If you’re a content creator – author, blogger, YouTuber, artist, podcaster, educator, social media influencer, etc. – Internal Revenue Service (IRS) categorizes you as self-employed for tax purposes. Any partner who pays you $600 or more during the tax year must report the income on tax Form 1099-NEC (Nonemployee Compensation). However, even if you earned less than $600, you still need to submit a return. Here are the ins and outs of tax deductions for content creators.
How to Report Self-Employed Income
To report your income as a self-employed individual, you’re required to fill out the Schedule C (Form 1040) Profit or Loss from Business. IRS allows you to deduct expenses that are ordinary and necessary for running the business.
- Ordinary expense: Is defined as a common cost accepted in your industry
- Necessary expense: Is a helpful and appropriate cost for the business
Some ordinary and necessary expenses may be non-deductible, such as expenses used to calculate the cost of goods sold and capital and personal expenses. Capital expenses mainly include business startup costs, purchase of business assets, and improvements. Other than the non-allowable expenses, numerous expenses qualify to be deducted when computing your taxable income.
Tax Deductions for Content Creators
Here is a comprehensive (but not exhaustive) list of allowable tax deductions for content creators.
- Products to review: If you create product reviews, you can claim the cost of purchasing the products
- Prizes and giveaways: If you hold a contest for your followers, you can claim the cost of giveaway items
- Gear and equipment: You can deduct the cost of equipment you purchase for content creation, such as camera, lighting, props, etc.
- Software and apps: The cost of content creation software, such as editing software, website hosting fees, app subscriptions, etc., qualifies as a business expense
- Employees and subcontractors: If you hire or contract people to help you with content creation, e.g., a photographer, graphic designer, editor, etc., you can treat their salary or fees as a deductible business expense
- Telephone bills: If you use your phone for business, you can deduct the cost of business-related expenses – calls, texts, and data.
- Personalized merchandise: You can write off the expense of acquiring customized merchandise you use to promote your brand, such as branded mugs, t-shirts, stickers, etc.
- Utilities: The cost of utilities incurred to run the business, like internet, water, and electricity, is tax deductible. If you operate your business from home, you can claim part of the utilities used for business.
- Rent or mortgage interest: If you have an office, rent or mortgage interest is tax deductible. In case you run the business from home and have an office or a spot solely dedicated to running your business, you can deduct a portion of the rent or mortgage interest expense proportionate to that section.
- Office supplies: You can deduct the expense of ordinary office supplies that you acquire to run the business, such as stationary, computer supplies,
- Payment processing fees: You can write off the fees for payment processing, e.g., on PayPal, ATM withdrawal fees, etc.
- Marketing and advertising: If you incur expenses to advertise or market yourself, such as digital ads, listing fees, etc., you can write them off.
- Business travel and meeting expenses: Any expenses you incur for business travel and meetings, including transportation, accommodation, and meals, are tax deductible.
- Vehicle expenses: If you use your vehicle for business travel, you can claim part of the expenses you incur in relation to running the business (fuel, parking fees, etc.)
These are just a few business expenses that qualify as deductions for tax computation purposes. If you’re unsure whether an expense is capital or deductible, consider talking to a tax expert for clear guidance.Gurian CPA Firm specializes in helping content creators make the best tax decisions. Contact us today to schedule a meeting!
