As the due date approaches for filing your tax return, the first part of the entire tax process for bloggers is to answer the question: How much money did my blog make?
Your blogging business may have several types of income. A good start for your blogging business, especially if this is the first time you're starting to make money, is to ensure you have a handle on all those streams of income.
Some of your income can appear on one of several 1099 tax forms. Other earnings may not be.
We'll discuss different way companies report your income. Reporting happens both by yourself and by those who have paid you (or your business). We'll look at the several types of 1099 forms that are out there. Then we'll talk about unreported income and some common questions about income for bloggers.
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Some important things about this article
First and foremost, do not take any of the following information as legal or tax advice. I do not intend this to advise you on your individual situation and taxes. The purpose of this article is purely educational. It's to provide information about the various ways income is reported for your business activities as a self-employed individual.
The best thing you can do for your situation is to seek your own tax professional (and legal expertise when needed). They can advise you on the best course of action for you and your business.
This article involves income tracking, reporting, and how it relates to Federal taxes in the United States of America. Other countries may have similar concepts, but the details can vary widely. You should seek information related to your own country. There also isn't enough space on here to delve into all the state and local governments and how they do things.
Finally, most of this is focuses on how business taxes work for bloggers who are sole proprietors or single-member LLCs. Things work differently if you've incorporated or have an LLC taxed as a corporation.
The importance of tracking your own earnings
Filing taxes as a blogger is different than doing so as an employee. You are now responsible for tracking and reporting your income as a small business owner. It doesn't come all tied up as it does for an employee with IRS form W-2.
Some or all income for small business owners may be reported on some version of form 1099. However, small businesses often have different types of income throughout the calendar year.
In the end, it's up to us as small business owners to know what we've made, both last year and this year. It's a good idea to keep track of your gross income (what comes in) and business expenses (what goes out).
Find whatever accounting system works for you. It might be just writing things down in a notebook or keeping track on a spreadsheet. There are a lot of excellent record-keeping software systems, including some with no monthly cost associated.
There are a few reasons this is important. Maybe the most important reason is that it's not uncommon to have 1099 forms show the wrong information for the payment amount sent to you. Not catching those errors can often lead to a higher tax bill than if they had it correct. Knowing what you made before getting the yearly reports allows you to react quickly to inaccurate information and have it corrected within the tax season.
1099-NEC may be the most common form for bloggers
When a company pays more than $600 in non-employee compensation in a calendar year, the Internal Revenue Service requires them to report that income. They do so by filling out IRS form 1099-NEC (the NEC stands for non-employee compensation). Copy A of that form is submitted to the IRS, and copy B is sent to the independent contractor (you).
Before the 2020 tax year, non-employee compensation was reported on IRS form 1099-Misc. That process created confusion because businesses had a different filing deadline for non-employee than other forms of payment. As a result, the IRS switched to using form 1099-NEC.
Generally, the money you receive as an independent contractor is reported on 1099-NEC. This will usually be money you report as business income on Schedule C and is subject to self-employment tax.
1099-NEC reports many types of income that a blogger can earn. Examples include affiliate commissions, advertising revenue, sponsorship, and guest post payments.
There is one major exception. You should not receive a 1099 from a company if they paid you via credit card, Paypal, Stripe, Square, or some other payment processing company. This is because payment processors report payments through form 1099-K. Your income is double-reported if the paying company also submits a 1099 form.
Form 1099-NEC Explained
For most people, there's usually just one number on form 1099-NEC. Money paid to you shows up on line 1: Nonemployee compensation. Most 1099-NEC forms will have only that line filled out.
Lines 4, 5, and 6 report money withheld for taxes. Withholding for 1099 work is pretty rare, which is why many bloggers need to pay quarterly tax payments.
The rest of the information is for identification purposes. The Recipient's TIN (Tax ID Number) will reflect whatever information you provided on a W-9, with either a Social Security Number or Employer ID Number (EIN). If you've created a business entity with an EIN, you want to make sure the W-9 information the payer has is current.
