Close
Close

46 Tax Deductions that Bloggers Often Overlook

Tax-Deductions-Bloggers-1This guest post on Tax Deductions for Bloggers is by Kelly Phillips Erb from Tax Girl.

Want to learn more about how to make money blogging? Subscribe to ProBlogger today for free.

The most popular question in response to my guest post on Problogger last time was invariably some form of “Can I deduct…?” It makes sense. Figuring out what constitutes income in the blogging world is pretty easy. But what constitutes a proper deduction is another story – and bloggers usually err on the side of not deducting enough (and not the other way around).

Don’t get caught leaving money on the table. Here’s a list of potential deductions that you might have overlooked. Consider:

  1. Monthly Hosting Fees
  2. Annual Domain Costs
  3. Design/Logo Fees
  4. Internet access fees – this clearly includes DSL and dial-up, but don’t forget charges that you might pay away from your home or office such as wi-fi charges in Internet cafes
  5. Paid blogging platform charges (such as Typepad monthly charges or “add ons” through WordPress)
  6. Cell phone usage
  7. Long distance usage related to your blog – remember that the IRS will not allow you to deduct the cost of your primary land line but you may deduct long distance charges
  8. Second phone line for business or fax
  9. Design or word processing software – this includes Photoshop, Illustrator, Word and similar programs for business use
  10. Computers
  11. Keyboards, mice and other periphery
  12. Web cameras
  13. Digital cameras – and memory cards
  14. Film processing for traditional cameras
  15. Costs paid to use or reproduce images
  16. Downloaded music or other audio
  17. Blackberry, Treo, iPhone charges
  18. Business cards
  19. Headshots for web site or promotional materials
  20. Letterhead – remember that printed materials not be professionally printed to be deductible!
  21. Promotional stickers and items – Frisbees, magnets, etc.
  22. Web advertising – text and banner ads
  23. SEO services
  24. Paid site submissions
  25. Prizes for giveaways and contests
  26. Postage – it’s impossible to keep track of every single stamp that you use in your business, so buy a sheet or two and keep them in a folder just for business use
  27. Post box fees – I recommend this if you’re working from home, it looks professional, it’s inexpensive and it keeps sales people from showing up on your doorstep late at night (trust me, MCI has seen me in my pajamas)
  28. Transportation – this includes mileage for car transportation, train and bus fare for public transit, cab fare, airline tickets
  29. Dining while away on business
  30. Hotel charges for overnight conventions and business travel
  31. Entertainment for clients
  32. Professional advice (from lawyers, accountants and tax preparers)
  33. Tax software
  34. Accounting software
  35. Copy paper, memo pads, photo paper
  36. Office supplies – pens, folders and post-its can add up!
  37. Books, magazines and subscriptions
  38. Professional affiliation and membership dues
  39. Professional informational sites (like imdbPro)
  40. Paid research sites (like LEXIS/NEXIS)
  41. Trademark fees and related costs
  42. Conference fees – such as for BlogHer and BlogExpo
  43. Promotional sponsorships – golf holes at tournaments, that sort of thing
  44. Charitable donations – limited to the cost of the production, not the FMV of the final product (in other words, if you blog about quilts and you donate a quilt, your deduction is limited to the cost of the quilt materials, not the FMV of the quilt)
  45. Backup tapes
  46. Zip drives

It is by no means an exhaustive list – you make think of more (feel free to add them below). The key is to make sure that the expenses are related to your business. They should also be both “ordinary” and “necessary” (a wide screen TV might feel necessary for your sports blog, but likely isn’t according to the IRS) for your business – if you’re not sure, ask other similar bloggers what they do. You can get some good advice and make great contacts at the same time!

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation. If you have a question, ask the taxgirl.

About Darren Rowse

Darren Rowse is the founder and editor of ProBlogger Blog Tips and Digital Photography School. Learn more about him here and connect with him on Twitter, Facebook, Google+ and LinkedIn.

