If you’re a blogger and aren’t sure if you need to pay taxes, it will depend on whether you’re making money with your blog and whether you consider your blog a business or a hobby. I received the question below and Amanda Henson of High Impact Mom researched the answer and wrote it up.
Dear Blogging Basics 101:
I am building a blog. I thought it would be no big deal to put up a few affiliate banners and make a little spending money, but I didn’t realize that even the smallest income must be reported. Is that correct? I know nothing about how to report my income, or which forms to use. Can you explain how things differ for bloggers (hobby or business?)? Can you recommend a book or article or resource for me? Specifically, if I make less than $600 per year, do I have to file?
Answer: Congratulations on building a blog and great question. Let’s begin by discussing the differences between hobby and business blogging. If you have been lucky enough to make a profit from your blog, or small business, in three out of the last five years the Internal Revenue Service (IRS) considers it a business rather than a hobby. Even more precisely, if you have treated your blog like a business by regularly working on it with the purpose of making a profit, the IRS would also deem this a business and as such would also qualify for business deductions. If your blog is considered a business and you are filing as self-employed, you are also expected to pay self-employment taxes quarterly rather than at filing time.
Wondering what you need to claim? According to the IRS, taxable income is defined as all “employee wages and fringe benefits, and [all] income from bartering, partnerships, S corporations, and royalties.” The blogger must claim all review items, blog conference sponsorships, ad purchases and generally anything you are given that has value. The IRS also states “[y]ou have to file an income tax return if your net earnings from self-employment were $400 or more. If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement listed in the Form 1040 instructions.”
As a business you are also able to deduct certain expenses and losses, though it should be noted that it is not generally a good idea for your expenses to outweigh your income outside of any first year start-losses. In order to make sure you’re taking advantage of as many deductions as you legitimately qualify for, I recommend seeking professional advice from an accountant or tax professional.
The long list of possible blogging tax deductions includes:
- Blog Conference Fees
- Hotel costs for business trips
- Mileage for business trips
- Industry books
- Website hosting fees
- Website design
- Jump drives
- Graphic design fees
- Business cards, letterhead
To learn more about tax law and how it affects bloggers, visit these articles:
- Hobby Versus Business — A Significant Tax Difference via Small Business Legal Blog
- 7 Things That Every Blogger Should Know About Tax[es] via ProBlogger
- How to Avoid Legal Trouble, Income Tax Fines, and Penalties as a Blogger via ProBlogger
- What is Taxable and Nontaxable Income? via IRS
- Self-Employed Individuals Tax Center via IRS
- 101 Tax deductions for bloggers and freelancers via Wisebread