April is just around the corner, and with it comes Tax Season! If you are a blogger, influencer or combo of both, you may be wondering about your own tax liabilities. This week we’ve got Guest Geek and tax expert Veronica Rhodes from Taxes for Expats with some advice on keeping everything legal, what you need to report, and suggestions for what you can claim as expenses. TFX offers help with all U.S. tax services — for both American citizens and non-citizens with U.S. tax filing requirements, so keep reading for a bit of free advice from the experts!
*Disclaimer: Article includes affiliate links
Tax Season Tips for Bloggers and Influencers
It’s no secret that you can make a living from blogging, whether you started it as a fun way to chronicle your trip overseas or with the intention of creating an extra income stream from home. Few of us are averse to a new source of revenue. It’s crucial to note, though, that earning money in any form means you’ll almost certainly have to disclose your profits to the IRS.
As a result, the goal of this post is to provide some tax tips for bloggers and influencers, as well as solutions to some frequent accounting problems involving taxes that you could find useful as you progress through your career.
Blogging as a Business
To correctly file taxes for your blog, you must first determine what type of business you are doing. Many people set up a blog for no other reason than to have fun. Perhaps you’re chronicling a trip, a self-improvement program, learning how to cook or you want to self-publish a book. If this is the case, any revenue you generate from your blog can easily be recorded as basic other income on your taxes. However, as a pastime, you won’t be allowed to deduct any blog-related expenses. On the plus side, the hobby income will not be subject to self-employment taxes.
If you plan to conduct blogging part- or full-time in the future, it may be helpful to choose a certain legal structure from the start, which is what the next section is about. (If you still aren’t sure about which legal structure to choose, TFX can help you figure that out!)
The Legal Structure of a Blog
Which legal entity you select to operate your blog business under has a big impact on how you submit your taxes as a blogger. You can choose from four different legal arrangements to run your blog:
1. Sole Proprietor
Sole proprietors can keep on filing their influencer’s taxes on their personal tax forms (on a Schedule-C), which is a terrific and convenient alternative for side hustle bloggers. However, once your business becomes your principal source of revenue, this business entity is no longer advantageous. A Sole Proprietorship has a greater risk profile because you are individually responsible for all financial and legal obligations.
2. S Corporations
Individuals can declare their income through an S Corporation on their personal tax returns, which simplifies the tax filing process. S Corporations can have up to 100 shareholders, making them a realistic choice to explore if you’re running your blog with others who want a piece of the action.
3. C Corporations
A C Corporation is a business that is treated as a separate tax entity from its individual owners (s). As a C Corp, you’ll have to submit two distinct tax returns: one for your business and one for your personal income. Your personal taxes will not include a Schedule C.
4. Limited Liability Companies (LLC)
A limited liability company (LLC) is the most common legal structure for a blogging business. You are not personally liable for business finances or legal concerns, and you are not subject to double taxes under this structure. While this corporate entity is simple to set up, it requires recurring tax payments in order to operate.
Be Aware of Quarterly Estimated Taxes
Be aware that as a blogger, you’ll almost certainly have to deal with estimated taxes, which most typical employees don’t have to deal with. The American tax system is based on a “pay-as-you-go” model. You must pay quarterly income tax payments to the IRS because no taxes are deducted from your blogging income. Estimated tax payments are due on April 15, June 15, September 15, and January 15. (with some exceptions for holidays, etc.). You may owe an extra tax penalty if you don’t pay your anticipated taxes on time. You may be eligible to avoid paying anticipated taxes if you had no tax liability the previous year or if you owe less than $1,000 in taxes.
1099-MISC Tax Forms
Every company that pays you as a self-employed blogger will issue you a 1099-MISC if you make over $600 through them. You’ll get a 1099-K form if you use a business like Stripe or PayPal to process payments for the sales of your own products and services, and your sales are over $20,000. A thorough description of your profits from a specific company is a 1099-MISC document (whether as an affiliate or contract worker).
If you earned more than $600 from any affiliate company or client during the year, you should obtain a 1099-MISC. Even if a company forgets to provide a 1099-MISC, you must still report those profits as income on your personal tax return. Bloggers who earn less than $600 must also reveal their earnings.
