What can you write off on your taxes as a blogger? Can you even write off expenses if you don't itemize your deductions?
One of the most expensive mistakes you can make with your content business is ignoring your expenses. Many bloggers mistakenly believe they can't write off the cost of blogging if they take the standard tax deduction. That mistake can cost you a lot in unnecessary additional taxes.
After several years of business management and self-employment, I started EntreCourier to help self-employed individuals understand the business of being independent contractors. I've researched and compiled information to demystify taxes for gig economy contractors. Many of those same principles apply to taxes for bloggers.
This is part of a series on taxes for bloggers. I didn't want to only provide one catch-all article. Such an article too often tries to cover everything but often needs more detail. I felt it would be more helpful to provide more detail on different topics. I'll link to other articles, and you can see an entire list of the series at the end of this post.
My focus here is on taxes for individual bloggers, especially those who are new to making money with their content.
I will have an article that talks about common write-offs. However, if you're like me, you always have a way of finding that one thing that no one has on their lists. I felt it was more important to start with how write-offs work. That way, you can have an idea of what you can claim even if you have costs no one else is talking about.
About this article
This article is not tax advice and should not be taken as such. Instead, my purpose is to explain the ideas behind how taxes work, so you can prepare yourself for tax day. I'm focusing on U.S. income-related taxes. I do not detail state and local taxes, sales taxes, or taxes in other countries.
This is about sole proprietor or single-member LLC taxes. You should consult your accountant or tax professional if you've incorporated your business or have a complex tax structure. Those things could be different in many ways.
You should seek out a tax professional who understands local tax regulations for self-employed individuals for advice about your tax situation. Try to find someone familiar with blogging and online businesses.
In this article, we'll talk about what business expenses are for bloggers, how they differ from tax deductions, and how you can identify whether a cost may be deductible. We'll discuss:
How business expenses are different from (and similar to) tax deductions
Many bloggers rob themselves of significant tax write-offs because they think business expenses are the same as personal tax deductions.
It's important to understand that expenses and deductions are two different things and are treated differently from a tax perspective.
Personal tax deductions are part of your income tax filing. You can choose between itemizing tax deductions or claiming the standard tax deduction ($12,950 for single filers and $25,900 for joint returns). Those deductions reduce your taxable personal income.
However, your blogging income is treated like a business (if you're not claiming your blog as a hobby). The money you receive from advertising, affiliates, sponsorships, etc., is not your personal income. Instead, it's your business's revenue.
Here's where the difference comes into play. Business taxes are based on profit, or what's left over after expenses. You only add your profit to other income on your IRS form 1040.
All of this happens during the income portion of the tax return, which is very different from taking personal tax deductions. This is important to understand for two reasons:
- Your business expenses are claimed on IRS Schedule C, which means you can claim those expenses regardless of whether you itemize or take the standard deduction.
- Even if you tried to write off your blogging costs as deductions, most of them can't be claimed under the latest tax laws.
To sum up, it doesn't matter if you claim the standard deduction. You CAN write off your costs related to your blogging and content business because it happens in a different part of your tax return.
Why it's important to know and track expenses as a blogger
Uncle Sam lets you write off business expenses.
However, you need to back it up if he ever asks you about them. It's like he's saying, “receipts, or it never happened.”
Every dollar of expenses tracked reduces your taxable income, and thus reduces your tax bill. A good rule of thumb is each dollar saved and tracked knocks 25 cents (or more if you're in a higher income tax bracket) off your tax liability.
However, the IRS requires a record and documentation.
Your best practice is to keep records and track every expense as it happens.
Your other best practice is to have a separate bank account for your business. Deposit all earnings into and spend all expenses from this account. That makes record-keeping easier.
HOW you choose to keep records is up to you. You can keep a spreadsheet or written ledger where you note every expense as it happens. Or you can get a book-keeping program like Hurdlr or Quickbooks Sefl-Employed.
Whatever method you choose, I recommend one rule: If you think you could possibly claim it, keep track of it. You can always ask your tax pro about it later.
It's far easier to keep track of your expenses as you pay them than to scramble back at the end of the year and try to remember what you spent your money on.
What does the IRS say about what expenses you can deduct?
If you can claim expenses, does this mean you can just claim that anything is a business expense and write it off?
The IRS is pretty clear that you can not do that. They have a specific definition for whether an expense is a legitimate business deduction.
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessaryInternal Revenue Service Publication 535
The IRS claims an expense must be “necessary and ordinary” for the type of work you do to qualify as a business expense. In other words, you must have a business purpose for spending the money. You should reasonably expect a business like yours to need it.
They clarify that it doesn't have to be indispensable. Just because you can get by without it doesn't rule it out as a legitimate expense. If what you buy helps you run your business better or helps you be more profitable, you may be able to claim it's necessary.
Personal expenses don't count as business write-offs. For example, simply wearing certain clothes while writing doesn't turn that clothing into an expense item.
Some items may have mixed use. Cell phones, cameras, and laptops are common examples. If you use something part of the time personally and other times for business, estimate what percentage of the use is for business. You can often claim the business percentage of the cost.
What kind of expenses should you track?
I'm not going to create an exhaustive list here. I'll talk more in another part of this series about IRS expense categories and some of the expenses that are common under each.
If you need to spend money to keep your blog operating, you should keep track of it.
There are the common costs of blogging: Hosting, themes, and plug-ins. You may have subscriptions with email providers or SEO programs. Anything you need to spend money on to operate and improve your blog or content.
Due to the extra time you're writing, did you upgrade your computer or get a better keyboard and mouse? Maybe you bought a blogging course. You might need a camera or better lighting if you're adding videos or supplementing your blog with a YouTube or TikTok channel.
If you drive somewhere to interview someone, take pictures, or meet someone about your blog, your cost of driving for your blog is deductible.
If you need to purchase or pay for something for your blog, keep track of it. As I said earlier if you're not sure it's a legitimate claim, track it anyway. Your tax pro can tell you if you cannot write it off at tax time.
How do you write off expenses on your income tax return?
I mentioned earlier that you can write off your expenses even when taking the standard deduction because it happens in a different part of the tax process.
That other part of the tax process is called Schedule C: Profit and Loss for Business.
The top part of the form is where you enter the income your business made. Anything you receive because of your blog or content is added here. If you buy and sell items, your cost of goods sold is subtracted from your business revenue to determine gross income.
The next section of Schedule C is your business expense section. There are several expense categories listed. You will list the total spent on each category here. Add up expenses here, and subtract that total from your gross income to determine your profit.
Your profit is moved over to your tax return as personal income. In that way, your Schedule C is really your business's closest thing to an employee's W2 form. The profit at the end of the form (not the revenue listed on any 1099 form you get for blogging) is what you add to your 1040 form as personal income.
Profit also will determine your Self-Employment tax as a blogger. Self Employment tax is your version of FICA taxes (Social Security and Medicare).
Once you understand how this happens, you see why it doesn't matter if you claim the standard tax deduction or not. Expenses are claimed on Schedule C, not as itemizable tax deductions.
You can significantly reduce taxable income as you understand this and begin tracking your business expenses. This helps keep your income and self-employment taxes lower.
The Taxes for Bloggers Series