Regardless of whether blogging for you is full, part, or just-once-in-a-while -time, its totally smart to treat it like a business because it can totally save you money–even if it’s just a hobby! And to save the most-est this year, I worked with my accountant to come up with these 10 Tax Tips for Bloggers.
- Receipts. Confirm that you have all your receipts for income and expenses. Go through your bank statements and credit card statements just to confirm that all those crazy expenses you paid are backed up with a receipt–just in case the IRS wants to chat with you…and you don’t want to leave out any deductions that are allowed!
- Expenses and Income. If saving money is your goal, make a spreadsheet, and list all your expenses and income. Categorize your expenses into groups like: office expense (ink, paper, pens, postage, internet service, domains–anything officey), telephone (because if you use it for your business, then it TOTALLY counts!), dues and subscriptions, contract labor.
- Contract Labor. If you’re utilizing contract labor for like a virtual assistant or paid guest-bloggers, you need an Employer ID Number (EIN) which you can get online here. Plus, you need to be sure to send 1099’s (or get your accountant to send these for you–that’s much easier since they kinda know what they’re doing with all that).
- IRA Contributions. If you want to save some money on any taxes due, then think about investing in your retirement at the same time by taking advantage of the opportunity to make contributions to your IRA account!
- Estimated Taxes. Make a list (and confirm) all estimated tax payments you’ve made to the IRS in the past year. My accountant suggests that you find receipts–so look for those while you’re looking for your other receipts! LOL!
- Paying Your Kids. If your unmarried child, under age 18, has assisted you in your business (like being your model or helping you with your online social-interaction), you can pay that child! This can reduce your own income, which also reduces your taxes due. Kiddos can earn up to $6,100 before they must file a tax return. But, they do count as contract labor, so if you decide pay your kid more than $600 per year, you also need to prepare a Form 1099 for them, even if they don’t file a tax return.
- Owed Money? Did anyone forget to pay you for work you performed in a prior year? If so, you can TOTALLY deduct that in the current year. But, like with everything else, be sure to have some kind of documentation (like an original invoice) to back up the deduction. No need in upsetting those IRS folks when they come a knockin’!
- Business Bill Leapfrog. If you have business-related bills looming, consider paying for them with a credit card in the current year. That way, you can go ahead and take the deduction, but won’t have to actually shell out the cash until after the new year!
- MILEAGE! Did you use your personal car to do business stuff like shopping for products for sponsored posts? Take advantage of that! The 2014 mileage rate is currently $0.56 per mile. That means that if you traveled 100 miles for your business, you can deduct $56.00 from your net income–and reducing your taxes due. You’ll need to have a record of the miles you traveled and purpose for that travel (I keep a little notebook in my car for just such purposes). And business travel does not include commuting miles (which I still don’t get and have to have a refresher from my accountant a couple of times a year). This can get super confusing, but there’s an IRS publication to help clarify. Nice of them.
- Accountant Help. Find an accountant–not your tax preparer (it’s just a good idea to have two eyes on that, especially if it’s getting to be a full-time thing). The accountant can make sure you have all your ducks in a row throughout the year, before having your CPA (or tax preparer) work on your taxes–and making it easier for you to get the most deductions. If you don’t have a CPA, your accountant can get you a reference, I’m sure.
And the biggest (and bonus) tip…remember–the LAST thing you want to do is get on the wrong side of the IRS!
Special thanks goes to Darlene Hattox, Accountant for guest posting this. (She’s my accountant, so she knows what’s up when it comes to bloggers if you want to give her a call!)