1099-MISC is still around
Starting with the 2020 tax year, the 1099-MISC is used less frequently for blog or business-related income. Most types of income reported on form 1099-MISC are personal income rather than business income. Those would be reported as “other income” on your tax form, and not on your Schedule C.
The IRS website lists a number of income types for IRS form 1099-misc including:
- Prises and awards
- Medical and health care payments
- Crop insurance proceeds
- Attorney payments
- Fishing boat proceeds
For content creators, the most common income reported on form 1099-MISC is royalty income. Bankrate.com defines royalty income as income received from allowing someone to use your property.
Royalties are compensation for the use of your property. For example, if a publisher sells your book and gives you money for the rights to do so, that is royalty income. The publisher is the one performing the business activity. However, if you self-publish an e-book and sell it on your website, that is not royalty income. You are the one performing the business activities.
YouTube is perhaps the best-known form of royalty income for content creators.
Royalty income is often reported as other personal income on your taxes instead of business income. You should verify with your tax professional where you should report1099-Misc earnings on your personal tax return.
Companies that send you a 1099-NEC must submit or have them in the mail by February 28th if filing on paper or March 31st if filed electronically (or the first business day following a weekend or holiday).
Form 1099-MISC is similar to form 1099-NEC in many ways. The main difference is there are thirteen boxes where compensation can be listed, compared to one on the 1099-NEC.
Big changes to form 1099-K
We mentioned earlier that you should not receive a 1099-NEC if the merchant or payor paid you by credit card, Paypal, or some other payment processors.
This is because payment processors report payments to you using a 1099-K.
Say an affiliate pays you using Paypal. They send you a 1099-NEC. Paypal sends a 1099-K. Now, Uncle Sam has two reports of the same income.
Companies that pay you by cash check, merchandise or direct deposit to your financial institution should report using a 1099-NEC. They should not send a 1099 form if they use a credit card or payment processor to submit funds, as the payment processor is now responsible for reporting the payments.
You'll typically receive a 1099-K if you sell digital or physical products. The purpose of a 1099-K is to prevent a merchant from selling products under the table without record of business revenue.
Previously, payment processors were only required to submit a 1099-K once you've received more than $20,000 and had more than 200 transactions. That changes with the 2022 tax year. Congress changed the 1099-K reporting requirements, reducing the reporting threshold to $600.
This may catch a lot of content creators off guard if they previously received money through Patreon, Paypal, Gumroad, Stripe, Square, and other payment handlers. In previous years they may not have earned enough to receive a 1099-k form, and they may have avoided reporting that income.
Other 1099 forms
There are several other 1099 forms you could receive. Most of them relate to personal income not reported on your Schedule C.
NOLO has a good list of the different types of 1099 forms out there. I'm sure that list is not up to date, as it does not include 1099-NEC.
Some of the most common 1099 forms you might receive include:
- 1099-DIV: dividends and distributions from investments
- 1099-G: government payouts such as unemployment benefits
- 1099-INT: Interest income
- 1099-R: Retirement distributions (pensions, Social Security benefits, IRAs, etc.)
Income from these other 1099 forms is rarely related to your business. The good news is, you won't have to pay FICA or Self Employment taxes on that income.
One possible exception is 1099-INT. If the bank account (or other account) that earned interest is in the name of your business, that is considered business income.
Bloggers who've incorporated
Things may be different if you've incorporated or formed an LLC and elected to be taxed as a corporation. Then, your business files a tax return reporting revenue and expenses.
An S Corporation is a pass-through tax entity where the owner pays tax on all business profits. A C Corporation pays its own corporate income tax. A shareholder pays taxes on dividends they draw from those profits. This is known as double taxation, as profits are taxed both at the corporate and the personal levels.
Owners (or shareholders) pay income tax on corporate profits or dividends as “other income” on their tax returns. They do not pay self-employment tax. This is because an active owner is on the company payroll and pays Social Security and Medicare taxes via their paycheck withholding.
