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:
- Various Premium WordPress themes ($$$ all well worth the money)
- UAW (Unique article Wizard) as of Dec 2011 ($67 a month)
- SEOpressor ($97 one off)
- Scribe by Copyblogger ($27 a month)
- Both Aweber and Mailchimp (Approx $100 a month combined)
- WP Subscribers ($47 one off)
- Premium Commentluv ($87 one off)
- EasyAzon by Chris Gutherie ($47 one off)
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:
- All hosting fees and domain names charges.
- Advertising, Sponsored advertising, or paid site submissions fees.
- Business branding fees such as Logo design, business cards, promotional items etc.
- Internet access at home and on the go.
- Partial home phone if used for business and all dedicated business phones.
- Software on your computer as this is a computer based business.
- Computers and gadgets needed to run your business. (Cameras, USB sticks, Laptops, Tablets, Storage devices,etc)
- Fees for stock images, music, or video added to your blog.
- Outsourcing, SEO, Blog services. A social media marketer.
- Products to review and prizes for giveaways and contests.
- Business education. Anything that is aimed at improving your business. Ebooks, Magazines, paid Newsletters.
- 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.