10 Legitimate Tax Deductions for Bloggers Making Money Online

I am definitely not a tax professional and you can take my suggestions with a grain of salt, but to confirm if these are really legitimate tax deductions for bloggers in your country, make sure you ask your accountant.

I have operated many businesses over the years, in fact I have never worked for anyone, but bloggers making money online is a completely different story. The potential tax deductions are often overlooked as bloggers are busy people, no doubt. Bloggers are simply sitting in their home office making money, sticking to their daily blogging routine, not realizing the legitimate tax deductions that they could be claiming.

I live in Australia and have just had my tax done by my accountant. I just thought I would share some of the tax deductions that I have used in the past. (This might not apply to you in your country)

#1. Rent for Business Premises – Tax Deductions for Bloggers

Ahh this sounds scary but it is not. Bloggers making money online have got the cheapest rent in the world. I have mentioned before that I used to pay in between $10,000 and $11,000 a month to rent a shop premises near Brisbane. Now I am earning just as much money from blogging but I do not have the stress of working seven days a week and employing 15 people. (OMG that was a nightmare!)

Now I rent my Internet premises from Hostgator for around $10 a month, allowing me to open approximately 15 businesses, just with that one small fee. I also have other hosting accounts with Hostgator with more businesses (WordPress websites) on them.

Even though the renting fees are tiny compared to the income that they produce, the fees are still tax-deductible.

#2. Domain Name Renewal

It costs me around $10 a year to renew each domain name that I own. I do have a decent collection but I have made my money back on these domain names over and over. For example I bought a domain name that a local business wanted. They offered me $400 for the name, when I only paid $10. This kind of sale will pay for registering some of the other domain names that I have. If not they are all still tax-deductible because that’s what business I am in.

#3. Tools of the Trade

Every business needs the tools of the trade to operate and obviously they are clear tax deductions for bloggers. Although in the beginning I only bought Web hosting and domain name. This was the cheapest business I have ever entered into! However as I progressed I realized that I could not possibly do my work without certain tools of the trade.

These blogging business tools include:

Therefore I have one-off payments which are one-off tax deductions, and I have continued recurring payments that will also be deducted. Either way I am happy to buy tools when they are tax deductions for bloggers anyway. I just love all the goodies I buy and I cannot believe they are for business use!

#4. Conference Expenses

I do attend the odd conference here and there and because I live over an hour away from Brisbane, I usually need to travel there, buy accommodation, eat out, and so on. Luckily these kinds of things are tax deductions for bloggers as it can be a very expensive exercise.

Of course I also treat this kind of thing as a holiday as well. I might as well make the most of it! I often go to the gold coast (because that’s where most of the conferences are), attend the conference and work from one of the high rises over looking the beautiful beaches in my down time.

#5. Travel Expenses

Yes I do leave my home for my job sometimes…But rarely of course as I hate getting out of my pajamas. As I stated above, I might travel to a conference, I might go shopping for a product to review, or maybe even to buy more computer equipment for my business. I have blogs about computers and gadgets and need to keep up with the latest stuff. It is my job to know how to use these things. Now you know why this is my dream job as all my favorite goodies are tax deductions for bloggers. OMG how lucky am I?

I try not to be a hermit, because in this business bloggers making money online can often be shut off from the world. I can also go to various cafes to work and review their food for one of my websites.

#6. Products to Review

I get a lot of products, software, plugins and stuff for free (these are counted as income in some countries). But sometimes I need other products that I would like to have myself and would also like to review on one my websites. For example I went out shopping for Android tablets and came home with nothing, but I did write a review about it. I definitely tried to buy a tablet, but none were available for me.

If I had purchased the android tablet, that would be tax deductible either for use in my business or because I might have written a review on it. Therefore there were two ways to make this a tax deduction.

I can also claim the travel expenses that I payed for to seek out the information for this review.

If you want to claim something like this, make sure you have the proof to back it up. If you had purchased the android tablet then you need to keep the receipt, the petrol receipts, and so on.

So if I have a website about Wii games and I go and buy a Wii game to review for the website, this is an expense for the business. It does not matter if that website makes money or not, the game is used for the business. I do not purchase items for blogs that do not make money though, as this would be a bad business decision, but it is just an example. As I have stated, you will need to talk to your accountant to see what the real tax deductions are for you.

#7. Home Office

Ok you can get technical and work out the percentage your home office takes up in your house. Then you can claim that amount the expenses of your house. This can be different in other countries. I can claim around 10% for my home office. You will have to ask your accountant what you can claim.

This means I can claim rent or mortgage payments, electricity, and so on.

#8. Internet, Phone and Electricity

Of course this can be claimed under the home office section but I also have extras to claim. I have a dedicated business mobile phone, and a mobile Internet connection for using when I matter the house.  I paid $39 to access the internet in a hotel room once so now I have my own USB dongle. (ripped off) Obviously I had to pay that, another one of those tax deductions for bloggers, but I was not happy about that one!  The mobile internet and the mobile phone are needed to make my business mobile.

