Have you filed your taxes yet? In the business of blogging, taxes are the biggest drag. For most of us at least. In fact, you many be reading this post in procrastination of actually doing your taxes. But no matter how much you try to avoid the subject, you can't escape it.
I'm in no way a tax accountant, but I've been a blogger operating as an independent contractor for over six years, plus I think I may have been an accountant in another life, so I've learned a few things about filing your taxes as a blogger. And regardless of whether you have a tax accountant file for you, file yourself, or use a service like Tax Robot and TurboTax (which I just used for the first time and highly recommend), you should always have an understanding of the tax man. These six tips are a great starting point.
I can't stress this enough. Everything must add up, and if you get audited you'll be thankful you stayed organized. A few examples of things you should keep record of:
- Emails: Especially when it comes to blogger SWAG, bartering, free trips — keep record of conversations. That way you can always retrace your steps — it'll be right in front of you.
- Receipts: Lunch meetings, drinks to entertain potential advertisers, etc, you can deducted these entertainment expenses so keep record. I have a folder designated for receipts and make sure to clear my wallet out weekly.
- Swag: You may be receiving free stuff to review, keep invoices of these products when they arrive, and make note on the invoice as to whether or not you requested item, it was expected, you reviewed it, etc.
Know Your Forms
There are a few key forms you'll need to have a rough understanding of, and the 1099 is important.
- The 1099-misc: Anyone working as an independent contractor, who earns over $600 in a given year will receive a 1099. Some clients will send you your 1099 via snail mail, some electronically. They have until the end of January to issue your forms. Example, affiliate networks like Linkshare and Google will send you a 1099.
Q: I worked for someone and got paid over $600, but they never sent me a 1099. Do I need to claim this? A: YES. You are legally obligated to claim all of your taxable income, even if it is under $600. Other common forms: Schedule C (Form 1040), W9, 1099K.
SWAG vs. Gifts
This is a tricky one, and a definite grey area. While there are some exceptions and all situations are different, in general, the IRS considers SWAG taxable income (which you are supposed to claim), not a gift. Some high-value ‘freebies' can actually warrant a 1099! So that pair of $500 shoes you received in the mail — there may be more than a giant heel attached. And then there is bartering, similar, but different …
Bartering is Income
“Bartering is an exchange of property or services. You must include in your income, at the time received, the fair market value of property or services you receive in bartering.” Says the IRS. similar to SWAG, if you put a banner up in exchange for a new handbag, that's income. Not just a perk of being a blogger. When does a ‘freebie' become a barter? Depends. But primarily it's when there is a will full interaction between the blogger and person providing the item, or some sort of communication. Be it for review, a giveaway, etc. Once you begin a conscious business interaction, your new pair of shoes becomes taxable income.
Itemize Your Deductions
Regardless of whether you're operating your blog mainly as a hobby generating some side money, or a profitable business you should still itemize your deductions. Itemizing your deductions means claiming piece by piece your expenses. Common blogging expenses include:
- Blog Design
- Hosting Fees
- Magazine and online Subscriptions
- Logo Design
- SLR Camera (May be a depreciable asset)
Keep Your Red Flags Lowered
Red Flags initiate audits. If your blogging expenses heavily outweight your blogging income, think twice before you file. Same thing goes for huge expenses you aren't sure about claiming. Always do you research before claiming them as to not raise any red flags.
Also, IRS.gov will be your best resource so bookmark it today. Now go do your taxes!!
I really, REALLY appreciate the attention paid in this post to battering, swag, and gifts, and how they should be claimed or if they need to be!
GREAT article. I was wondering about a few of these things, but wasn’t sure where to turn! Thanks!!
What about products you buy in order to review on your blog? Does anyone know if that is deductible?
Great question. Yes, if you purchase product specifically to review you should be able to deduct this expense. I’d talk to a tax professional to determine which category of expense this would fall under.
THE GOOOOD ARTICLE!!
Thank you a lot!
Really great article!
I don’t know that the product you receive for a review should count as barter, because it’s something that is necessary for you to do the review (you can’t review the product without having the product). That’s different than getting a sample of the product for putting a banner on the side of the site (since you can do that without having tried it).
To put it in another context, if I was a wine taster and people consulted with me to see how the wine tasted, I wouldn’t have to report the wine they gave me on the taxes so long as it I was given the wine just to be able to taste it and give my oppinion. If I took a survey comparing the taste of different chips (which I’ve done), I dont’ have to report the cost of the chips…because they gave them to me SO THAT I WOULD BE ABLE to answer questions about them, not IN EXCHANGE FOR answering questions. Now if they also gave me a whole box of them to take home, that probably would have to be reported…but if they just gave them to me in order to “be able to” answer the question, than what is the difference between that and being given something “in order to” be able to review it?
I totally agree Gale! This is a very, very grey area just like SWAG, the question is what exactly qualifies as a barter. To the IRS, internet businesses and blogs are relatively new, and the tax code is still evolving so the definition of barter can be argued. In the eyes of the IRS, if a designer or business gives you something and you review it on your blog, the main purpose of the designer giving you this product is for promotion. So to them you agreed to accept the item in exchange for a post. Albeit a ‘possible’ post, as most reviews are never guaranteed. And chances are the designer will be claiming the the given item as an expense on their end. And this is where keeping records comes in handy. If someone gave you a product that you never asked for, and you never had interaction with the business, than technically you never entered into any agreement. But the second you make any contact, you’re conducting business.
I’d talk to a tax professional to get their opinion. I found this quote helpful as well, although bartering is income, you can expense some of the cost of producing the review. “If you are in a business or trade, you may be able to deduct certain costs you incurred to perform the work that was bartered.”
These links are useful as well:
This is a great post, because I was completely oblivious to the whole concept before!
I still don’t know where you include your income and expenses information when doing your taxes. Do you have to file separately as a business?
The great part is you can file together. You just have to complete a separate form called a 1040Schedule C, and include this with your 1040. There is a line on your main 1040 where you enter your business income, or loss.
This is great information! Maybe I missed the post on it, but what does the acronym SWAG stand for?
Something, or stuff we all get.
This is great! I would love to see a post about knowing when you should file. At what point? At what income level? etc.
According to IRS.gov: “You have to file an income tax return if your net earnings from self-employment were $400 or more. If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement listed in the Form 1040 instructions.”
what business code do bloggers usually file under??
Great article, but I’m living in the UK and not sure if these tips fully apply here? Does anybody know a website which has current UK information about Tax Tips for Blogging?
Great post, Christina. You provide some great analysis on doing taxes as a blogger, especially your point about keeping you and your records organized. We recently wrote a piece ourselves on deducting business gifts if anyone is looking for further insight on the subject. We think it would supplement your main points very well. Come check it out and let us know what you think. https://blog.usetallie.com/deducting-business-gift-expenses/
i have received free items, most of which I assumed were under $100. how do I know if a 1099 was issued or not. I know I am supposed to get one if the value is $600 but what if its under that limit. i did not give any of these companies my social security number but how can I make sure that there is no 1099 for any of these free products