Blogging and vlogging are relatively new forms of the online business industry. The IRS is constantly updating it's tax laws related to online industries. These changes may impact your blogger/vlogger tax planning, as it may make figuring out what you can and cannot deduct a challenging experience. Besides doing your research, working with a financial adviser who specializes in blogging/vlogging services may be a solution to consider to achieve the maximum legal tax savings available to you.
Tax Deductions to Consider for Blogger/Vlogger Tax Planning
The following are a few deduction options that may apply to your blogger/vlogger business:
- Hosting fees
- Internet fees
- Design fees
- Travel expenses
- Electronics, including laptops, tablets, and cameras
As small business accounting specialists, we recommend partnering with a seasoned CPA with expertise in accounting for blogging/vlogging business models to help increase accuracy in recording patents, trademarks, and the domain name registration fees as eligible capital property as they depreciate yearly. Some blogger/vlogger financial advisors may argue that yearly domain fees that get paid as a subscription be classified as an asset.
Software used for editings, such as Adobe Photoshop, Adobe Illustrator, Final Cut Pro, or CorelDRAW, might be considered by a blogger/vlogger CPA to be capital in nature. This is because they have a 100 percent depreciation rate and may be subject to the half-year rule, so you may only be able to claim half of the cost of your purchase. That being said, a blogger/vlogger accountant could argue that since software like Photoshop or Illustrator change year after year, it could be expensed instead of capitalizing it.
Additional Items you might deduct from your earned revenues include ads purchased to promote your vlog or blog, money spent on SEO services, and money used for promotional giveaways or prizes connected to your vlog or blog.
Items That Typically Should Not Be Claimed As a Deduction
Blogger/vlogger bookkeeping may have some gray areas in what things you can and cannot deduct. For example, an experienced blogger/vlogger accountant may recommend deducting a portion of your home expenses if you have a home office. However, the percentage you claim is usually prorated based on the time you use a particular space for business and the total square footage of your home.
If you have a clothing blog/vlog, you may think the clothing you purchase, photograph, and then highlight in your blog is deductible. However, it doesn’t always work like this. Clothing might be deductible if it’s a uniform or a costume or is solely used for business purposes. An example might be clothing that has been embroidered with your blog’s name and logo.
A fitness blogger may deduct their gym membership if they can prove that the membership is a business expense. This is tricky, though, because many fitness bloggers use their gym membership for non-work exercise.
Several blogs and vlogs feature pets. However, in most cases, related expenses, such as pet food, veterinarian visits, and insurance, cannot be claimed. As you may have noticed, keeping receipts for your blogger/vlogger bookkeeping will be one of the key things to help ensure that everything you are claiming can be justified.
Get Practical Financial Advice to Build a Strong Future
Here at Fusion CPA, we offer CFO business advisory to blogging /vlogging small businesses or self-employed bloggers/vloggers. We help small to midsize businesses like yours by providing you with the same level of business advisory as large corporations.
We understand the unique accounting and tax needs of businesses that earn revenue online. Our team aims to work with you to create tailored tax strategies and help you identify popular and unique deductions. If you are just getting started, our small business financial advisors offer guidance to help you find the best business structure for your needs.
When you partner with us we strive to provide accurate financial analysis, help you track your expenses, and introduce you to accounting software designed to improve the accuracy of your bookkeeping. We want to hear about your long-term and short-term financial goals. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.