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Tax Deductions For Bloggers & The Self-Employed.

Starting looking at my tax situation for 2008, I have begun putting together a spreadsheet of all the expenses I have incurred running my blogging business.

get your taxes done
Creative Commons License photo credit: Paul Keleher

I keep a loose tally throughout the year and have a folder on my computer that holds all my receipts (PDF’s and scanned docs), but this is the time of year that I start adding up actual numbers to see what my deductions might add up to. This is also the time I consider buying any new equipment for my business so I can get that write-off if I need it. In thinking about what I can and cannot deduct from my income, I refer to a bunch of sites and books that offer advice on deductions I have used before and ones I have never even thought of. Since a lot of you either run your own business or are bloggers yourselves, I thought posting a list of some of these deductions would help you in getting ready for tax season. Also, next week I will have a review of a tax book that every self-employed person should have in their bookcase; it is simply a great book. OK, let’s take a look at some of the things that you might be able to deduct on your tax return:

  • Health insurance costs
  • Web hosting fees
  • Domain name expenses
  • Design fees
  • Application costs
  • Bank charges
  • Tuition fees
  • Library charges
  • Business gifts
  • Safe deposit box fee
  • Equipment rental
  • Licensing fees
  • Research materials
  • Business credit card renewal fees
  • Computers
  • Computer accessories
  • Video & still cameras
  • Internet access
  • Cellphone costs
  • Business cards
  • Promo pieces
  • Product review expenses
  • Advertising costs
  • Giveaway prizes
  • Percentage of rent/mortgage
  • Percentage of utility bills
  • Percentage of home insurance
  • PO Box fees & postage
  • Transportation costs
  • Business lunches
  • Second business phone line
  • Membership dues
  • Conference fees
  • Charitable donations in the name of the business
  • Backup hard drives
  • Lawyer/accountant fees
  • Software
  • Office supplies
  • Seminars
  • Cable TV
  • Magazine subscriptions
  • Trademark/copyright filing fees

So for those of you getting ready for tax season, what would you add to this list that I might be missing? Let me know in the comments!

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Comments (29)

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  1. FFB says:

    Are these deductible for any blogger or do you need to be incorporated or LLC, etc? I’m in need of a new computer and I’m wondering if I could deduct some of it. Great list of items by the way. I’ll have to keep a note of them.

  2. david says:

    Depending on your circumstances, some are and some aren’t. You do not need to be incorporated in ANY way to take most business deductions on a Schedule C as a sole-proprietor.

  3. Josh Smith says:

    Great list, do you do your own taxes with this many deductions or got to an accountant?

  4. Miranda says:

    @FFB I’d see an accountant about changing to LLC from sole proprietorship. There are tax advantages to an LLC that you don’t get in a sole proprietorship. Once you are making a certain amount, it is worth it to change your status.

    I also deduct overseas phone calls that I make to do interviews in the course of my work as a freelance writer. I check the phone bill and deduct these. Also, now that I have Skype (and it’s only used for business), I can deduct the amount I pay for the ability to call phones around the world for business purposes.

  5. david says:

    Miranda – I would be curious to see what advantages, as 2 different tax people told me there was really no advantage at all.

    Josh – I have an accountant.

  6. FFB says:

    Another question is what is the cost of LLC? I think I’m going to need a discussion with my accountant!

  7. david says:

    FFB – It was $800 a year in CA plus any other fees.

  8. Miranda says:

    I have an accountant, and he recommended an LLC. (As did a tax attorney I consulted before following the accountant’s advice.) I think it might depend on individual circumstances. And I am paying much less in taxes than I did as a sole proprietorship. I think it has to do with the way the distributions from the LLC are paid out, and the smaller amount of self-employment tax I pay under this arrangement. Of course, there are still FICA and other taxes to pay…

    Sadly, as I am not a tax professional, I’m not clear on why that is. Only that things have improved greatly for me on the tax front. Which is why I recommend a consultation with someone who can answer questions for specific circumstances But I do know that the LLC provides:

    *Pass through taxation
    *Some protection against liability (I guess that’s not really a tax advantage).

    I guess the crux is that while the LLC may not provide many more specific tax advantages, it does limit liability in ways that sole proprietorships don’t.

  9. Curt says:

    That’s a great list. The only one that I stay away from is the

    Percentage of rent/mortgage
    Percentage of utility bills
    Percentage of home insurance

    because these deductions can come back to bit you when you sell your house. They also are red flags to get an IRA audit.

  10. david says:

    Miranda, many accountants’ first reaction is to form the LLC. However, my thoughts on your two points:

    *Pass through taxation – Sole-proprietorships do this as well

    *Some protection against liability – Not really, you can still get sued by anyone.

