Ah tax time. You gotta do it, but how should you file taxes for your blog? There are some specific things to think about when filing your taxes as a blogger.
We aren't CPA's and if you have super specific questions we definitely recommend finding a professional because they can help you dig deep and potentially find you some more money, but we've learned some things along the way that might be a huge help if you're going at it alone.
You're an individual, but your blog is sort of a business, so what do you file as? As bloggers, we're actually considered sole proprietors. If you own your business yourself and your business is unincorporated, you're considered a sole proprietor by the IRS. If your blog is considered a hobby, this may be different for you. You can read more about a blog as a hobby here, or check with your CPA for specifics.
What does this mean?
You don't have to file a separate tax return for your business and another for yourself as an individual. Your business income and expenses will be captured on your individual tax return and you will have to file a schedule C if you are considered self-employed. How do you know if you are? If your net income (income minus expenses) is more than $400 for the year, you're considered self-employed. If you want more info on filing taxes as a blogger, this article is a good reference.
Income is the money you made. It includes any money that brands paid you as well as any other compensation you received. This means things like affiliate income, any sales you made from products on your site, and even gifted products given to you in exchange for a post.
Expenses are the costs of running your businesses. They include anything you spent money on for your blog or business. Not all expenses are factored into your taxes: According to the IRS, a business “may deduct ordinary and necessary expenses for conducting a trade or business.” Here's an example of an expense that the IRS rejected as not ordinary or necessary. So for tax purposes, some expenses are considered deductions and some aren't.
Deductions are expenses that reduce your taxable income. So your taxes are calculated by taking the amount of your income times a certain percentage which depends on your tax bracket. In a really general way of explaining things, deductions are subtracted from your income amount before tax is calculated on the income that remains (i.e. taxable income), which means the more deductions you have the less taxable income you have and the less taxes you pay.
If all you just heard was "blah blah number blah income expenses blah blah", here's an example: The first thing to know is that deductions aren't subtracted $ for $ from your taxes, and the whole situation is a little more complex than this, but here's the gist of how it goes:
Let's say your income was $1000 for the year. If your tax rate was, let's say 35%, then you would owe $350 in taxes if you had $0 expenses. Ok let's assume your expenses were $600, but the thing is not all your expenses count as deductions (see this list for some examples of expenses that aren't deductions), so let's say your deductions come out to $400. This could be things like your website costs, a webinar your bought, etc. Now, you take your income ($1000) and subtract your deductions ($400) to get your taxable income ($600). Then your tax is calculated on this taxable income: $600*35% = $210. So now you're paying $210 instead of $350. Make sense?
Business Expenses (Deductions)
Just a few examples of expenses you'll want to keep track of (there's bunches more..see some here):
- Advertising (FB ads, print ads, business cards, etc)
- Blog Maintenance (Website hosting, domain name, email list hosting,
- Contract Labor (Your photographer, web designer, VA, etc)
- Education & Industry Associations (courses, workshops, webinars you bought or conferences you paid to attend...psst My Haute Society counts)
- Affiliate earnings - if you sell a product like a course and pay other people affiliate commission on it when they refer a sale
- Office Supplies & Office Space (you can deduct space in your home use as your blog office)
- Sponsored Posts - If you paid to be featured somewhere like a IG feature
- Giveaways - If you bought products to giveaway or paid to be part of a loop giveaway
BLOG TAX FAQ
1. Do gifted products count as income? How do I have to report them?
If a brand gives you a product in exchange for a post, then this is an exchange of goods and services - its considered compensation and must be recorded as income. This includes any product you were given to review or feature in a post. However, if someone sends you a gift where there is no implication that you will share on your blog, or if it's a "thank you gift" where it's clear they don't expect you to share with your followers, then you don't need to record it. There was no exchange of goods and services here - i.e. a product in exchange for a post (service).
2. How do I record giveaways?
It depends on the giveaway. If you buy a product or service to give away to your readers, then you will record that under expenses. If a brand donated an item for the giveaway, that's a couple extra steps. The product will first be recorded as income since its a product a brand is giving you in exchange for a post. But you're giving the product away, so you also record it as an expense because you are giving away that product. It ends up canceling out (+$X as income and -$X as an expense), but you should still record the transaction. If the brand also pays you in addition to the product, you would record that compensation as income.
3. What about products or services I bought to blog about?
You can write these off as an expense! If you saw some shoes that were 35% off and you bought them to write a post about and share with your readers, that counts as an expense. Don't go overboard with this. Record items that were genuinely purchased for your blog and items you used "blog money" for. Not your own personal or "fun money."
4. Should I still track and file taxes even if I didn't receive any money from my blog?
Yes! You likely still had expenses you should record and if you have another part time or full-time job, they count towards reducing that taxable income from that job. Not only that, its a good practice to get into keeping track of everything so you understand your costs, the value of what you may be receiving in gifted product, and then the amount you need to make in order to cover all your expenses and eventually make a profit.
5. What all goes into my home office space?
Generally, you can write off a designated space in your home that you use for blog purposes. You can include things like rent, electricity, internet, phone, etc. Here are some simple sample formulas:
Office Rent = (Office Sq Ft. / House Sq Ft.) * Total House Rent
Phone = (Data & Minutes Used for Blog. /Total Data & Minutes.) * Total Phone Bill
- Finance Basics
- Monthly Income Tracker
- Monthy Expense Tracker
- Yearly Income Tracker
- Yearly Expense Tracker
- Yearly Profit Tracker
- Gifted Product Tracker
- Spreadsheet with all trackers that will auto-populate as you fill in the monthly trackers
Disclaimer: My Haute Society Ltd. and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.