For many years, I’ve worked full-time in Web content development and management, but I’ve always run a freelance writing business on the side—an article here, some Web copy there—and of course, blogging about fashion here on Grit & Glamour, and occasionally on other sites.
Since blogging yields some taxable income for me, it is a business, albeit a tiny one that I’d love to grow. Writing for G&G and other sites makes me happy, keeps me creative, and because it’s a small business, enables me to deduct expenses related to it.
Yes, I just wrote that.
You may not be aware of this, but if you generate income from a blog, you may be able to take tax deductions for expenses related to your blog endeavors. Of course, I am not an accountant or a tax advisor, and you should consult yours for tax advice. But I am a freelance writer, and today’s topic isn’t shoes, but taxes—though I did include a couple sweet pairs, to keep your attention. 🙂
Are you blogging as a business or as a hobby?
How do you know what can be deducted, or how much? The first question you need to ask yourself is whether you are a hobby blogger or a pro blogger, because ultimately, the answer to that question determines what deductions you can legitimately take. You can download tax software that can help aid you in the tax preparation/deductions process. But making money from a blog doesn’t necessarily make you a pro blogger, so how do you determine which category of blogger you are?
In his article, 7 Things That Every Blogger Should Know About Tax, Darren Rowse explains the difference between business and hobby bloggers:
“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).
You can have fun as a blogger and make money, too. Your specific level of interest and time involved in making it a profitable venture will be reflected in your tax reporting. There’s nothing wrong with being a blog hobbyist—it makes the reporting easy. But if you’re planning to blog for a living, then act like it. Be business-like. You’ll impress those in the blogging community and make the IRS happy at the same time.”
The interesting thing about tax deductions for freelancers and bloggers is that there really are no set-in-stone guidelines. The only thing you must do is make a profit, or intend to make one. But to avoid getting yourself into hot water with the tax man, it’s important to talk to a qualified account or tax advisor.
What tax deductions can I take?
You’d be surprised how many deductions are possible, especially if you’re blogging as a business. The following list is an excerpt of 46 Tax Deductions that Bloggers Often Overlook, also by Darren Rowse:
- Monthly hosting fees
- Annual domain costs
- Design/logo Fees
- Internet access fees—this clearly includes DSL and dial-up, but don’t forget charges that you might pay away from your home or office such as wi-fi charges in Internet cafes
- Paid blogging platform charges (such as Typepad monthly charges or “add ons” through WordPress)
- Design or word processing software—this includes Photoshop, Illustrator, Word and similar programs for business use
- Keyboards, mice and other periphery
- Web cameras
- Digital cameras—and memory cards
- Blackberry, Treo, iPhone charges
- Business cards
- Web advertising – text and banner ads
- Prizes for giveaways and contests
- Transportation—this includes mileage for car transportation, train and bus fare for public transit, cab fare, airline tickets
- Dining while away on business
- Hotel charges for overnight conventions and business travel
- Professional advice (from lawyers, accountants and tax preparers)
- Office supplies—pens, folders and post-its can add up!
- Books, magazines and subscriptions
- Professional affiliation and membership dues
- Conference fees—such as for BlogHer and BlogExpo
That’s a pretty comprehensive list, but there are actually even more deductions you can take. Be sure to review these additional resources:
- 101 Tax Deductions for Bloggers and Freelancers
- Blogger Tax Deductions
- Blog Earnings and Income Tax Deductions
Tips for Taking Tax Deductions
Think you may want to take deductions related to your blog or freelance expenses? Here are some pointers to help you get started:
- Talk to a pro. I’m no accountant—but I have a very, very good one who has saved me a lot of money by advising on what I can itemize as a blog-related deduction, and what I can’t. I also prefer to pay her to prepare my taxes (I’m a writer…are you kidding me? I’m hopeless at math). It’s a worthy expense—and also 100% deductible on your next return.
- Set up an accordion file to hold tax paperwork. Since you need to retain documentation for the entire year, you may have a lot of paperwork. You need somewhere to store everything from receipts to mileage documentation.
- Save your receipts. For everything. To take deductions, you need proof of your expenses, and a way for an accountant to tally it all up. That means you need to save receipts from Target showing your fashion mag purchases as well as receipts from your blog hosting service. Save everything.
- Show proof of income. More paperwork for your accountant. Check stubs, Paypal receipts, emails—whatever you have that shows that you made money also needs to be submitted at tax time.
- Keep track of your mileage. If you’ve driven anywhere to cover an event, promote yourself, or do research for something you’re covering on your blog, you can deduct your mileage. You can actually manage this retroactively by putting your starting address and ending address in Google directions—it will give you total mileage. Print the route, and remember to double if it’s round trip.
- Print a tax deductions checklist. Several of the articles I referenced above could serve as checklists. I like to refer to a checklist periodically so I remember what paperwork I need to put aside as the year progresses. There are so many possible deductions, and seeing the list jogs my memory.
- Prepare for tax time the entire year. Don’t wait until April (U.S.-based bloggers) to start tracking down receipts. If you just paperclip them together by category (e.g., equipment, subscriptions, office supplies) as you go along, then they’re practically ready to go when it’s time to file. Nothing worse than spending entire weekends pulling your house apart and hair out trying to make that April 15 deadline.
Again, I’m not a tax advisor or accountant, so I can’t answer any questions related to tax deductions. But I do welcome your comments, and appreciate them very much!