Blogging in 2004 was significantly different from blogging in 2009. Over the past five years we’ve seen an explosion in how people use social media and how we make money from it. In 2004, it was hard to find a professional blogger; blogging was still very much a community-based hobby. These days, it’s unlikely to find a blogger who’s not making a little money (whether from affiliate links, an ad network, or selling their own ad) or at least being offered products in exchange for a review. And if you’re making money (even a little bit), you are required to pay taxes on it. But what about products and services? What about deductions? Just what, exactly, does the IRS expect bloggers to report? I’ve gathered a list of helpful articles and blogs to help you figure that out. (Of course, since I’m not a tax professional or a lawyer, I also strongly suggest you hire a tax professional who is familiar with social media and can help you file your taxes properly.)
The first thing you’ll most likely reach for as you prepare your 2009 taxes are tax forms. You need your W-2 forms from any employers and 1099s from any companies you worked with that paid you. If the company does not send you a 1099 by the end of January, you should contact them to see when you can expect that information from them (note that if they didn’t pay you $600 or more, they are not required to send a 1099, but you are still required to report the income). Keep in mind that if you went on any marketing trips this year, those companies should provide you with a 1099. Even though you may not have been paid monetarily for those trips, the flight, hotel, food, etc. is all considered income and you have to pay taxes on it. In her article Taxes for Bloggers, Mrs. Micah provides a list of items (in addition to your W-2s and 1099s) you’ll want to gather before going to your tax professional. She also provides links to handy spreadsheets that help you track your income over the year and a deductions spreadsheet that lists possible tax deductions as they relate to your blogging business.
If you have questions about bloggging and taxes, the most complete resource I’ve found is Tax Girl written and maintained by Kelly Phillips Erb. Here are a few of the articles that specifically address how your blogging career affects your taxes:
- Ask the taxgirl: When is it income?
- Ask the taxgirl: Deductions
- Problogger guest post: 7 Things that Every Blogger Should Know About Tax
- Problogger guest post: 46 Tax Deductions that Bloggers Often Overlook
In 3 Ways to Reduce Your Freelance Writing Taxes and Help Yourself, Thursday Bram explains why freelancers (and bloggers) may want to consider funding your own retirement and health insurance options. She writes, “One of the reasons employers can afford to offer benefits like health insurance and retirement plans to their employees is because there are tax benefits available when they do so. They’ll have to spend money either way — the question is whether they spend that money on benefits for employees or on taxes. The same is true for freelancers.”
Mom in the City’s article Mrs. CPA Answers Your Questions Regarding Blogging and Taxes tackles issues like
- whether you’re conducting a business or a hobby (and why it matters to the IRS)
- whether you need to pay taxes on goods or services you receive
- what to do if a company doesn’t send a 1099
- whether you need to report giveaways
- how to handle donations
Taxes, as they say, are inevitable. Knowing what you are and aren’t responsible for or what you can and can’t deduct can be confusing. Do your research and consult a tax professional to avoid any problems down the road.
Additional articles on bloggers and taxes:
- 7 Year-End Tax Tips by Karin Mueller via Entrepreneur.
- June Walker: Tax & Financial Advisor to the Self-Employed
- Top Tips on How to Avoid an IRS Audit by Cody via Your Frugality Advice
- Year-End Tax Tips for Freelance Writing Businesses by Bob Younce via Business Tips for Writers
A version of this article was cross-posted at BlogHer.com.
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This is a great subject that I fear many bloggers and small online retailers avoid/ignore. There are other taxes/license fees in my local area past the income tax. At one point I was a bit more active selling products online and got a state business/sales tax license. My city and county found me on the state tax role and sent me a bill for county business taxes and city business license fees. I recommend that anyone interested in selling products online be prepared to shell out up to an extra 10% for license fees and taxes per year if you are going to operate to the letter of the law. The found that the city business license is required even if I was not selling products and was only making money from online consulting and content creation.
Thank you for including my post in your round up. It’s very true that bloggers and other writers often struggle with taxes, but as long as you’re in business for yourself, there are so many ways to lower your tax burden. It’s just a matter of reading up on deductions and finding yourself a great tax preparer.
Thanks for this info. Lots of helpful links!
Thanks! As a new blogger, this info & your entire site are so helpful!
just came upon this, what a WEALTH of information. thanks so much.