Note: I am not an accountant. Please confer with your accountant or tax professional for your personal finances.
Taxes. We all hate them. No matter whether you’re liberal or conservative. We all hate having to pay them. But we like having paved roads and standing bridges, so we have to pay taxes.
When we work for an employer, we receive a W-2. Our employer makes sure that the proper taxes are withheld for us. As bloggers, we need to make sure that we take care of this on our own. However, it gets a little murky.
Should I file? How do I know if I need to file taxes for my blog? Will the IRS know?
So being that it’s tax time I thought this little post was in order.
Last year, I bought an inexpensive e-book covering taxes for bloggers by Nikki Hughes, a bookkeeper turned blogger. For only $5 you get all your questions answered, with scenarios to illustrate the tax law. The only downside is that (as of writing this post) her website seems to be down. However, you can still purchase this useful e-book here: Your Blogging Business: Tax Talk & Tips from a Bookkeeper Turned Blogger.
Here is a small summary of what you can find in this book:
Do I need to file a tax return?
Bloggers are individuals who just happen to be self-employed through our blogs. So as far as tax filing is concerned, are we individuals or businesses? We’re actually sole proprietors. The IRS says that a sole proprietor is “someone who owns an unincorporated business.”
Most likely than not, we don’t need to file a separate return from our individual tax return. However, we have to fill out a Schedule C form if we qualify as self-employed.
In a nutshell, if your net income (the amount you keep after all your expenses are accounted for) is $400 or more, you have self-employment income.
For example, if your gross income is $1,000, and you have $600 in expenses, your net income is $400.
Anything $400+ and you’ll have to file a Schedule C in addition to the individual tax return (Form 1040, 1040A, or 1040EZ).
What are examples of income and deductions?
Let’s say you make $200 from ad sales, $300 from sponsored posts, and $150 from affiliate links. Your income is $650, and since it exceeds $400, it is taxable income.
However, let’s say you just switched to WordPress and you spent $200 on hosting fees, plus $150 for the transfer, that makes your net income fall below $400. Those are all deductions (business expenses). You would not need to file a tax return for your blogging income.
What are examples of taxable income?
affiliate sales
ad spot sales
sponsored posts
paid reviews,
freebies (details on pages 20-21).
What are examples of business expenses?
Advertising – paying for an ad spot on a blogger’s sidebar
Depreciation Expense – so, say you buy a new MacBook for blogging. You take a portion of that expense once a year for the next 5 or 7 years and report that portion as a depreciation expense each year (p.25)
sponsored posts
affiliate earnings
gift cards
giveaways
If any of this confuses you, Nikki provides partially filled out forms to help you get started on your taxes. She also explains the form 1099 and how you might need to issue one to a blog designer, or even a giveaway winner. (That’s just one of many reasons not to give away any prize worth over $600).
Nikki also goes above and beyond detailing what other business expenditures you can claim, such as a portion of your mortgage or rent. She even explains the differences between personal expenses and business expenses (the differences aren’t always clear!). Every blogger should have this resource handy.
For all of my readers and fellow bloggers, I created a simple minimalistic Excel document to track all of your blogging income and expenses. I already included formulas that add up your total income, total expenses and calculates your net income for each month. There are 12 sheets in the document, one for each month. Feel free to personalize it with your colors of choice. Download the sheet here: FREE Blogging Income Tracker.
If you need more rows, just right click on row 19 and select ‘Insert row’ and another row will be added. (You might need to adjust the sheet for the formulas to work. hover at the bottom right of cell H19 or L19 until a + appears. Click and drag until the last row of your data and the formula should adjust).
Need more information?
The following two sites have chock full of information for bloggers.
You should be able to get an idea of how much your site brings in by looking at three main sources: Google, Social Media, and Direct Traffic. Google calculates how much advertisers pay to show their ads next to your content, while social media sites like Facebook and Twitter track what sales each source generated.
Tips for servers or bartenders at a business meal are deductible, but there's no "tip expense" category on your tax return. Instead, you claim tips as part of your total meal expense. You can also write off tips to cabbies, valets, maids and other non-meal related people as travel expenses.
“In addition to standard federal and state income taxes, self-employed individuals are also obligated to pay self-employment taxes,” Pianoforte said. “The net income from self-employment is subject to a 15.3% tax rate, comprising 12.4% for Social Security and 2.9% for Medicare.”
Since you don't have any taxes deducted from your blogging income, you'll typically need to pay estimated taxes to the IRS each quarter. The due dates for estimated taxes are April 15, June 15, September 15 and January 15 (with some exceptions for holidays, etc.).
Earnings can vary from $0.5 to $2.5 per 1000 views, but several factors influence this, including your blog's niche, audience location, and ad technicalities. 🔍 Understand the Key Factors: Ad Types & Sizes: Choose wisely for better CPM. Audience Geography: Some countries offer higher CPC.
In most cases, you should expect it to take at least 6 to 12 months (minimum) of consistent blogging & promoting your content to start earning something from your blog. When it comes to making $1,000/mo in blog income, expect that to take 1 to 2 years of consistent effort for most people.
All tips you receive are income and are subject to federal income tax. You must include in gross income all tips you receive directly, charged tips paid to you by your employer, and your share of any tips you receive under a tip-splitting or tip-pooling arrangement.
If you've started working as a food service employee, you might be wondering: Are tips taxable? The simple answer is yes, the IRS treats tips as taxable income. If you earn tips, then you're responsible for paying income, Social Security, and Medicare tax on that tip money.
That means you can claim a total of $300 without receipts, although you are required to show how you spent money on the item and how your claim was calculated. The total work expense limit does not include travel expenses, car expenses, or meal allowance.
It's best to start an LLC for your blog when you generate some reasonably good income. For example, if you're earning less than $30,000 a year from your blog, it may not be worth starting an LLC unless you want the liability protection.
So, can you write off clothes as an influencer? Undoubtedly, you can – but you'll need the proof to get the pudding. In other words, clothing expenses as a business expense for influencers need evidence as an essential purchase.
Blogging is a popular way to share your thoughts, ideas, and expertise with the world. However, creating and distributing quality content does cost money. Thankfully, the IRS lets you deduct all ordinary and necessary business expenses from your income.
Revenue Per Mille (RPM) – is a measure of how much money you're able to earn from every 1,000 pageviews that your blog receives. This metric is useful because it allows you to predict the earning potential of future content based on your past data.
The cost must be related to your business. So, if you blogged about your trip to the Guggenheim, that would be a tax write-off. However, if you went to a nice restaurant afterward but did not review it or use it to create content, then your meal would not be eligible as a write-off.
If you're traveling for food events, conferences, or to gather content for your blog, you might be able to deduct the expenses—like travel fare, where you stay, and even meals along the way.
How much money can bloggers make? Blog owners with 10,000 to 100,000 monthly page views often earn between 2 cents and 10 cents for each page view from advertising, equating to $200 to $10,000 per month.
According to ZipRecruiter, bloggers can make $37,652 per year or $3,137 per month on average. The amount of money a blogger makes depends on a lot of factors, such as their niche, traffic, and revenue streams. Some make very little money, while other bloggers make millions of dollars per year.
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Job: Sales Manager
Hobby: Web surfing, Scuba diving, Mountaineering, Writing, Sailing, Dance, Blacksmithing
Introduction: My name is Prof. Nancy Dach, I am a lively, joyous, courageous, lovely, tender, charming, open person who loves writing and wants to share my knowledge and understanding with you.
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