So these two items are completely tax deductible, while the electricity is partly tax-deductible, and my home phone is only partly tax-deductible.

If you use 50% of your home internet usage for your business then you can claim 50% back on tax.

#9. Paypal and Bank Fees

I cashed an Amazon cheque the other day and it cost me close to $50. The cheque was for about $1000 but by the time I had it converted from US dollars to Australian dollars and also paid fee to deposit the cheque, the actual bank fees came to $50. That is one thing that sucks about being an Amazon on affiliate in Australia. I do not know why they cannot pay into my bank account like everyone else, or even PayPal.

Anyway I also have PayPal fees each time I receive money for things like an e-book sale or maybe some other affiliate payment. All of these fees add up dramatically and I was seriously shocked when I saw my total.

#10. Outsourcing Fees

I am not directly employing people but buying goods from them. If I was to employ someone in Australia, I would need to have workers compensation (min $250 a year), superannuation (if you pay over $450 a month), and whole lot of other fees!

Therefore I buy articles, I pay someone to service a blog, or maybe I get a plugin built. I am not directly employing anyone.  I do not pay people by the hour, I pay for goods and services and therefore these are tax deductions for bloggers.

My money I earn on the Internet is shared all over the world. I buy stuff from USA, China, Philippines, India, and many more countries.

This is basically stock to fill my shop. LOL

Here are some of the places I use to get content:

Quick Tax Deductions for Bloggers List:

  1. All hosting fees and domain names charges.
  2. Advertising, Sponsored advertising, or paid site submissions fees.
  3. Business branding fees such as Logo design, business cards, promotional items etc.
  4. Internet access at home and on the go.
  5. Partial home phone if used for business and all dedicated business phones.
  6. Software on your computer as this is a computer based business.
  7. Computers and gadgets needed to run your business. (Cameras, USB sticks, Laptops, Tablets, Storage devices,etc)
  8. Fees for stock images, music, or video added to your blog.
  9. Outsourcing, SEO, Blog services. A social media marketer.
  10. Products to review and prizes for giveaways and contests.
  11. Business education. Anything that is aimed at improving your business. Ebooks, Magazines, paid Newsletters.
  12. A business coach. One on one help from a mentor.

When bloggers that make money online do a tax return, the best advice I could give you is to use a qualified tax professional. Blogging is a new business and the rules about what is tax deductible is very unclear in most countries. I have written this article so you can get an idea of what can be claimed but it is up to you to find out if these are legitimate tax deductions for bloggers in your country.

Comments

  1. johnavery says

    Being from a place where i have different type of tax issues let me not fit to the article,but defenitly sure is well return for the purpose.
    johnavery recently posted..Truck Salvage

  2. says

    Some more deductions i have are…

    1) My car.
    2) Camera/computer equipment.
    3) Holidays masked as business. Example, affiliate conference in Vegas :-)

  3. says

    The most difficult thing to consider as a blogger is how to maximize your earnings thru your money making activities. One of the best way is to be aware of all the legitimate tax deductions. The enumerated items above are really helpful to every blogger.
    Stan recently posted..Best Microwave Oven 2012

  4. Richard Brown says

    This is a great list to reference for tax deductions. I was actually looking for something like this, a list geared for the average internet marketer. Although people usually have an idea of what they can write off, it definitely helps to refer to a list. I realized I forgot 3 of them after I read through this.
    Richard Brown recently posted..4 Easy Ways to Build Your Weekly Budget Planner

  5. Ricky says

    Absolutely Brilliant, This is why I love your articles so much. They are always informative, but also fun. Thanks for the time put into this. I absolutely love your site.

    Thanks again,

    Ricky Strode
    Ricky recently posted..Hypnosis Training Update

  6. Annie says

    Nice! Figuring out taxes is one of the most difficult things about working freelance/monetized blogging.

  7. Cindy says

    Hi, I own a whole heap of domains under the auspices of my internet marketing and web design business… can I claim all of those as a business expense (even if I don’t have a website up on them yet – but am developing)?

    Thanks!

    • mitz says

      Yes it is like paying to register your business name.. This is the kind of business we are in..We need domain names in order to build websites.

  8. says

    I was not aware of 1 out of this list, Home office, i think i can use this one to deduct some expenses like utility, partial rent & furniture, but i have to keep good paper work for it just in case if i have to show it, tax season is almost here so need to prepare for it and posts like this really helps.
    Thanks for post.
    Ricky Jamal recently posted..Home

  9. David Britt says

    Working online is like having a new business outside internet world. You’ll need to comply and paid some taxes.Thanks for sharing this valuable piece of information…
    David Britt recently posted..Food Catering

  10. Ann says

    Hi Mitz,
    Terrific article. I’m definitely copying it to save for future reference. Justin really filled in some solid information with our own IRS. With our economy right now, we need all the breaks that we can get. Separate bank accounts are perfect. That way you have a dedicated record to check those receipts against for the year. Super information.
    Ann recently posted..Debt Settlement Los Angeles

  11. Pete says

    Mitz, If you have some time to answer a question for me, I’d be super appreciative.

