Running a blog is like running a business.That is, unless your blog is your hobby. You’re legally required to pay taxes on any money you earn as a blogger, either from advertising, affiliates or writing. It’s essential that you declare all income on your annual income tax return form.
According to the IRS, “Generally, an amount included in your income is taxable unless it is specifically exempted by law. Income that is taxable must be reported on your return and is subject to tax. Income that is non-taxable may have to be shown on your tax return but is not taxable.”
However, there area host of tax benefits for bloggers.
Most expenses that directly relates to your blog/s are classed as ‘allowable’. You will be able to deduct them from your tax returns.
If you’ve set up an office in your home which you use to conduct your blogging business, you may be able to claim against the rent or mortgage.Also, utilities that you use such as water, gas and electricity are tax deductible.
Below is a list of some of the items that you will also be able to claim against:
- Blog designs/logos
- Advertising fees
- Computers, keyboards, mouse
- Web cameras
- Professional letterheads and business cards
- Expenses relating to hotel charges – dining and hotel bills
- Lawyers, accountants and tax preparer’s fees
- Hosting fees
- Advertising for blog/s – text and banner ads
- Domain fees
- Software such as, photo editing, accounting and tax preparation software.
- Paper, staplers, paper clips and post it notes
- SEO Services
- Paid site submissions
- Fees for post boxes (post box addresses are best, if you want to keep your home address private).
- Car mileage
- Image or music downloads that you use on your blog
- Accounting software
Here are some tips to make life easier, and the process of paying your tax run smoother.
5 tips to consider when paying taxes
1. Avoid tax fraud
If you intentionally file false tax returns, not pay your taxes or enter an incorrect figure you’re committing tax fraud. Not declaring your actual income and claiming more for expenditure than what you actually spent is tax fraud. Should the IRS find out that you’ve cheated on your taxes, it could lead to criminal or civil penalties. You could end up with a big fine or get audited.
2. Have your list of income and total expenditure to hand
Keep a record of all expenditure incurred in running your blog. A simple Microsoft Excel spread sheet will do.
Another way is to file all receipts and invoices so that you have access to them when needed to complete your tax returns. A folder, shoe box or envelope is useful for storing them. Another alternative is to use https://www.shoeboxed.com/sbx-home/. This is an online site that keeps all receipts organized and clutter free. You could also create a simple computerized account by using tables, for your financial year. List your income on one side and expenditure on the other side. Your total expenditure is deducted from your income, to show a profit or loss on your blog.
3. Familiarize yourself with forms W-9 and 1099
A lot of companies, who employ bloggers to write, will ask you to complete a Form W-9 before you start writing for them. This is to inform the IRS that you’re basically self-employed. Therefore, the employer is not required to deduct taxes from any monies they pay you. It’s up to you to declare your income to the IRS. You are responsible to pay your own taxes. It’s best to familiarize yourself with form W-9 so that when you are completing it, you will know what to do. Here is a link to the W-9 form: http://www.irs.gov/pub/irs-pdf/fw9.pdf
Form 1099 (this copy is for information only) records all the money you have earned within the tax year. It’s handy because all you need to do is include that figure in your tax returns. You may have to access that form yourself because not all employers will give you one.
4. Pay your taxes free via EFTP
Using the EFTPS (The Electronic Federal Tax Payment System) is a convenient, easy, safe and secure way to pay taxes if you live in the USA. You can do this over the telephone, online or by using a Voice Response System. It’s a free service offered by the US Department of Treasury.
5. You can file for an extension if you need extra time to pay your taxes
You could get an automatic extension of six months to complete your tax returns. There are different options open to you, depending on your circumstances. For example, if you haven’t got all the money to pay your tax, still complete the tax returns form and pay what you can afford, and request a Payment Agreement Application online. Send Form 9465, which is the Installment Agreement Request with your tax return. Or if you prefer, you can call the IRS to discuss your situation on the telephone. Click on this link for all the information you need on filing for an extension.
Contact a Tax Professional who will help you sort out your taxes. They will know the best ways to help you complete your tax returns so that you pay the right amount of taxes and avoid any over payments. Another advantage of using a Tax Professional is that they will ensure you get all the refunds you may be eligible for.
Paying tax as a blogger is not so scary, especially when you know what expenses you’re entitled to claim against, on your annual tax returns. The important thing is to keep accurate records of all your spending and earnings.
This post was written by John from Fast Forward Academy.