Congratulations! Your blog has officially made the jump from a hobby to business, but did you know blogging is covered by the same tax laws that apply to most other occupations? It is. But, as a self-employed blogger, your taxes won't be automatically withheld from your earnings as it would with a traditional work-for-hire occupation. You'll also owe self-employment taxes that most employees don't pay, and can possibly owe taxes at the end of the tax year.
Tax Tips for Bloggers
We're smack dabbed in the middle of February, which means it’s officially tax season. Before you groan inwardly, run to hide in the nearest corner, or close this blog page in the hopes of avoiding having to tackle your taxes as a full-fledged business blogger, fear not! With these simple tax tips for bloggers, you may be able to take advantage of certain deductions to reduce your annual tax bill.
As a blogger, you're likely to face estimated taxes, something most traditional employees don't have to worry about.
Since you don't have any taxes deducted from your blogging income, you must pay estimated taxes to the IRS every quarter. The due dates for estimated taxes are April 15, June 15, September 15 and January 15 (with some exceptions for holidays, etc.). If you don't pay your estimated taxes in a timely fashion, you may owe an additional tax penalty. If you didn't have any tax liability in the prior year, or if you don't expect to earn at least $1,000 in blogging income, you may be able to avoid paying estimated taxes.
When saving for your estimated income taxes, don't forget to set aside additional money for self-employment tax. From the perspective of the IRS, working as a blogger means you run your own business.
Even if you only work part-time as a blogger and full-time as a salaried employee somewhere else, the blogging part of your income qualifies as self-employment income. As a result, you must pay self-employment tax on that income, which is the combined Social Security and Medicare taxes paid by an employee and an employer. Since you run your own business, you must pay both the employee and the employer portions. Self-employment tax must be paid whether or not you owe any federal income tax.
Deductions You Don't Want to Miss
The good news about running a business as a blogger is that you are allowed to deduct expenses that are considered reasonable and necessary to your profession, and we'll cover what you can, and can't deduct below. (By the way, this is our favorite segment on tax tips for bloggers. The deductions!)
- Your Blog – Domain registration, hosting, e-mail, framework, blog design services, and ready-made templates are all popular blogger deductions.
- Advertising – Business cards, buying ads on other sites, head-shot photography fees, or any other product or service that helps promote your business.
- Supplies (That you pay for!) – Save those receipts! Supplies for DIY projects that you use in tutorials on your blog and ingredients for recipes you make and share are all tax-deductible. BUT, if you receive products and or supplies for free, these items are considered a form of compensation and you MUST include the market value of the item (the amount you’d pay for them if you weren’t getting them for free) as income.
- Furniture and Electronics – The biggest ones that bloggers forget are the cost of using cell phones, cameras, and computers for business.
- Software – Any software you purchase for use in your business such as accounting software, Photoshop, fonts, etc.
- Education – All the classes you take online (e-courses) are business expenses, as they educate you on how to improve your blog business. You can also expense blogger conferences and events you attend.
- Travel – Any hotel and transportation costs you incur if you had to travel to blogger events, or other business related travel.
- Vehicle Use – Mileage. When you drive in your vehicle, you can take the standard mileage deduction allowed by your state for every mile you drive.
- Business Use of Your Home – You may write-off the business use of your home if 1) The area of the home for only this business, and no other business and 2) No one else can claim the deduction for this home office.
- Possible home office expenses you can deduct include house payment or rent, utilities (gas, electric, trash, water, sewer), entire home repairs (painting, roofing, chimney & gutter cleaning), home owner's or renters insurance, home owners association dues. home security fees,
- and more, like postage fees, PO Box fees, giveaway prizes you purchase out-of-pocket, blog consulting, and even fees to prepare your taxes!
Our number #1 tax tips for bloggers is that we always suggest you meet with a tax professional to assure you get all the deductions you deserve.