    If I am a freelance blogger, but I am hired by attorneys to blog for them once a week, can I deduct travel expenses?

    For instance, I blog for three law firms, and I have to drive the 30 minutes each way to their offices twice a week to meet with some of the associates for what information I can write on, and what is confidential. I spend about $120 in gas a month doing this. Is this a business expense?

    • mitz says

      Are you running as a sole trader and providing a service or are these companies employing you..?? In most situations employees don’t get compensated for petrol to get to work. You need to ask a pro but I would say you could easily adjust your business to get this deduction.

  12. David Cornick says

    Mitz, Yes you are right, all the things you mentioned are legitimate tax deductions in Australia.
    The one thing I would say is that keeping proper records and all receipts is vital.The taxman has a nasty habit of visiting when you least expect him.The onus is on the person claiming the deductions to have all their paperwork in order
    David Cornick recently posted..To Know About Mazatlan Mexico Vacation Rentals (Ezine Ready)

    • mitz says

      Well most of the receipts are online like paypal payments, credit card payments and so on..all recorded for me… the only things I have to watch is the rare petrol receipt and stuff I buy at a shop..Otherwise I buy online… I guess this is one good thing about this business because I can’t really lose the proof.

  13. says

    Great article Mitz, very informational again! Like one of your guests mentioned, I kinda sorta knew about some the things you’ve mentioned. Although there is quite a bit here I hadn’t THUNK of..lol
    Didi I mention my wife is an accountant? Believe me you, she doesn’t let me miss anything
    Bryan Ring recently posted..Start a Lawn Care Business in This Economy?

    • mitz says

      Glad to help James. There is probably some I have missed too.. I actually hate keeping records and doing tax so I leave it to the professionals. :)

  14. says

    I file taxes every year for past 3 years as a sole proprietor here in the states and write off a ton of blogging expenses, you pretty much covered them all. For the states, you have to be careful if you hire the same people because if you pay any single person more than $600 in a year you are required to collect a W9 form and report to taxes for that person, this is why hiring from oDesk, eLance..etc are cool because it handles that kind of paperwork automatically for you.

    Making sure you report all incomes from the dozens of sources can be a challenge too, since not all send an 1099 form showing earnings, so you have to carry a ton of receipts and match it all up. I keep pretty good records and Paypal does a great job with history, but this is why if you do blogging you should have a separate bank account for your blogs to handle AdSense/Amazon payments which don’t use Paypal. I completely isolate my normal day to day bank accounts from all blogging accounts so I don’t have any fuzzy transactions that take extra time to track and trace where the money went.

    Contest giveaways are a good one, you can write off any purchase you buy and giveaway in a contest to a reader too as long as you paid for it. You can probably write off most Fiverr gigs if you buy them as well as marketing expenses.
    Justin Germino recently posted..Last Day for the Kindle Fire Giveaway

    • mitz says

      Hi Justin..I have never heard of those forms but I am glad to hear from someone who knows about the US tax stuff. I do claim Fiverr gigs too as I had a few video intros and images done for me there. All for the websites. I kind of like the way everything is tracked online…Like Paypal history, clickbank reports, and so on. Keeps me in order too.

    • mitz says

      Yes I would say that they should work in other countries as they are used to run a business. But I really have no idea about other countries and it would be nice to hear from someone who has done a tax return as a full time blogger in another country.

  15. says

    I sort of know about these you listed as I have talked before to a good friend who’s an accountant.

    I also hate that Amazon conversion fee rate and bank fees..sigh..it’s ripping us off seriously and yeah, why can’t they just transfer to paypal??
    Michael Aulia recently posted..Getting an iPad this Christmas?

    • mitz says

      Yes but I found out that if I had deposited the cheque a week later, I still would have been charged for the converting currency but the exchange rate would have seen me with a small profit..The problem is the cheques are void after 28 days so I did not want to leave it too long…

  16. Brankica says

    I recently spoke to my tax guy and was amazed at what I can claim as deductions (in USA). For example, we can calculate how big of a percentage of space the office takes compared to the whole house and deduct that percentage from mortgage and utilities. And all the internet and phone bills. You are so right.

