In case you did not know, I am a licensed CPA. My full-time job outside of blogging is in Accounting. I tend to shy away from giving others tax advice but I have seen SO many false statements being made in various blogger groups that I felt the need to help.
If you missed my first post about basic tax tips for bloggers, check it out here. Today, I want to discuss the top 5 mistakes I see people making with their taxes. Note: this post applies to the US only as I am not familiar with the tax laws in other countries!
#1: If a business pays me less than $600, I don’t have to report it as income.
FALSE! A business is required to issue Form 1099 to anyone (other than Corporations) that they paid more than $600 in a year. A copy of this Form 1099 is also sent to the IRS. However, if a business pays you less than $600, YOU still have to report it as income. The business just isn’t required to issue you a 1099.
#2: If you aren’t sure about an IRS law, just “go for it”
FALSE! I am sorry, but have you heard of TAX FRAUD, TAX EVASION, and IRS AUDITS?! If those words don’t scare you then you are just crazy! If you are ever unsure of something related to the IRS and taxes – consult with an expert. Still not sure? — do whatever is the most conservative (i.e. causes you to owe the most tax). The IRS is not someone to mess around with and they will never complain about receiving too much of your money.
#3: If I buy clothes for my fashion blog, I can write those off on my tax return.
FALSE! If the clothing is a required uniform (like a postal service worker), you can write it off. Otherwise, it should not be written off.
#4: I do not need to save my receipts.
FALSE! Again, the IRS could audit you at any time. My parents have actually been through an IRS audit (luckily, my mom is a CPA and they came out of it just fine). If you are audited by the IRS, you will be required to provide support (receipts, etc.) for every item on your tax return.
#5: The only thing considered income is cash.
FALSE! Anything you are given of value in exchange for a service is income. You are given a free trip that you are expected to share on your YouTube channel? The value of that trip is income. You are given free makeup products to review on your blog? The value of that makeup is income.
I hope this post about taxes for bloggers is helpful! It frustrates me to see people, who clearly have not researched tax laws, share incorrect information about taxes. I would highly recommend that everyone hire their own CPA or educate themselves on tax laws.
Just starting out blogging? Check out my post on how to start a profitable WordPress blog here.