Blogging as a business is different from blogging as a hobby. A business is considered a serious pursuit; a hobby is something that you do for fun. If the IRS believes that your blogging is a hobby and not a business, you may only deduct expenses to the amount that you have income. In other words, if your blogging income was $100 for the year, you can only deduct $100 of expenses. If you’re operating as a bona fide business, you can carry forward expenses that are in excess of your income (that’s a good thing). Generally, to be considered a business, you need to hold yourself out as a business and act with the expectation of making a profit (you don’t have to actually make a profit every year, just expect to make a profit).
Blogging is a relatively new profession, but it’s covered by the same tax laws that apply to many other occupations. The main danger from a tax perspective is that, as a self-employed blogger, your taxes won’t be automatically withheld from your earnings, as is typical with traditional employees. Additionally, you’ll owe self-employment taxes that most employees don’t pay. However, you may be able to take advantage of certain deductions to reduce your tax bill.
HOW DO DEDUCTIONS WORK?
Basically, if you spend money on your business/blog throughout the year, you can deduct part of these expenses from the money you’d otherwise owe to the government. For example, if you owed $1,000 based on your yearly income, but purchased a bunch of things for your business or blog, you could cut that amount down to $100. I should note that your expenses should not outweigh your income. So if you made $1,000 from blogging last year, you shouldn’t be writing off $2,000 of computer equipment. The IRS allows you to do this for three years, but then decides that you have a hobby rather than a business.
WHAT ARE POPULAR BLOGGER DEDUCTIONS?
- Your blog design/template
- Blog conferences and workshops
- Hotel and transportation costs if you had to travel to a blogger event
- Business cards
- Buying ads on other sites
- Blogging related e-courses (like this one)
- Supplies for DIY projects that you use in tutorials on your blog
- Your computer
- Your camera
- Web hosting fees (I use and recommend Bluehost )
- Domain name fees
- Software, such as Photoshop
- Paypal fees (yes, all those fees they take from you can be deducted!)
- Stock photo fees
- Your blog framework, if you purchased it (such as Headway or Genesis)
- Fonts
- Fees to prepare your taxes (such as hiring an accountant or using Turbo Tax)
- Photography, such as head-shots or paid photos taken for your blog
- P.O. Box fees
- Postage fees
- Blog coaching/consulting
- A giveaway prize that you paid out-of-pocket for
- Office furniture, if it’s used exclusively for blogging
- Your home office, if it’s used exclusively for blogging
There are even more things, depending on you and your blog, but just remember that if you spend any necessary money to run your blog, you might be able to write it off. I also highly recommend saving your receipts, just in case you get audited. If the IRS thinks you’re fibbing or finds errors in your return and you’re found without proof that you purchased those deductions, you’ll be faced with extra fees and penalties. So save your receipts! Lots of people have folders or boxes that they toss their receipts into, but don’t forget to print out receipts and invoices for purchases made online, too. You could even scan your paper receipts and keep them, along with your online invoices, in a folder on your computer for easy organization.
I hope these tips help you get started on your way to reach your financial goals!
Will you be filing taxes for your blog this year?
**I’m not an expert on this topic, so you should probably consult a tax professional or filing service instead of taking my word as the gospel, but I hope this was helpful.
Facebook Comments Box