    I had no clue I can actually claim the “renting” for hosting and “filling up the shop” from buying content. Those are great ideas :)
    Brankica recently posted..Website or Blog | Why Site Build It Beats WordPress Any Time

    • mitz says

      Ha ha ha..Yes I call it some funny names but this is all used to run the business. The content is the goods to stock the shop..And the hosting is the landlord for the rental property. :)

  17. Missy says

    Are tax deductions only worthwhile if it meets or exceeds the standard deduction of $5,000 – is this correct?

    Thanks so much for taking the time to let us (bloggers and webmasters) know of our possible deductions when it comes to our taxes. Appreciate it. (and bookmarked all over the place)

    Cheers!
    Missy recently posted..5 Fun Solar Powerd iPhone Gadgets

    • mitz says

      I guess you have to earn a certain amount to pay tax anyway. I thought all deductions were worthwhile to reduce your income you are taxed on. But there are different tax laws everywhere so maybe I am misunderstanding your question??

  18. Peter Lawlor says

    This is a great post idea. What I do is have a spreadsheet and whenever I make a purchase, I note it in the spreadsheet for the tax year. If it’s a recurring expense, I note it’s recurring to tally it at the end of the year.

    My first year as a blogger I didn’t track expenses as I went and tax time was a nightmare. Now it’s a piece of cake.
    Peter Lawlor recently posted..Best WordPress Theme Framework: The Framework I Use the Most

  19. Juphet Mislang says

    Oh well, I was just shocked that all of this are to be paid. But, if people making money online is already gaining good profit, this would not be a problem right? And I still believe that blogging is one of the bests ways to earn money! And I guess being organized and pro active is the key.

  20. Juliette says

    You are not alone with Amazon fees, I’m in the UK and still have to accept US dollars cheques (way out-dated in this day and age!) and it costs me £7($11) each time to bank $100 commission, so not good at all. Useful post thanks.
    Juliette recently posted..360 (2011) Movie Review

  21. Mike says

    Reading this post makes me realise I need to pull my finger out and get my accounts sorted. There are so many things I over look. I just think I can’t be bothered a lot of the time but I suppose it all adds up by the end of the year.

    I was always worried about calming for outsourced staff but you have also cleared me up on that one so a big thank you.

    Great post mitz keep them coming

  22. Danny says

    Very helpful post. Especially in these times we can use any money we can get, especially if it’s getting back money we’ve already spent.
    Aside from the basics which everybody has, it is really smart to make deductions for costs like the product that you bought to review. Most times you are blogging in the niche that you are interested in, so you probably would’ve bought the product, ate at that restaurant or watched that movie anyway. But now because you are bloggin about it and hopefully making some money with it, you can deduct the taxes from stuff you would’ve bought anyway.
    Thanks for the great tips!
    Danny recently posted..Husqvarna 327P5X Pole pruner 25cc 12 inch bar

    • mitz says

      Yes my next venture will be a travel website..LOL So I can travel to places and it can be tax deductible.

  23. Raj says

    You know what, I am trying to get into the tax bracket. Right now, I don’t even come into the tax bracket for the income I earn online! LOL. But that’s ok, as I am just starting out. But when I do get into the tax bracket, I will definitely consider all the points as applicable to my place :)
    Raj recently posted..The Importance of Interlinking your Blog Posts

  24. Mark Tesa says

    Working as a blogger seems so cheap. It seems like you spent so much in your offline business. Working online as a blogger is some thing that you can do almost anytime and anywhere. It has so many advantages but only if you are well organized.

  25. vhein says

    I’m not that aware of the other taxes coz it’s not that everyday that I’ve encountered these fees. Thanks for making me aware of such information.

  26. Zeny says

    There are lots of legitimate ways to make money from home and online. Most ways involve freelance work or content creation. You can make a decent amount of money if you put in the effort using the many and varied, legitimate ways to make money. The key is to try different things simultaneously so you have different streams of income coming in.
    Zeny recently posted..Design Business Logos

  27. says

    That’s really great news. I’m using Get Response Autoresponder and I recently bought a software tool that helps me with my article submission and I’m also thinking about buying Unique Article Wizard (which isn’t really cheap calculated over the entire year). So that means I can deduct all those costs from my tax payments?
    Robert recently posted..WP Syndicator Review – WP Syndicator Bonus

    • mitz says

      Yes you can deduct stuff like that if it is running your business.. Article submission is like putting an add in a magazine.. It is business promotion… I guess if you add those expenses up it sounds like a lot but if I compare that to what I make then that is very cheap to run the business. These expenses are nothing compared to what I would be paying out if I had a real life business.

  28. says

    Thinking about all of these possible expenses makes me wanna spend some more money :)

    My first tax return is due in the next few months and damn this is gonna be a pretty big job tallying up all the income and expenditures. This post will definitely form my checklist! I never thought about the fees too – Thanks!
    Sunny recently posted..No Posts Were Found!

    • mitz says

      Yes I am not very good at keeping all the records but I like working.. Luckily it is all on record somewhere..like paypal, etc..

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