Before we get started, I want to clarify that I am no expert on this topic, so you should definitely consult a tax professional when filing your taxes. Take this with a light grain of salt and I hope it’s helpful.
One of the very first questions I had, when I started blogging, was how do you file taxes as a blogger? Do you consider your blog a business? If you’re making money on your blog, the IRS or your tax agency are going what their share of the money. Legally, your income from your blog is treated as business income but will be added to your job income for tax purposes (Unless your blog is an actual corporation).
You see, the difference between your blog income and an actual job is that your affiliate income, ad income, are paid in full! Nothing is withheld for tax purposes, so it’s up to you to pay the taxes once tax season is here. The good news is, your blog income is treated like a business income, so you are allowed to deduct business expenses that are associated with running your blog.
Personally, I use Turbo Tax (Business Version) to file my taxes. It allows me to input tax deductions and it’s very user-friendly! It walks you through step-by-step, but if you have an accountant like most big bloggers, by all means, use them instead.
More About Tax Deduction
If you spend money on your blog/business throughout the year, you can deduct part of those expenses from the money you would otherwise owe to the government.
For example, I held a lunch for people who want to sit down, eat, and talk about how to start a blog. The bill turned out to be $585.00, so I kept the receipt (will talk more about this later).
I don’t know exactly how much my taxes get reduced, but let’s just say that I owed $1,000.00 in taxes. With this deduction, I’ll owe much less than $1,000.00. Also, make sure your deductions don’t exceed your income otherwise the IRS or you tax agency will view your blog as a hobby rather than a business.
Save Your Receipts Just In Case!
Do you have to save your receipts for tax deductions? No, but you should! The IRS or your tax agency will check your tax return and if they find something out of the ordinary. Your receipts can be proof to prevent them from getting you audited. You don’t want to know how much extra fees and penalties you’ll receive.
Most people have a dedicated folder or container for all of their receipts. This can get a bit messy and very unorganized, so you as a blogger (uses modern technology) should do things differently.
What I like to do is have everything saved on my Dropbox cloud server. I have backups of everything on a few external sources, so if something goes wrong. I’ll still have my documents such as receipts. For paper receipts, I use my scanner to make a copy and have it stored online along with my online invoices.
You’ll be saving yourself a lot of time and headache during tax season because as a blogger, your income comes from multiple sources at different times. You’re not getting paid 2 or 4 times a month. You’re getting paid whenever you meet their threshold.
List Of Common Tax Deductions For Bloggers
- Your Blog Design (Premium Themes) – Whenever you purchase a new theme for your blog, save the receipt!
- Your Blog Tools (Premium Plugins) – I spend lots of money on plugins to operate my blog, so it counts!
- Travel Expenses – If you need to travel for blogger/business events! This includes the hotel, transportation, etc.
- Blog Events – This includes lunch, dinner, workshops, etc.
- Driving Mileage – This includes driving to a blogger event in your own vehicle!
- Buying Ad Space – If you’re paying for ad space on someone’s website like mine. It’s considered business expense(:
- Technology – Laptops, computers, cameras, etc.
- Website Hosting Services – (I use my website on Wealthy Affiliate).
- Website Domain Fees – This is negligible, but why not?
- Software Fees – Do you use programs like Photoshop to create products for your blog or for your clients?
- Email Marketing Services – I pay monthly for Aweber to maintain and grow my email list.
- Business Cards – I don’t use business cards, I usually give out my blog URL haha!
- Blog Giveaway Prizes – Do you give out prizes to your readers?
- Your Room – If you operate your blog from home, you can deduct expenses like air conditioning, heater, etc.
- Your Furniture – Computer chairs, tables, that are exclusively used for blogging.
- Tax Preparation Fees – Your account or turbo preparation software.
- Blog Coaching and Consulting Fees – Did you pay someone to coach you or offered you consulting services?
The above is just a list of things that I’ve used, but it can vary depending on you and your blog. Even if you’re not making a lot of money now, it’s better to get in the habit of being organized and ready for tax season. You never know, maybe by the end of this year, you’ll be making $40,000 per month. Once that time comes, you’ll thank me for nagging you about saving your receipts!
What About Not Reporting The Blog Income?
Legally, you have to report your blog income to the IRS or tax agency. However, I’ve heard of people not reporting it. Here’s a word of advice for you: Avoid income tax, but don’t evade it!
Use tax deductions and other means like 401K, IRA, donations, etc. Also, most affiliate programs or advertising agencies will report your earnings to your tax agency, so really there’s no way around it. I’d recommend that you save your receipts and report honestly. The money you save in taxes is not worth the potential risk!
Pay your taxes like everyone else! Just prepare for it and treat your blog as a real business. Save all your business expenses, so you can use it for tax deduction at the end of the year.
Will you be filing taxes for your blog this year? Have you already started preparing for it? If you have other tips to share, please leave them in the comment section below!