While I am not an accountant, these tax tips for bloggers will help you be more organized and know what to expect on tax day. Just keep in mind that your best bet for staying legal (and sane) is hiring a tax professional.
People have strong emotions about tax season. Either you get excited about a refund or dread having to pay. For me, I just hate the entire ordeal of crunching numbers. Or maybe it is just post traumatic stress lingering from an audit we experienced.
Talking about stress… wow!
But having survived an audit has definitely changed my approach to taxes and armed me with information other bloggers might not understand.
Whether you are a new blogger or have recently shifted your mindset from hobby to pro, these blogger tax tips will make you hate me… but I do it because I care about your success.
Hire an accountant.
Might seem like a dumb suggestion but hiring someone who knows what all the legal tax jargon means can be a huge relief. Plus, if you ever face an audit, you already have an ally.
As you choose an accountant, be sure they he or she understands internet business or is at least willing to do the research and be fully prepared to represent you as a blogger.
But I know… accountants cost a small fortune. If you are determined to do your taxes yourself, even though accounting fees may be a tax deduction, just use the same software consistently. Changing from one brand of software means the formatting is different and even the phrasing can vary. If you accidentally place something is a different category than you have in previous years, this can trigger a red flag with the IRS.
I personally use H&R Block software, not because I love it but because it is what I started with and I do not want to make any sudden changes. I know… makes me sound like I am walking through a minefield and avoiding any misstep that might can an explosion. Actually, that is pretty close to the way I feel.
Use an income/expense spreadsheet.
If you are a free member of the Inspired Bloggers University, you have access to the income/expense spreadsheet I use. This XLSX file is easily opened in Excel but if you do not have access to the Excel program, just upload it to your Google Drive. The file should open easily.
Of course, having the spreadsheet still requires that you complete the income and expense categories each month. Procrastinating will just make it harder. Dedicate time at the beginning of the month to completing the entries. If necessary, grab a few bloggers and create a mastermind group where you can share you report each month.
Count all of your income.
Do not skip over this and think, “Well, that’s a no-brainer.” What you consider income and what the IRS considers income might be completely different.
Sara F Hawkins has a very comprehensive list of taxable income items for bloggers that might surprise you. For instance, the books and t-shirts you are given while browsing the exhibits during a blog conference?
That is income.
Prizes you were awarded for being the most profitable affiliate?
That will cost you.
The ebook you graciously accepted from a friend to offer a complimentary review on your blog?
Ouch. Yes, that digital document has taxable value.
Even the giveaway prizes a company sent to your address and asked you to forward to the winner… Surprise. It is all income and the IRS wants to know if you are including it when you file your taxes.
“But, but, but…” I hear you stammering to plead your case.
- I did not receive a 1099 form.
- The value is under $600.
- Blogging is just a hobby.
Doesn’t matter. So what. Your point is?
If you received it, the IRS considers it income and you are responsible for reporting your income accurately.
Keep it organized.
If you must file taxes then do yourself a favor and keep everything organized.
When you attend a conference, keep a copy of the agenda and your name badge. Even a photograph or digital scan will suffice. Then, collect your receipts for meals, accommodations, and cab fare and keep it together.
Expensify is a fabulous app – available for desktop, iOS, and Android – that will help organize your travel receipts and can even track your mileage if you choose to drive.
Another organizing idea, create a folder in your inbox just for receipts and conversations with brands regarding giveaways and reviews. If you prefer Evernote, you can create a notebook and email them to your Evernote file with a Premium account.
Remember your deductions.
Even the best accountants need a little help. You must be educated about what you can safely use as a qualified deduction. Wise Bread has a long (although uncategorized) list of blogger tax deductions you should browse. Another list of tax deductions for bloggers is available by Free from Broke.
Some deductions you might have missed include:
- Ingredients for a test recipe
- Premium plugins
- Licensing for images, fonts, and music
- Your blog planner
- Postage for mailing giveaway prizes
- Ink and paper for printables
- Stock photography subscriptions
- E-courses and ebooks that further your education
Tax time can feel daunting but you can master this with an organized method for tracking your income and expenses.
Don’t forget to download the blogging income/expense report on your Inspired Bloggers University profile page.