Companies that pay you do not file 1099 forms to report the payment to corporations (or LLCs taxed as corporations). Owners of S Corps receive a K-1 form that reports their taxable profit, and C Corp shareholders receive a 1099-DIV to report taxable dividends.
I'll assume that if you're at a point where you've incorporated or created an LLC taxed as a corporation, you have professional tax help. I definitely recommend you get guidance from your tax professional regarding your business income. Corporate income goes well beyond the typical Schedule C filing scope that this article focuses on.
Unreported blog income
Many of us as bloggers may have several sources of income. Many of those may be small amounts. Revenue from some affiliate programs may only trickle in. I'm sure I'm not the only Amazon affiliate not crossing the $600 income threshold.
This is one significant difference between being a business owner and being an employee. It's possible to have income that isn't reported on a 1099 or any other form.
Look at it this way: You're not responsible for sending in a report of how much money you spent at your favorite restaurant. It's their job to stay on top of their own income and accounting.
The same thing is true for you as a blogger and small business owner. The merchants and vendors who pay you are your customers. Ultimately it's your job to stay up on your income.
This sounds like we're back where we started with this article, doesn't it??
Even if income isn't reported, it's your responsibility to track and report it as a business owner.
I personally prefer it this way. Because I've kept track of my earnings, I don't have to wait for all the income reports and 1099s to know what I made. I already have the gross income for my business at my disposal to enter on Schedule C.
I believe that the more you think of yourself as a business and the less you think of your blog income as personal income, the easier it is to keep on top of your business income. Once you have that down, you can move on to other parts of your tax return.
- Do I need to fill out a 1099 form as a blogger?
- Is a 1099 like a W2?
- Where do I report my blog's 1099 and other income?
- Do I send a copy of my 1099 form in with my tax return?
- What if my 1099 is incorrect?
- Is it possible for income to show up on two different 1099s?
- Can I get a 1099 if I didn't receive actual money?
Do I need to file a 1099 form as a blogger?
You receive a 1099 for your blog income. The individual or business that paid you files the 1099 and sends a copy to you.
You would only file a 1099 form if you paid $600 or more to an independent contractor (such as a virtual assistant). In that case, you report that compensation to both the IRS and the contractor. You should seek guidance from your accountant or tax preparer for your particular situation.+
Is a 1099 like a W2?
A 1099 form is actually very different than a W-2 form. You immediately add income on your W2 to other income on your 1040 tax return. A 1099 form reports your business's income, not your personal income. You add that to your Schedule C, then deduct expenses to determine your business profit. It's that profit that you add to your tax return. Therefore, I believe your Schedule C is the self-employed person's actual version of a W2.
Where do I report my blog's income?
Blog income for a sole proprietor or single-member LLC is added to the income section of Schedule C. If your blog is just a hobby, include blog income as “other income” on your tax return. A blogger taxed as a corporation reports their blog's income on their corporate tax return.
What if my 1099 is incorrect?
The IRS expects the income you report for your business to meet or exceed what's reported on 1099 forms. That creates a problem if a payor over-reported your earnings. This is why record-keeping is critical, so you can catch the discrepancy. You should contact the issuer immediately and request that they correct the 1099.
What do I do if I receive two different 1099's for the same income?
It is possible to have your income double-reported. This usually happens when a customer pays via a credit card or payment processor (Paypal, Stripe, etc.) and submits a 1099 form themselves. Credit card and payment processors report total payments on a 1099-K.
The payor should not issue a 1099 form if they paid with a credit card or payment processing company. Otherwise, the IRS thinks you made double the amount actually received. In this instance, you should contact the payor, explain that you receive a 1099 from the payment company, and request that they issue a corrected 1099 with $0 income.
In years past, this kind of mistake was often unnoticed. That's because payment processors didn't report total payments under $20,000. However, starting with the 2022 tax year, the reporting threshold is now $600.
Can I get a 1099 if I didn't get actual money?
Yes. Products given to you by merchants or sponsors can be considered income. Many companies will provide merchandise in exchange for a review or as compensation to influencers. They may submit a 1099 form reflecting the product's value. This is legitimate, as you receive something of value as compensation.