As the old adage goes, “You've gotta spend money to make money.” While starting a blog can be free, the costs to maintain, improve and promote it can add up, especially if you're trying to create a business. What kind of expenses do you have for your blog? Hosting fees? Graphic design work? A DSLR camera? DIY supplies?
A blogger friend of mine recently got in touch wondering about what kind of expenses you can write off (or deduct) on your annual tax return as a blogger. Tax season in the U.S. is months away, but now is the time to start keeping track of your expenses and your income so that you're not scrambling come April.
First thing's first: if you're a blogger in the United States making any money from your blog, you have to claim that income on your tax return, and that requires classifying your blog as a business. That being said, there are also deductions you can make to help cover some of the expenses you may have as well, and we recommend consulting a tax professional to find out what deductions you may qualify for.
So what kind of business is your blog? Usually, it's either a sole proprietorship or LLC (limited liability corporation).
- Sole Proprietorship: This is a type of business entity that is owned and run by one individual (you), where there is no legal distinction between the owner and the business. Anyone can start a sole proprietorship and claim earnings as part of their tax return, and in this case, all the income and expenses of the business take place in the owner's personal financial accounts.
- LLC: A limited liability corporation provides legal and financial protection to it's owner, because it operates as it's own entity. An LLC is more difficult to set up than a sole proprietorship, and is not free, but if you want to look into it, The Wall Street Journal is a reliable source of information on this subject. In their “How To Guides” section, there is an article titled, “How To Form an LLC.”
Because we are neither tax professionals nor lawyers, we at IFB cannot tell you exactly what deductions you are eligible for, and they will absolutely vary from blogger to blogger. Through research, however, we have been able to find out some of the most common deductions for blog businesses. Here is just a sampling:
- Internet access, hosting, and domain name fees
- Digital camera
- Business cards
- Web design
- Conference fees
- Blog-related travel fees
- Office or home office supply expenses
In case of auditing, you will need to have receipts or records for all your purchases and expenses, as well as your blog earnings. It's also important to note that there are different kinds of expenses for small businesses, not all of which are deductible. The U.S. Small Business Administration website gives a clear, easy-to-understand explanation of each. (A quick Google search lead me to one of their landing pages that focuses on expenses and tax deductions.)
Again, we strongly recommend consulting with an accountant, a tax professional or at least a trusted friend to help you figure out what kind of business your blog is, and what kind of expenses and deductions apply to you.
Sources & Further Reading:
- Tax Deductions For Bloggers
- When To Turn Your Blog into a Formal Business
- NOLO: Sole Propriatorships vs. LLCs
- Classifying Your Blog Business
- The U.S. Small Business Administration
*Disclaimer: Information in this guide is based on general principles of law in the United States and is intended for information purposes only. It is not offered for the purpose of providing individualized legal advice. Use of this guide does not create an attorney-client or any other relationship between the user and IFB.
If any of our bloggers in the community have experience with filing blog-related taxes, please share your advice in the comments!