buy during the next 24 hours, even if you don't buy TurboTax.  Have I influenced you to shop at Amazon, when you probably already have Amazon Prime and would go there anyway even if I told you to try WalMart?  

Silly discussion.  Deduct the QBI.  It expires soon anyway, doesn't it?  

As Justice Gorsuch says, hundreds of thousands of people die every year from influencers.