Do you know that blogging will affect your taxes?
You have to claim your blog income of course, but you also have to claim anything you get in exchange for blogging. Yep, even those free roller skates you took in exchange for a review.
Say what? Claiming freebies as income? Yep. If you were given a fridge from Hoover, tickets to a hockey game which you attended, and a pallet of chocolate (we should all be so lucky), you’ll need to claim it!
But if you didn’t keep them- maybe you held a giveaway for that item, and didn’t keep them for personal use, for example, you do not need to claim it as compensation. If you accepted the tickets, couldn’t use them, and gave them to your sister, though – you have to claim it. (See, this is why you need to check with your accountant if you have questions!)
You even have to claim moneys earned through illegal activity. So, if you are selling heroin, you better put it on your Schedule C. The IRS is what brought down Al Capone, after all, when the FBI couldn’t.
What about deductions, to minimize the impact of that “barter income”?
Bloggers qualify for quite a few deductions, which might include: cost of hardware, software, or premium themes used exclusively for blogging, promoting online, etc.; hosting; buying your domain name and privacy registration; design work; postage and shipping if you mail items to readers from promotions and giveaways; postage if you send your readers notes, cards, etc. via snail mail; cost of conferences, webinars, ebooks, or regular books if used to further your knowledge on blogging. So, if you bought 31 Days to a Better Blog or a Thesis theme for WordPress, write them off!
Don’t forget your legal costs! Incorporation costs are deductible and so are licenses or permits. Bank and PayPal fees may be deductible, too.
Be careful- don’t claim so many deductions that your blog business is unprofitable more than one year in a row. Because if you are consistently losing money, that’s a hobby, not a business!
Please note, I am not an accountant and you should always seek the advice of a qualified professional if you have any questions.
Some links to help you out when you’re up to your ears in a Schedule C:
From Blog to Business - stop blogging as a hobby, blog as a business.
Is it a hobby or a business? Here’s what the IRS thinks.
John Chow on Blog Earnings and Income Tax
More from the IRS: Guide to Business Expenses
101 Deductions from Wisebread- do you qualify for any of these?