As a Blogger or YouTuber, you may be able to take advantage of various tax deductions to reduce your taxable income. These deductions can help offset the costs of running your online business by reducing your overall tax liability. Understanding the deductions available to you can save money on your taxes and keep more of the income you earn from your online business. In this blog post, we will discuss some of the most common tax deductions available to bloggers and YouTubers in the United States.
Tax Deductible Expenses for US YouTubers & Bloggers:
- Home Office Deduction
- Equipment and Supplies
- Travel Expenses
- Business Meal Deduction
- Educational Expenses
- Website and Hosting Fees
- Legal and Professional Fees
- Marketing and Advertising Costs
- Interest and Fees
Before we begin, you must understand that the IRS treats blogging and YouTube content creation differently based on whether it is a hobby or a business. Let’s start by defining the difference between a hobby and a business when it comes to blogging and YouTube content creation.
YouTube and Blog Content Creation: Hobby or a Business?
A hobby is defined as an activity that is engaged primarily for personal pleasure or enjoyment. At the same time, a business is an activity that is engaged with the intent to make a profit. The IRS looks at several factors to determine whether your YouTube content or blogging is considered a hobby or a business, including:
- Whether the activity is carried on in a businesslike manner
- Whether there is a profit motive
- Whether the time and effort put into the activity indicate an intent to make a profit
- Whether the activity is a part-time or full-time occupation
- Whether the activity is undertaken for livelihood or for recreation
When it comes to blogging and YouTube content creation, the IRS will likely consider it a business if you are consistently creating new content, promoting your content on social media, and actively monetizing your content through ads, sponsorships, and affiliate marketing.
If your content creation is considered a business, there are several tax deductions that you may be able to claim, including:
- Home office expenses
- Equipment and software expenses
- Business travel expenses
- Marketing and advertising expenses, and many others, which we will discuss in detail in the coming sections
Note that even if your content creation is considered a hobby, you may still be required to report any income earned from your content to the IRS. However, you will not be able to claim any deductions related to your hobby.
If your content creation is considered a business, you may be able to claim more deductions, but you will also need to be more diligent in reporting your income and expenses to the IRS. Suppose you’re unsure whether your content creation is a hobby or a business. In that case, it’s always a good idea to clearly understand your tax obligations with a tax professional.
Now that we have understood how the IRS determines whether your YouTube content and blogging are considered a hobby or a business let’s move on to how you can deduct expenses from the income you made via blogging or YouTube content creation.
Disclaimer: This post is for informational purposes only. It is highly recommended that you seek advice from a qualified tax attorney or CPA before making any decisions regarding your tax filings.
Top 10 Tax Deductible Expenses for US YouTubers & Bloggers:
1. Home Office Deduction
The first in the list of the top 10 tax-deductible expenses for YouTubers and bloggers in the U.S. is the home office deduction. If you use a portion of your home exclusively and regularly for your business, you may be eligible for the home office deduction. This includes a dedicated room or space used for filming, editing, and creating content. To calculate the deduction, you’ll need to calculate the square footage of your home office and multiply it by the percentage of your home that it represents. If your home is 2,000 square feet and the space you use for your home office is 200 square feet, then 10% of all the costs of your home can be considered as expenses for your home office.
2. Equipment and Supplies
Bloggers and YouTubers often invest in equipment and supplies to create and produce content. This can include cameras, lighting equipment, editing software, and more. These expenses are deductible, so make sure to keep track of all receipts related to your equipment and supply purchases throughout the year.
Imagine a freelance graphic designer purchases a new MacBook Pro for $3,000 and uses it for personal activities such as browsing social media and watching videos 20% of the time, but 80% of the time they use it for work-related tasks such as creating designs and communicating with clients. The designer cannot claim the full $3,000 as a business expense, but they can claim 80% of the cost, or $2,400, as a legitimate expense. This is important to keep in mind when tracking and documenting expenses to ensure accuracy and compliance during tax season, as failure to do so can result in penalties and fines. Consult a financial advisor to ensure proper expense tracking and reporting.
