Are you a blogger? Does your blog make money? Have you been given products of value in exchange for blog posts? If you answered YES to any of those questions, The Tax Institute at H&R Block has some great tax tips to share with you!
(I’ve summarized some the key points below, so make sure to download the complete Business of Blogging for all the juicy details.)
Is your blog a business?
The determination of whether your blogging activity is a business or a hobby is an important one. Whether your blog is a business or hobby directly affects how you report income and expenses from the activity.
Your blog may be directly related to a business activity, in that case, the decision is easy. All blog-related income and expenses should be reported along with the other business income and expenses.
Operating like a business
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Network with other successful bloggers
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Set up a separate business account and credit card
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Keep records
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Store your records in a safe place in the order that the transactions occur
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Back up your computer files
What is income?
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Fees paid to you
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Advertising revenue
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Product trials and endorsements
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There are such things as “gifts” -a box of chocolates, a cute calendar, products sent to you as “warm fuzzies”
Expenses
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Hosting fees
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Computer equipment
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Marketing and advertising
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Books and magazines
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Bank fees
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Legal fees
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Accounting fees
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Tax preparation
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Home office
Your tax return
Assuming your blog is a one person venture and you didn’t incorporate or form an S corporation, you report your income and expenses on Schedule C. Good news is that your expenses directly offset your income and you can show a loss. Bad news is that if you make more than $400 net profit, you’ll be paying self-employment SE tax.
I received access to H&R Block The Best of Both software free of charge. I was not asked for anything in exchange but chose to share the tax tips I was given with my readers. Please read my site policy if you have any questions.
The deduction of a home office is a fuzzy area. It needs to be a dedicated office space and used for business, not by the family. Likewise if you want to deduct your computer. In most cases it’s recommended not to claim those as deductions because they kind of call red flags for auditing down the line.
.-= Loretta´s last blog ..Can Your Blog Benefit From Promotion Help? =-.
The tip sheet also says that internet access is NOT deductible because you’d probably have it regardless of blogging. That I disagree with, because I’d totally be stealing wireless from my neighbor if I didn’t need a reliable connection.