Tax time is either dreaded or adored by most Americans, and few of us fall anywhere in between. The bottom line is this: you either owe or get paid. So for some, it's super rewarding, and for others, too big a burden to bear. If you're doing any sort of freelancing, you'd know that taxes in your situation get even more complicated than waiting on that standard W2 to come in from your employer. Blogging and YouTube are considered freelancing according to the tax man, so listen up if this is your first time reporting those blogging checks.
*Please note that I am not a tax professional and am only repeating what my CPA and research has told me. Use this post as a guide but do your own research and please speak with an accountant before submitting your earnings to Uncle Sam!
Keep your receipts.
This isn't a bad habit to get into for life in general, but keeping and organizing your receipts throughout the year will make your life a whole lot easier (and your refund a lot bigger) come tax time. Did you know that as long as you treat your blog/channel as a business you can deduct things like office supplies, video equipment, meals on business trips, and business cards? This doesn't mean you get that money back, but you do keep a portion of the taxes you paid on those things.
I just use a cheap coupon organizer to file my receipts. I have a few categories that I know will be included in my taxes like electronics (for business-use only), business trips, and services like graphic design or consulting. For miscellaneous receipts, I just file according to month. Some of those receipts end up being used come tax time, and others do not. Months are just a good home for them until I figure out where they belong.
I also have an education tab since things like books and supplies can be written off, too.
Note to self: add an office supplies tab for next year.
...But make sure your expenses are qualified.
It's a pretty well-known rule that things that appear in videos can be written off. That doesn't mean they should be. Technically, anything that you use for both personal and professional use must be proven to have been bought strictly for business. That means makeup or fashion hauls are pretty much off-limits since you're likely going to use the items for your personal use once the video is up. If you're reading this post, chances are your channel/blog is pretty small (hey - mine is too!) and getting that in depth is more trouble than it's worth, anyway. Stick to the big things like domain registration, web hosting fees, camera accessories, and trips to networking events. If you have any other concerns, bring them up with someone who knows tax law better than me...
Find a good accountant.
If you have a monetized blog, whether you realize it or not, you're a small business owner. Keep this in mind when searching for someone to prepare your taxes. Finding someone who specializes in small businesses may be more helpful than someone who specializes in students, for example.
Make sure to come prepared.
A traditional job sends out W2 forms to verify employee's earnings and deductions, but bloggers operate a little differently. If you do freelance work for a company like I do, you may be sent a 1099 form. Similar to a W2, this form shows how much you have earned through your freelance work. Since that income isn't taxed, the IRS uses this to calculate the amount I have to pay in.
But what about those sponsorships that were sent through PayPal? Your affiliate link income? The YouTube channel art your friend paid you to design for her? These are all things that you technically need to be keeping track of and reporting yourself. If this is how you make the bulk of your money, a bookkeeping software wouldn't be a bad investment (plus you can write it off next year!) but for someone who handles only a few of those transactions per month, I do my books old school. Again, just keep receipts - be it email communication from a sponsor or a PayPal screenshot, you will need this information if the IRS ever questions you.
And one thing you do not want to do is tick off the IRS.
Don't throw anything away!
My tax preparer recommended that I keep all of my business receipts and tax documents for 3 years after filing. For now, I'm just using a binder, but eventually I might upgrade to something like this, which a lot of YouTubers and bloggers I watch use. Either way, in a binder, a shoebox, and/or on your computer, your documents need to be retained. In case anything goes wrong with your taxes or you get audited, you'll need proof to back up your business expenses.
A few common deductions for bloggers:
Networking event costs (IMATS, BeautyCon, etc.)
Website domain name
Travel costs for business trips
Hotel stays on business trips
Remember that this list is not exhaustive and is just a guide! Just keep an eye on your spending for those items and bring your receipts to your tax preparer. They will be able to determine if they are qualified expenses or not. I hope this post was helpful for you!
Check out this post for more advice - it helped me a lot.