    An LLC would be valuable if you are selling a product, but for people just writing content or not selling anything, it might not be necessary.

    Just the fact that Miranda’s 2 people said to get the LLC and my 2 didn’t show the different thoughts on this. I suggest really reading up on the difference before shelling out the money and anything else for your specific situation.

    Curt – not really anymore, the IRS understands that people work from home. You should take advantage of every tax deduction you are allowed by law. An audit is not a bad thing if you are telling the truth.

  11. Andy says:

    Great list, I was just thinking of this very topic. Should give it to my accountant!

  12. Mrs. Micah says:

    Also, don’t forget that if you’re paid via PayPal by some customers, you should deduct any fees (don’t claim them as deductions, just don’t report earning $500 if you only got $492 because of PayPal fees). The nice thing is that the fees are taken away before you get the money, so you really only do receive $X.

    Or get paid via echeck.

    Because I wasn’t thinking about this earlier this year, I’m planning to do a massive calculation around the end of the year of all the money PayPal took, up ’till I started calculating right.

  13. david says:

    Absolutely, I just remembered to make sure of that myself!

  14. Caleb Nelson says:

    At what point should a part-time blogger consider forming an LLC? Additionally, at what point should a part-time blogger consider going full-time?

    Caleb

  15. David says:

    I am a full time blogger and I dont have an LLC, nor do I have plans to form one.

  16. Caleb Nelson says:

    David,
    How long did it take you to go full-time? When do you think a blogger should think about going full-time? What’s the name of your blog?

    Caleb

  17. david says:

    Caleb, you are on one of my sites right now leaving comments. It took me 2 years to get to this point and I run multiple blogs to pay the bills.

  18. Nice list, and a perfect example why I keep my accountant on speed dial. Some call accountants a waste, but I call them a peace-of-mind service because the last organization I want to upset is the IRS.

    One tip – for anyone searching for an accountant, give them a quick 10 minutes interview. Specifically ask if they have clients such as yourself who have tons of self-employment deductions. I made this mistake a few years ago, and fortunately my new accountant found the mistakes and fixed them.

  19. Miranda says:

    I work about 25 hours a week as a freelance writer and professional blogger. When I first started, I was sole proprietorship. Since switching to LLC, I have been paying less in taxes. I know that both are pass through, but, even though I can be sued by anyone through my LLC, some of my assets are protected in ways that they wouldn’t be through a sole proprietorship (so says my attorney, anyway).

    At any rate, my taxes have gone down through the way we distribute the earnings from the LLC (most of them go to my husband, who is my partner). We still pay income tax, of course, on the income from the LLC, but the self-employment tax I pay is significantly lower than with my sole proprietorship, and that makes a HUGE difference in what I am paying overall.

    But I think it probably differs. It made fiscal sense for me to switch, but an LLC isn’t right for everyone. Here in Utah, it only costs $150 to do the LLC thing, plus $50 for a business license.

  20. david says:

    “we distribute the earnings from the LLC (most of them go to my husband, who is my partner). ” I work full time as a blogger, but what you said about your situtation makes a difference and probably a good reason to have an LLC. I operate as a SP and on a cash basis – so any money that comes in is my income, no matter where it goes. It works out well for me and an LLC would not be beneficial in my situation at all.

  21. This is incredible! Thanks. I knew about 50% of the list but it’s nice to have a complete one

  22. So I just started a grilling blog/website. I’m wondering if I can deduct the food that I cook which I document the process on the site? As well as say grill gadgets and maybe charcoal and smoke wood and the like….

  23. david says:

    Yes, you can, according to tax law.

  24. [...] Qualified business expenses. If you have your own business, you can write off certain expenses. As long as you pay your expenses by the end of the year, you can write it off next year. This would include things like prepaying for webhosting, buying a new computer, paying for advertising, or other qualified business expenses. [...]

  25. jozie says:

    I am self employed.. I have about 14,000 .. is it the more i deduct the bigger the return? Im confused

  26. david says:

    No, the more you deduct the lower your tax bill is. If you are self employed, and have not paid quarterly estimated taxes all year, you will owe all your taxes plus late penalties, on April 15th. Deductions just reduce your taxable income, they don’t increase your refund.

  27. [...] someone else, and I needed to learn how to start thinking like a small-business owner. What could I write off on my taxes? What kind of taxes would I owe? How should I keep my records? Well, this book covers all this and [...]

  28. tax 2010 says:

    Thanks for the info… Im new to being selfemployed and I need all the help I can get.

  29. jamie slay says:

    What if your blog only made about $7 last year? Does that count as a business?

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