Problogger.net runs on the Genesis Framework

Genesis Framework

The Genesis Framework empowers you to quickly and easily build incredible websites with WordPress. Genesis provides the secure and search-engine-optimized foundation that takes WordPress to places you never thought it could go.

Check out the incredible features and the selection of designs. It's that simple - start using Genesis now!

Comments

  1. Nice list Darren!!

    See what I do I split the cost on different affiliates and don’t go over $600 so I don’t end up paying 42% of my tax to gov :). Downside of that is that I miss a lot of earnings.

    But in 2008 I will probably trademark my blog as business and open LLC that will give me 15% back of my tax return.

    Thanks for the list, it’s printing!!!!!

  2. Ken says:

    Be careful deducting ISP fees, especially if you use this for personal use. If your family is sharing the connection, chances are, the IRS won’t agree that it’s deductible.

  3. bob cobb says:

    Theres the home office deduction too. As long as you use that room purely for business.

  4. Aaron Stroud says:

    Thanks for the list. I just realized I forgot to add Shaun Inman’s “mint” analytics software to my list of expenses. And the durations pepper for tracking how long people browse my site…

    I probably would have remembered at some point, but I think I’ll keep this list around to review at tax time. Maybe it’ll bring some more forgotten expenses to light.

  5. Aaron Stroud says:

    Bob Cobb, that’s the problem with deductions. The IRS insists that you only use the expense for business, otherwise you have to figure out just how much of it you can deduct…Calculating the percentages really isn’t worth it to me right now because I really don’t want to get into an argument with the IRS later about how my home office wasn’t strictly used for writing because I stored books in the room and my wife telecommuted from the room.

  6. Matt says:

    Very useful, thanks. This is our first year and we’re already concerned about how to handle the taxes as we’re an LLC instead of just an individual. Every little bit will help though.

  7. Kelly says:

    Bob -

    Good point, although I rarely put home office deduction in a list because it deserves a post all by itself. It’s replete with issues because sometimes it doesn’t pay off – not only because of what Aaron raises but it can make you subject to other state and local taxes (depending on where you live – I live in Philly and there are definite consequences) but capital gains issues and more.

    But since you mentioned it, I will say to remember that those who rent (not just own) can claim the home office deduction!

  8. Starfeeder says:

    Bookmarking this, deliciousing it, stumbling it and emailing it to myself…. don’t want to get screwed on next years taxes….

  9. Kelly, thanks very much for this list.

    Do you do your own taxes or do you go to a pro to have them done? What about your first year of self-employment….do you recommend going to a pro if you didn’t earn very much from your business?

    I’ve been doing my own taxes except for a couple of years when I had a lot of deductions, but this will be the first year filing any type of self-employment income.

    Thanks!

  10. Great list! One of the most important aspects that can definately help each of us in our own small business venture is to find a competent, yet affordable, tax advisor. A C.P.A. can be a great asset in helping you understand the tax laws, what can and can’t be written off as business expenses, and guide you for future income preparations.

    You might spend a little on getting those year end filings, but save each and every receipt and keep a log of monthly expenses too. You should also keep a “timecard” of your time as this will help when you “pay yourself” for your time invested in your business.

  11. Kelly says:

    JoLynn, I do my own taxes. I use software for my personal returns which I highly recommend if you do them yourself.

    There isn’t an income level or similar criteria that I use to when making a recommendation about a professional – it’s a comfort level. If you think you can muddle through, by all means give it a go. But consider the time value of money: if it takes you several hours or days to do your returns yourself, that is time taken away from things you do to make money, like blogging. If you “save money” because you do your own taxes but your time is better spent in other ways, then you really didn’t save.

    Whether you use a professional or not, I think you should find one that you like for those “just in case” situations. You don’t want to be searching for somebody with audit notice in hand – then you might not make the best choice.

  12. Andrew G.R. says:

    Great post! Can anyone point me to the benefits of incorporating, etc. a successful blog? Or am I better off filing as an individual?

  13. Coqui says:

    Very useful list, I just need to be more organized

    thanks

  14. Thanks Kelly, I have been using software to file, but I’ve been able to get away with the basic edition.

    Do you have any recommendations for software and the edition for those of us who are comfortable doing our own taxes?

