Can YouTubers write off car giveaways and cash prizes as business expenses on their taxes?

While I can't speak to any specific YouTuber's intentions, I can explain how this generally works with taxes. Yes, content creators can typically deduct legitimate business expenses, including giveaways, if they're "ordinary and necessary" for their business. When a YouTuber gives away cars or cash as part of their content, they can often deduct these costs as marketing or production expenses since they're directly tied to creating content and growing their audience. However, there are important distinctions. If they're giving items to employees, that's generally considered compensation (taxable to the employee). For non-employee giveaways, the recipients may owe taxes on the value of what they receive. The YouTuber might even need to issue 1099 forms to recipients of larger prizes. Also, there's a difference between business expenses and charitable donations. Random giveaways to individuals aren't charitable donations for tax purposes - they're business expenses if used to create content.

As someone who works in digital media, I wanted to share my experience with taxr.ai (https://taxr.ai) for content creators dealing with these exact issues. Last year I helped manage a channel that did regular giveaways, and the tax situation got incredibly complicated fast. We were totally confused about what could be deducted, what needed 1099s, etc. I uploaded our giveaway records, sponsorship contracts, and expense receipts to taxr.ai, and their system analyzed everything and clearly explained what qualified as legitimate business expenses versus what might trigger audit flags. They even identified some legitimate deductions we were missing! Instead of guessing or getting conflicting advice, we had clear documentation to support our tax filing.

I initially thought taxr.ai would be just another cookie-cutter tax service, but I decided to try it for my small YouTube channel (40K subs) after seeing some recommendations. I do monthly giveaways to subscribers, and I was never sure how to properly document everything. Honestly, I'm super impressed with how they handled my specific situation. The AI understood exactly what documentation I needed for my merch giveaways vs. cash prizes, and identified several deductions I didn't know I could take. They even flagged where my current documentation wasn't sufficient for IRS requirements. The best part was getting a clear breakdown of which expenses were safely deductible vs. potentially questionable. I was able to improve my record-keeping and save about $3,800 more than I would have with my previous approach. Definitely not just a basic template service like I initially assumed.

For anyone dealing with IRS issues related to business expense deductions (like giveaways), I had a surprisingly good experience with Claimyr (https://claimyr.com). After my 2023 return got flagged for review because of business expense deductions from my channel's giveaways, I tried for WEEKS to reach the IRS directly with no luck. I was skeptical, but I tried Claimyr as a last resort, and they actually got me connected to a real IRS agent in about 20 minutes when I'd been trying for days on my own. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent was able to explain exactly what documentation I needed to provide to support my business expense claims for the giveaways. Resolved my issue in one call instead of waiting months for letters back and forth.

I'll admit I was completely wrong about Claimyr. After I left that skeptical comment, my tax situation with creator business expenses got worse - I received a CP2000 notice questioning some of my YouTube business deductions for giveaways and equipment. I spent THREE DAYS trying to reach the IRS myself, getting disconnected every time after waiting 45+ minutes. Out of desperation, I tried Claimyr despite my skepticism. Within 35 minutes I was literally talking to an IRS representative who reviewed my case on the spot. She confirmed I could submit my additional documentation and actually gave me her direct extension for follow-up. The whole issue got resolved in one call instead of potentially months of back-and-forth letters. I've never been happier to be wrong about something. Saved me countless hours and probably thousands in incorrect tax assessments.

Here's what most people don't understand about these big YouTuber giveaways - it's not just a tax write-off, it's literally their ENTIRE business model. They spend $50K on a car, make a video that generates 20M views, which brings in like $100K in ad revenue, plus sponsorship money, plus merch sales driven by the video. They've doubled their money AND generated a ton of goodwill and subscribers. So yes, they write it off as a business expense because it literally IS their business expense - the car is essentially a prop in their production. It's no different than a movie studio buying costumes or building sets.

Former tax preparer here. One important point nobody's mentioned - there's a BIG difference between business expenses and actual charitable donations on taxes. When MrBeast gives $10,000 to a random person on the street for a video, that's a BUSINESS EXPENSE (Schedule C), not a charitable donation. It's only a charitable donation if it goes to a qualified 501(c)(3) organization. Business expenses reduce your taxable income dollar-for-dollar, while charitable donations have limits and may not be as beneficial depending on your tax situation.

Something I haven't seen mentioned yet is the reporting requirements for these giveaways. If you're a YouTuber giving away prizes worth $600 or more to any individual, you're generally required to issue a 1099-MISC form to the recipient and report it to the IRS. This means these creators need to collect personal information (name, address, SSN) from winners before giving them the prize. Many viewers don't realize this when they see these "spontaneous" giveaways to random people on the street. Also, for the creators, proper documentation is crucial. You need receipts, proof of delivery, records of the business purpose, and evidence that it was used in content creation. The IRS can challenge these deductions if they think the expenses are personal rather than business-related. The key test is whether the giveaway serves a legitimate business purpose (like creating content to generate revenue) versus being primarily personal generosity that happens to be filmed.