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If you’re a blogger or an influencer, then you may already know our line of work is much more different from the average 9-5 job. However, your blog is still a business, which means that you have to pay taxes just like all business owners do.
If you’ve never ventured into self-employment before, tax season might be a little scary for you, but fear not: learning more about taxes as a blogger will not only prevent you from an audit with the IRS but can also benefit you in more ways than one.
Before I continue, I want to disclose that I am not a licensed CPA. This blog post was written from my own experience with filing my taxes as a blogger, not from a professional perspective. If you need legal advice regarding your taxes, please consult with a licensed CPA or trusted tax preparer.
Also note that my advice comes from my residency in the United States, so income and employment taxes may vary depending on your country or even state.
If you’re new to the world of blogging, here’s a freebie for you: download your free copy of THE BLOGGER BLUEPRINT to learn how to design and create a blog from scratch. You’ll also learn how to publish amazing blog posts that generate tons of traffic and build your audience across several social media platforms!
You Have to File Taxes Regardless of How Much Income You Make
Any and all income from blogging should be reported to the IRS. This is the law. If you think you can stay under the radar, think twice: the IRS typically reviews the past 3-6 years during an audit. So you may not get caught for that $2,000 you made this year, but if you have the intention to grow your business (which I assume is everybody’s goal), then the IRS can review the past few years and become suspicious if they see that you’ve previously earned income from various places but never reported it.
It’s a common misconception that blogging income less than $600/year does not need to be reported, but it still does! The only difference is that the tax form your tax preparer will use will be different if you make less than $600. Note that when working with a CPA or tax preparer they will recommend the most appropriate form according to your income.
Whether you fail to report $1,000 or $1,000,000 in income, it’s still tax evasion. They may not toss you in jail for a small amount, but you may definitely get slapped on the hand whether it’s now or later. Keep a clean track record from the beginning and you won’t face problems later along the line.
Side note: If you are looking to legitimize your blog/influencer business, definitely look into getting a business license for your blog! By doing this, you are proving to the IRS that you are conducting business professionally and legally. Check out my post “5 Tips on Getting a Business License For Your Blog” to learn more about the process.
Put Away 15% of Your Income When You Are Paid
A good guesstimate for taxes you’ll be paying for the year is roughly around 15% of your income. So if you make $40,000 for the year, it’s a good measure to have about $6,000 saved up by the time tax season rolls around so that you won’t be scrambling for the money when it’s time to pay the IRS.
You may or may not wind up paying the entire 15% depending on your business expenses, which we will cover later on in this post.
More Blogging Tips & Tricks:
- 2018 Income Report: How I Made $37,953.17 During My 2nd Year Blogging
- 8 Huge Mistakes I Made During My First Year of Blogging
- 5 Tips on Getting a Business License For Your Blog
- What is the CCPA and How Will It Affect Your Online Income?
- How Can Blogging Be a Real Business?
Save Money During Your Tax Filing By Staying Organized
Just like with any business, you can simply bring all your paperwork regarding income and expenses to your trusted CPA, but depending on how much paperwork you have, they will more often than not charge you more for the time and effort they will have to spend on sifting through and organizing all of it. Do yourself a favor and keep everything organized.
By organizing all of my receipts and income into spreadsheets, I was able to file my taxes with my CPA for $300 instead of $700. So it pays to make that extra effort!
Track Your Income Every Month
To save yourself the hassle of having to go through your emails and bank accounts during tax season, start the habit of tracking your income as you receive it over time. You can do this easily by creating a spreadsheet on Microsoft Excel or Google Spreadsheets and logging all your income by date.
At the end of the year, brands should send you tax forms regarding your income earned from them which can be accessed through your affiliate portal. Note that this is what they should do, but not all brands will. Influencer marketing is still a new concept to many brands, so they may not think of this as necessary, although it is. Regardless, counting on brands to send you paperwork can be unreliable, so whether you receive it or not you should report the income anyway. Again, track your own income!
Free Products and Services Count as Taxable Income
Money, services, and property all count as income, so if you agreed to advertise a brand on your blog and/or social media channels in exchange for free products or services, those need to be reported as income. Yes, that means the free detox tea you posted about on Instagram or that free hotel stay you received for your blog review is considered taxable income!
PR gifts, or gifts that were given to you by a brand, are not considered taxable income. However, in order for the item to be considered a true gift, the brand must inform you that they have zero expectations for advertising; otherwise, if they imply they require a social media or blog post from you, this is considered taxable income and should be reported.
What You Can Write-Off as a Blogger
Now that we’ve got the scary and ominous part out of the way, here comes the fun part: tax write-offs, also known as business expenses. It definitely helps to learn the different expense categories so you know what is eligible to claim as a business expense.
Why should you bother with claiming business expenses? Well, if you are self-employed, that means that nobody is taking out taxes from your paychecks every month as a normal hourly or salary-based job does. That means that you have to pay self-employment taxes as well as income taxes, and trust me: this can add up.
