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To pay or not to pay, that is the question...
You may be new to this blogger/influencer world, like me, and may be approaching this tax season uncertain about whether or not you need to pay taxes ( hint: you do), how to file and what things are considered tax deductible and what are not. Although I have been in small business for the last 11 years, what I have done for my professional work looks a lot the same and somewhat different from what I am doing as a blogger/ influencer and I got to wondering what things I should be paying attention to, keeping track of and what exactly was an acceptable write off in this realm, so I started doing some research.
As I thought about some of my friends in this community who might be filing for the first time as a small business owner, I thought I would take my research and drop it right here for all of us to benefit - thus this blog. I hope that it is helpful to you and gets you started on approaching this tax season with a little more confidence.
This blog is not tax or legal advice. I am not a professional. These are just a few tips and tricks for how I handle my own taxes and my blogging business, and this blog was created from my own research and conversations with a CPA. Please be sure to consult with your own CPA and/or attorney and to learn city, state and federal tax laws for your area.
Is Blogging Income Taxable?
The simple answer is, yes, it is.
If you are collecting ANY income from your blog or influencer business, you will owe the IRS money. Whether you are operating as a true legit business with a license (like a sole propreitorship, a corporation or a LLC) or whether you are just hanging out and collecting coins casually, you will have to pay something.
Is My Blogger/Influencer Business "a business" OR a Hobby? How Do I Know?
Now before you file taxes, you have to know if you are filing as a hobbyist or a as full-fledged business/influencer and there are a few thing you need to know. If you are a blogger and are earning money from you blog, the government sees you as self-employed, and this STILL holds true even if you are only blogging part time.
Before you can deduct anything - you have to establish that your blog is an actual business and not just a hobby. Here are three things that the IRS will be looking for:
Is your blog profitable? The IRS considers a blog profitable if they can turn a profit at least three of 5 years. If you go three years without turning a profit, the IRS may not allow deductions. What does that mean for someone like me who is a new on the blogging scene? Well, it means I am a hobbyist, unless I can prove that I am eligible to be considered a business, but even still as a hobbyist - I have to pay taxes on income that comes in from my blog. Not sure if you're a hobbyist or a business - head here and answer these 11 questions to see where you fall.
Is your blog producing a regular and consistent revenue stream?
Are you putting a significant amount of time into your blog & maintaining proper records and receipts.
If you can say "yes," to all three of these things, congratulations! You are running a blogging business and even if you can't, no worries, you won too - you still have to pay taxes on the income you earned LOL.
But the good news is, that once you have established where your blog falls on the business spectrum and how you should file, there are a TON of tax deductions that bloggers can take advantage of and it doesn't matter if you are full OR part-time, you get to reap those benefits too.
Deductions That Bloggers Can Write Off
The best part about blogging/influencing, besides it being totally fun, is that there are so many expenses that can be written off from this unique business, from costs related to conferences and workshops to photo shoots, clothing, office supplies and props and car mileage. Here are just a few every day items that you may or may not have known were tax deductible.
Office supplies
Home office
Virtual conferences, mentorships, workshops
Photoshoots & Props
Branding
Job-related travel expenses
Books, online resources, and subscriptions
Advertising/marketing
Website fees
Software
Gas/mileage
Unpaid invoices
And here's what these look like broken down just a bit more...
Office supplies: This includes traditional office necessities, like paper, pens, notebooks, staplers, planners and printer ink cartridges. All of those supplies are deductible expenses on your return. When it comes to items that last longer than one year, like laptops or computer, digital cameras and wireless speakers, it gets kinda complicated. Those are considered assets to the business, and you then deduct the cost of the item over the life of it, the depreciation. You can also deduct a portion of your rent, utility bill, internet and phone service, any physical changes or remodels you do to the space that you use for your business, any furniture (couches, chairs, desk, lamps) and a portion of the space that you use for the office. It can be difficult to figure out how exactly to do that, so may folks deduct $5 per square foot up to a maximum of 300 square feet for the portion of your home used for your blogging business.
Writing conferences and seminars: These types of things are considered professional development and necessary to your business, so you can write off any costs connected with attending these events, including the ticket and related travel along with marketing or advertising costs if you’re also presenting or sponsoring the event.
Job-related travel expenses: This includes any expenses incurred during business trips, such as airfare, gas, rental vehicles, bus and train fares, and local transportation. Note that travel must be overnight and away from your primary residence or place of business to qualify and only 50% of meals on business trips are eligible for write offs. This means that if you are on a business trip and vacation on the back end - that if the the majority of your trip was for business, it can be written off, but as always, you will have to show proof for your dual purpose trip - and have that proof be airtight.
Books, online resources, subscriptions: just like the conferences and workshops, these these purchases are considered professional development and are totally tax deductible items. You can also write of any costs to be a member of any professional organizations connected to your blog or business.
Advertising or marketing: Examples of costs in this category are those incurred to advertise and market your blog or business website, including paid ads on search engines and marketing subscription costs, as well as branding photo shoots, and any boost of campaigns or posts on any social media sites.
Website fees: This includes fees paid for your domain name, domain hosting and general maintenance, and if you hired someone to build and design your site OR if you have someone who maintains it for you, you can also deduct those costs.
Software: Any software that’s paid and used to manage your blogging business can be written off, think Photoshop, Lightroom, all of those fancy apps you pay for to create templates, videos, to edit your images - those too.
Gas/mileage: If you travel to events, to special locations to shoot products or to film, you can deduct the cost of gas, mileage used and normal wear and tear to your car. Using an app to track mileage is the easiest way to keep track of these expenses. Here are a few I would recommend:
or a good ole 3x5 card that you switch out monthly.
Unpaid invoices: If you did work, but didn’t get paid, keep track of the unpaid invoices. You can deduct them as business loss if you already recorded it as business income for the year. Because blogging/influencer payments often work on a net 30, 45, 50, 75 and 90 (who's idea was this anyone?, it's possible you may book a job in the previous year, but receive payment in the next. If that happens to you, you can count predicted income that you haven't received in the previous year as a loss and it won't count against you the following year, when you're finally paid. Please though, check with an accountant and the tax laws in your area, because I am not an accountant and am simply sharing what I know to be true from my own personal experience.
And everyone's big question - can you write off clothes? The answer is yes. If the clothing/ outfit is necessary to accomplish your job as an online influencer/blogger and you can prove that it is highly impactful to the mission of your work, even those shirts, shoes and dresses can be written off.
To find out more of those items that can be checked off of your write off list, check out this post by Small Business Sarah 101 Tax Deductions for Bloggers, This blog was written a couple years ago, so some of this may be a bit outdated, but this is a really strong list that will get you thinking and hopefully give you an idea of the every day expenses that are tax deductible. Also, head over to this list of 19 Tax Write-Offs for Social Media Influencers. This list was awesome and helped me think about other things I hadn't considered that are deductible right now and some moving forward for future endeavors.
Was this blog helpful? Did you find a bit of clarity for wading through this tax season? If so, let me know in the comments. Have any resources that might help us navigate through this tax jungle, please do share, so many of us are all still learning and need all the info and help we can get.
With wisdom and courage, for His glory,
Tash
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