3. Travel Expenses
If you travel for your business, you may be able to deduct your travel expenses. This can include airfare, lodging, transportation, and meals. However, it’s important to note that you can only deduct expenses directly related to your business. So if you take a day to sightsee during a business trip, that portion of the trip is not deductible.
For example, if you are a travel blogger and plan a two-week trip to Japan. During the first week, you visit popular tourist destinations you have always wanted to see.. The second week, you attend a conference in Tokyo and meet with potential sponsors and collaborators.
In this scenario, you can claim a portion of your travel expenses, such as flights, accommodation and transportation, as a business expense. However, you cannot claim expenses related to the tourist activities you did during the first week, as they are considered personal use.
4. Business Meal Deduction
The Consolidated Appropriations Act has made it possible for certain business meals paid or incurred after 2020 and before 2023 to be 100% deductible. Otherwise, the limit is usually 50% of the cost of the meal.
To qualify for the 100% deduction:
- The business owner or an employee must be present when food or beverages are provided.
- Meals must be from restaurants, which includes businesses that prepare and sell food or beverages to retail customers for immediate on-premises or off-premises consumption.
- Payment or billing for the food and beverages occurs after December 31, 2020, and before January 1, 2023.
- The expense cannot be lavish or extravagant.
On the other hand you can claim only 50% for meal that’s offered during a board meeting or dinner provided for employees working late.
However, this tax benefit will expire at the end of 2022. Starting in 2023, the deduction for business-related restaurant meals will return to the regular rate of 50 percent. This means that only half of the cost of the meal can be written off on your taxes.
In order to claim a deduction for business meals, you must be able to demonstrate that the meal was directly related to your business, and that you had a clear business purpose for the expense. You should also keep detailed records, including the date, location, attendees, and the business purpose of the meal.
5. Educational Expenses
If you take courses or attend conferences to improve your skills as a blogger or YouTuber, you may be able to deduct the costs of tuition, books, and other educational expenses.
6. Website and Hosting Fees
The next on the list of tax-deductible expenses for U.S. YouTubers and bloggers is Website and Hosting Fees. If you have a website or use a hosting service for your blog or YouTube channel, you can deduct the costs associated with maintaining and operating your website.
7. Legal and Professional Fees
If you incur any legal or professional fees for your business, such as fees for trademark registration or accounting services, you can deduct them from your taxes.
8. Marketing and Advertising Costs
When it comes to advertising and marketing costs, the IRS allows you to deduct expenses that are ordinary and necessary for your business. Ordinary means that the expense is common in your industry, and necessary means that it is helpful and appropriate for your business.
Examples of expenses that fall into this category include paid advertising, such as sponsored posts or video collaborations.
As a YouTuber or blogger, you may subscribe to various services or software to help you run your business. These may include social media scheduling tools, graphic design software, or stock footage websites. These subscriptions can be deducted as a business expense for your business operations.
CheckYa is one such software that provides tools to help creatives like yourself run your business. CheckYa allows you to launch a professional profile/link-in-bio page in minutes. You can insert a link to your CheckYa profile in the description of your video. Your viewers can use your CheckYa page to send donations, buy your digital goods, or pay to book you. Our invoicing tool allows you to bill your clients for any custom requests. All your payments received will be organized in one central location to make your life easier when it comes to reporting for tax season.
10. Interest and Fees
The last on the list of tax-deductible expenses for YouTubers & Bloggers is Interest and fees. If you take out a loan or credit card to help fund your business, you may be able to deduct the interest and fees associated with it. For example, if you take out a loan to purchase new equipment for your YouTube channel, you can deduct the interest on that loan as a business expense.
By following these guidelines, as a YouTuber or blogger, you can save money on your taxes and focus on growing your online presence. It’s also important to keep in mind that these deductions may change from year to year and are subject to certain limitations, so consult with a tax professional to ensure you are taking advantage of all the deductions you’re eligible for. By staying organized and keeping track of your expenses throughout the year, you can save yourself a lot of headaches come tax season and potentially save some money on your taxes.