By claiming business deductions, you can reduce your taxes owed to the IRS. So do yourself a favor and start the habit of being organized and track all of your blogging expenses. Just like with tracking your income, you can create a spreadsheet of all your business expenses and organize it by expense category.
If you spend a good amount of time on your phone, your phone bill may be eligible for a write-off. However, this doesn’t mean you can write-off your entire bill: you can deduct a percentage of your bill according to how often its used for business purposes vs. personal purposes. For example, if you are using your phone 30% of the time for business purposes, you can write off 30% of your monthly phone bill. Consult with your tax preparer.
Car insurance and gas are also two more things that can be claimed as a business expense if you use your car a lot (I do want to stress, for business use and not personal use). Just like with your phone bill, you won’t be able to claim 100% of these expenses unless you have a car solely for business use.
Bonus tip: Economy vehicles like Hondas and Toyotas can potentially be considered business expenses, as long as it is justifiable for your business. Luxury cars like BMWs or Mercedes are not eligible for this. But again, consult with your tax preparer!
Business License Fees
If you’ve licensed your business, the processing fees involved are considered a business expense! Any other licensing fees that are supplemental to your blog/influencer business may be allowed too. For example: if you are a licensed esthetician who blogs about skincare or an attorney who blogs about legal services, that you may be able to write off any fees required to keep your licenses up-to-date.
Any amount that you pay to file your taxes for your business can be written off! Whether you use Turbo Tax or go to a CPA or tax preparer, those fees can be deducted as a business expense.
Office Supplies and Equipment
If you use your printer for business and need things like printer paper or ink, make sure to add these to your expenses. Hardware like computers, cameras, external hard drives and other equipment that’s essential for content creation can also be written off.
Marketing Expenses & Software Subscriptions
Paying for Instagram or Facebook ads? Use a scheduler for Pinterest or feed planners like UNUM for Instagram? You can write these off. Don’t forget other important monthly services like web hosting and domain name, if you pay for them.
Yup, education counts too! If you’ve enrolled in my course The Blogger Bible or purchased any other courses, books, other educational material or even consulting services for the purpose of learning how to better your business, then save those receipts because those are eligible.
If you work with an affiliate program that cashes out your income through wire transfer and have to pay a wire transfer fee, you can write that wire transfer fee off as it was necessary to collect your income. If you receive payment from third parties that charge transaction fees like Paypal, you can write that off too.
Meals and Entertainment
If you have to attend a meeting to discuss business with a potential partner or take your photographer to lunch for a break between pictures, you may be able to write off your restaurant fees. The golden rule with this category is that as long as the purpose of the meal was for business and not personal, then you are safe.
Tip: On top of logging my meal and entertainment expenses on a spreadsheet, I also make sure to note the purpose of the expense, ie.: “Meeting with a business partner to discuss sponsorship opportunity.” It also helps to keep all your receipts and write down the event on the back of the receipt for your own personal reference.
Photoshoot Props and Equipment
If you’ve purchased flowers, lighting equipment or other items for the purpose of staging photos for your blog, these are eligible for business expenses.
The Golden Rule: Be Honest
Keep in mind that while there are many things that can be considered a business expense, the IRS may be suspicious of you if they see that you’ve made a small amount of income in comparison to the business expenses that you claim. If you made a mere $800 in the entire year but claimed over $5,000 in business expenses, you’re putting yourself in the hot seat of facing civil (and sometimes criminal) penalties.
Before filing your taxes, review all of your paperwork and determine if some expenses were truly business or personal. When in doubt, bring those items to your tax preparer and ask for their insight.
While some CPAs may not understand the business of influencer-based marketing, it’s important to remember that your blog is an advertising and marketing business and should be treated just as such. As long as you can justify that an item was used for business purposes with the intention to make money from it, then it can be considered a business expense.
If you want to learn more about the business side of your blog, be sure to check out my course, The Blogger Bible. This course will teach you how to run your blogging business both efficiently and legally to maximize your income potential.
Using the strategies in The Blogger Bible, I was also able to grow my Instagram audience to over 10,000 followers in less than 4 months and expand my Pinterest reach to over 900,000 people in 4 months as well. Click here to enroll.
Have you filed your taxes for 2017 yet? Let me know in the comments and don’t forget to subscribe to my newsletter below to get more blogging tips emailed to you.
More Blogging Tips & Tricks:
- What is the CCPA and How Will It Affect Your Online Income?
- Blogger Tax Deductions and Tips That Can Prevent a Huge Tax Bill (And An Audit)
- How to Start a Fashion Blog: The Ultimate Guide
- 2019 Income Report: Tough Lessons I Learned During My 3rd Year of Being Self-Employed
- How I Got 3 Million Monthly Viewers on Pinterest