As a social media influencer, you never miss an opportunity to make a connection or land a promotion. However, you might be missing opportunities for important tax planning if you're not working with an Instagram influencers CPA. It may be important to follow a good accounting strategy as you amass followers.
Do You Have to Pay Taxes If You're an Instagram Influencer?
Generally, you're viewed as an independent contractor for tax purposes when you're an online influencer. That means that you're likely responsible for self-employment taxes. You may also have to consider state tax returns if you get paid by companies that are located in multiple states. Generally, each company you work with is going to send you a Form 1099-MISC if they pay you $600 for services in any given year. It will be up to you to report any projects that pay less than $600.
A Look at the Commonly Missed Deductions for Instagram Influencers
The tools and techniques you use to craft your perfectly polished image could qualify for tax deductions. Yes, even "fun" items that you buy for your work can qualify. That includes things like specific outfits that you wear on camera. Here's a rundown of just some of the common expenses that may qualify for partial or full deductions:
Internet, domain, and hosting fees.
Purchases of stock photos.
SEO, branding, design, photography, and photo-editing services.
Software and licensing fees.
Fees associated with attending training or conferences.
Business coaching and similar services.
The list of applicable tax deductions for your field is long. That's why it's so important to go over all business expenses with an accountant to make sure you're catching everything. It may even be possible to integrate an upload system that lets you plug in tax-deductible expenses as you go.
There sometimes is a catch. It's possible that what you do may only qualify you as a "hobbyist" in the eyes of the IRS. Unfortunately, deductions may not be applicable if this is the case. That's why it's wise to sit down with a financial adviser who understands the Instagram influencing to get the vision and status for your personal brand settled.
How to Handle Gifts as an Instagram Influencer
One of the most complex topics to cover with your CPA may be the issue of gifts. Do they count as income? Do you have to pay taxes on them? The answer depends on the specifics of each gift. Generally, any gift with a value of $100 or more that is given as compensation must be declared as income. Gifts valued at less than $100 typically don't have to be declared as income. However, recurring gifts that are valued at less than $100 may need to be declared.
Navigating a Totally New World of Income Streams
The idea of being a professional Instagram influencer is relatively new. That means that it can be difficult to get a clear picture of the best Instagram influencer bookkeeping strategies using "traditional" advice. At Fusion CPA, we offer access to a team consisting of an entertainment industry financial advisers and accountants. Let's talk about creating a plan for managing your tax and accounting needs. 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.