  15. Kelly says:

    JoLynn, I hate to promote any one company over another but I will cop to using TurboTax because they are Mac-friendly.

  16. Leon says:

    Wow. Just wow. All of this goes into making a successful blog? Professional blogging is an expensive business.

  17. Kelly says:

    Andrew – I always hesitate to answer these kinds of questions over the net because they are so fact specific. It matters what you do, what kind of blog you have and what state you’re in (different states treat LLCs differently for tax purposes).

    Chances are, if you’re forming an LLC, you’re going to be treated as a disregarded entity or partnership for federal tax purposes. That’s a lot of tax lingo to say that you probably won’t have any significant tax consequences (good or bad) on the federal level as an LLC.

    So here’s my quick advice. Find a professional who will give you a consult (usually about $200-250) and a run-down on what works in your state. You want to find out the costs of the initial set up as well as the annual fees, whether incorporation opens you up to additional taxes, etc.

    Keep in mind that there may be solid, non-tax reasons for incorporating. Some of the most often cited in the blogging/freelance world are (1) liability protection in some instances; (2) credibility – in fact, some of the big boys won’t pay out to an individual; (3) ease of keeping business and personal assets separate; and (4) health insurance (it can be cheaper if you’re a company).

  18. Wonderful article! While some of these may be questionable to an accountant, I imagine I could get away with most of them. *=)

  19. Jeffro2pt0 says:

    At what point does a blog or blogger become a business? When you make your first penny of revenue?

  20. Max Powers says:

    Now I better find a drawer to save and throw my business related receipts in each day. Taxes was not even in my mind until today. This list has also reminded me of some items I have neglected to use in promoting my site.

    The information you can learn about blogging never seems to end. Thanks all. http://consumerfight.com

  21. Kelly says:

    Jeffro – If you’re in the US, the short answer is that you report the income from the first dollar paid, regardless of whether you’re doing this as a business or a hobby. You can deduct expenses up to the amount of your income, regardless of whether you’re doing this as a business or a hobby.

    The question of what to do with excess deductions/expenses is when it matters most about whether it’s a real “business” or not – you lose them if this is a hobby and you can tack them onto next year if it’s a business.

    For more information about the distinction between business and hobby, you can check the link above to my prior Problogger post or visit here:
    http://www.taxgirl.com/ask-the-taxgirl-deductions/

  22. Great post, Kelly. Many good tips here. I’m referring my Home Biz Notes readers to this post. They’ll benefit from it.

  23. Lots of good ideas here. But, have people actually used zip drives any time in the past 5 years?

  24. Complicated! This is a good argument for the Fair Tax!

  25. Thanks for the list! Definitely something I will need to keep around for taxes next year. We pay way too many taxes imo.

  26. Bob says:

    if I remember correctly Australia is TAX first Claim later for employee, is this the same for business? I used to see some of my mates going through trash for receipts when it time to do their taxes.

  27. Thanks a million for this post. I am an accountant to be in December and I also blog so this helped out greatly.

    Cheers!

  28. Sam says:

    Hahahaha if you leave in the Philippines you don’t need to declare anything from your blog earnings! You get your money 100% *laughs*..there are no laws here that will allow the government to “tax” us from our blog earnings..I guess this is my only incentive for living in a 3rd world country *laughs*

    Sam
    FlipBrownGuy

  29. Tarik says:

    Wonderful article. Since corporating my business, I need to spend more time keeping track of tax-deductible expenses.

    A lot of your deductions were right on target!

  30. Graphics from istock photos and other purchased stuff…

    In Australia the rules are a bit different as you can only get back what has GST on it. But most of the things listed is ok for Australia businesses.

  31. Nice list, will be storing it for future reference :)

  32. cmanlong says:

    Thanks for a reminder on the tax angle of blogging. I had thought about it a while back and then it slipped my mind. I have been doing this mostly for fun and a bit of extra income. I probably really need to get a bit more serious about it from a business angle.