Tax Deductions for Bloggers
Let’s take a look at the different types of costs you can claim if you run a blog:
Your internet-related expenses, such as blog hosting fees, domain name registration fees, blogging software fees, and image or music downloads for your blog, can all be claimed. If you run your blogging business from home, you can also claim a percentage of your internet expenditures. You can claim all of your internet charges if you work from a designated office away from home.
If you’re a self-employed blogger, any business-related capital equipment you buy for less than $20,000 qualifies for an instant tax deduction. Your computer or laptop, as well as your wireless router, keyboard, mouse, monitor, webcam, and digital camera, are all included.
You can claim a portion of your rent or mortgage interest on your home as a tax deduction if you conduct your blogging business from your dedicated workplace at home. As this is an area where the ATO checks closely, make sure you claim an acceptable share compared to the overall size of the property. If you utilize that area to run your blogging business, you can deduct a percentage of your household expenditures. This may include a percentage of your electric, water, and gas bills.
You can get reimbursed for business-related landline and mobile phone calls, as well as a portion of the mobile phone’s cost.
All of the stationery and office supplies you use in your blogging business, including business cards and letterheads, are claimable.
Advertising, Promotion and Design
Investing in cutting-edge design and promotion is crucial to getting your blogging brand out there. This is why branding-related expenses like blog design, advertising, logo creation, promotional gifts, and search engine optimization services can be claimed.
Tax for Influencers FAQ
For social media influencers, taxes can provide unique and perplexing issues. You can learn to manage your taxes with ease—and save money in the process—with the appropriate information and preparation.
Do social media influencers have to pay taxes?
Yes, in most cases. You are most likely an independent contractor for the business you advocate as an influencer. Because independent contractors are regarded as self-employed, they must pay both income tax and self-employment tax. Because you do not have taxes withheld from your paychecks, you must pay the SE tax, which is a Social Security and Medicare tax.
What tax forms should influencers get?
Each brand you work with that pays you $600 or more should send you a Form 1099-NEC. Even if you don’t obtain a 1099-NEC, projects under $600 should be declared as income on your tax return.
Do influencers pay tax on gifts?
It is debatable. In general, receiving a gift as compensation (free products, trips, etc.) is considered income, and you must pay tax on the amount of the present. If you are sent things to evaluate that is worth less than $100, you can make an exception. The value of those items does not have to be included on your tax return.
Should you go all in with an LLC with your social media influencer business?
Many social media influencer businesses begin as a pastime. Your hobby may develop into a business, or you may have intended to start one from the beginning. In any event, you should think about forming a limited liability company or an LLC. LLCs are a straightforward and low-cost solution to protect your personal assets while also lowering your tax bill.
When your business faces risk and/or could benefit from tax benefits and a greater reputation, you should consider forming an LLC. You may secure your savings, automobile, and home with limited liability protection, gain more tax benefits and possibilities and improve your social media influencer firm’s credibility by forming an LLC for your social media influencer business.
What if you are just starting out and only earned a few hundred dollars—should you report that?
The money you’ll make from a certain brand or sponsor won’t be huge, especially when you’re just starting out. Micro-influencers may earn $50-100 per post or share a piece of revenue with a specific code, depending on the specialization. You might hear the figure of $600 mentioned when submitting your taxes. Some even argue that if your income is less than $600, you don’t have to pay taxes.
That isn’t the case! It makes no difference whether a business pays you $25 or $550; all it means is that you won’t receive a 1099 tax form. The money is still on their books and in your bank account. However, you’re on your own rather than getting a tax form as a contractor (which may or may not happen depending on your specific partnership). Even more reason to keep meticulous records all year!
And so, if you are an influencer, be sure to take the time this year to gather your tax information. If you are having trouble and need assistance, Taxes for Expats is here to help with all of your questions and concerns so don’t hesitate to contact our team today! We can walk you through what steps need taking depending on where in the world you live or work. Don’t wait until the deadline; get in touch with us today!
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TFX is a women-owned tax firm that offers all U.S. tax services — for both American citizens and non-citizens with U.S. tax filing requirements. From straightforward tax preparation to complex cases involving multiple factors — we’ve handled it all for over 25 years.