  33. Deborah says:

    I deduct 100% of my blog realted expenses. Travel, dining, as well as office supplies, partical home mortgage for the space my office takes up as well as some of my car cost and maintenance.

    Got to love the deductions!

  34. Great information! @ SingForHim – The Fair Tax is not fair, it’s ridiculous. It would make everyone across the board pay the same taxes and for those people working while in high school or college, they would pay the same tax that an executive making 1.5 mil a year would? I don’t think that’s fair at all….

  35. thewild1 says:

    This is a really good article

  36. CatherineL says:

    Hi Kelly – I am from the UK and can claim for almost everything you list – but I’m not sure I can get away with paid music. Is that definitely ok, or do you just have to hope the tax people have never heard of itunes when you get audited? Thought I’d ask, as my son uses itunes a lot (for my sites of course!)

  37. Miki says:

    Great info, Kelly. Because I’m always forgetting one or another of these I have a credit card in the name of my company that I use for all business-related purchases—that’s the only reason my tax lady knows to deduct my hosting expenses, I always forget them. If you don’t want a company card, then you can dedicate one of your cards for business only. It’s a great help when one is organizationally challenged!

  38. Kelly says:

    Catherine, I have corporate clients who claim downloads all of the time. It’s perfectly legit if it’s for business.

  39. Kelly says:

    Miki, that’s a great idea. You can use debit cards for the same purpose – just open a separate checking account.

  40. Marianas Eye says:

    You can also deduct a portion of your rent or mortgage. Take the amount of square feet your “home office” takes up, and divide it by the total sq ft of the house or apartment. You can deduct this much of your monthly rent/payments as a business expense.

    For example, home office takes up 100 sq ft of a 1000 sq ft apartment. That’s 10%, so you can write off 10% of your rent/payments as office expenses.

    David

  41. Jeremysa1 says:

    Watch out with the home office deduction. In the US, you get the first $250,000 ($500,000 if married) of profit on your house tax free. If some portion was used for home office, you lose that exemption. Given the recent housing market, maybe a lot of people don’t have gains so its not a big deal :( but it is something to think about.

  42. Andrew/Kelly: I formed an LLC for liability purposes, and Kelly is correct (at least in my case)… All income passes through and taxes are handled as a sole proprietorship (it’s basically treated as self-employment income on my individual return). There are, of course, a number of other options when you start talking about actually incorporating, and your best bet is to schedule a consultation with a tax pro or business attorney.

  43. Marianas: When it comes to mortgage payments, I believe that you can only deduct a percentage of the interest portion of your payment, not that amount that goes to principal. Here again, it’s best to consult with a pro — or at least to check the IRS guidance yourself.

  44. Kelly says:

    Jeremy – Great point. And see my comment above about other cautions when claiming a home office deduction.

  45. Kelly says:

    fivecent – You’re correct re mortgage interest, thanks for pointing that out.

  46. Mike Dammann says:

    been overlooking half of those :o

  47. Deducting home office is very complex and a big hassle. If you deduct home office, you have to also reduce your corresponding mortgage interests and real estate taxes if you are itemizing.

    LLC is only good for liability purposes. Your income is still treated as individual incomes.

    I use a few company credit cards, e.g. an Avanta Business Card, American Express Blues credit cards, Chase, City, and Bank of America, Capital One, etc.

    Bank Of America and Capital One will send you itemized and categorized at year end for all your charges. That is great help for tax purposes.

    I charge all business expenses on business cards and personal expenses on persoanl cards and record them in MS Money. For persoanl expenses, I don’t record every thing, I just put the total for the month, but for business expenses record charge.

    Come March, I run a report for the preceeding year. Of course throught out the year I deduct an extra $500 every month from my pay check.

  48. Neil Duckett says:

    Thanks for the reminder … tax time!

  49. Wells Fargo has some nice tax services as well.

  50. Lara Kulpa says:

    It’s amazing what kinds of things people can deduct! I take the mileage total for trips to see clients, going to conferences or other meetings, and meals where I’ve taken a client out for a dinner meeting too.