WHO: Blog owners & operators that make more than $400 a year (including all those product payments in reviews & giveaways!) EVEN if blogging or owning an etsy shop is not your full time job!
WHAT: When doing your taxes you need to account for the money you made off your blog as well as your other job(s)
WHEN: Taxes are due April 15th so make sure you sit down to get them done before hand! The sooner you turn in your taxes, the sooner you can get your refund! YAY.
WHERE: I recommend making a little work station at home with all you tax documents, receipts, and blog information and carve out a couple hours to get it all taken care of and done with!
WHY: Because the government wants to know how much you are making and wants to make sure you are playing by the rules.
HOW: I am not claiming the title “expert” on any of this, but I want to share with you what I learned from doing my blog taxes for the first time ever this year. I hope it helps you feel more comfortable about the whole blog taxes thing and helps you stay organized and on top of things for future years.
I had no idea I needed to worry about blog taxes this year. I work full time and I blog as a hobby, the thought to file my blog income was not anywhere on my radar. You can imagine my surprise when my husband was doing our taxes and came across a self employment document talking about needing to file over $400 and he asked me how much my blog made in 2013.
I wish I knew the exact amount off the top of my head. I wish I had a spreadsheet with my earnings and spending but, I’ll be honest, I had nothing of the sort! I looked up my Passionfruit account, racked my brain for all the giveaways & reviews I had participated in 2013, and spent a good while looking through my PayPal account history. It was a process but I got the biggest things from 2013 all sorted out and, in the process, I created a pretty great system to keep track of all my 2014 earnings & expenses! (It helps looking at the bright side!!)
CREATING A SYSTEM
DO YOU NEED TO RECORD REFERRAL MONEY?
If you receive money for referring your friends to a website (Minted, ThredUp, Stitch Fix, etc) you do not need to record that money anywhere. You would be receiving that money whether or not you had a blog – that is an incentive they do for their marketing (you become their ad!). They write the gifted money off on their side of things but you do not need to worry about this at all when filing your blogging taxes!
WHAT ABOUT GIFTS (no obligation to blog about it)?
If someone sends you a “thank you” gift or a “I love your blog” gift and makes it clear that it is not for a review, it is just for you, then you do not need to record it! Even if you end up posting it on social media, it was a gift and so you do not need to record it. there was no exchange for goods or services (EX. product in exchange for a review).
HOW ARE GIVEAWAYS RECORDED?
Giveaways are a funny little thing in themselves. All giveaways that you purchase the items for will go on your expenses – like if you gave away a $20 Starbucks card and you bought it than it needs to be recorded on your expenses. If the giveaway product was donated (Lindsay Letters gave you a print to giveaway) then you need to record it in two places. It is a source of income because Lindsay Letters is giving you that print to giveaway and there is an exchange for goods or services. BUT it also needs to be recorded in expenses because the giveaway costs you that print. It ends up canceling out but it helps you remember to be recording everything and it also looks really good if you were to get audited (you are showing everything and not hiding anything!)
HOW ARE PRODUCT REVIEWS RECORDED?
If you are given a product to review in a post you need to put that on your income page. If Lulu Lemon sends you a new workout outfit to wear and then share with your readers, that is an exchange of goods and services and counts as a form of payment.
WHAT IF I BUY SOMETHING TO BLOG ABOUT IT?
If you saw that Hello Merch was offering 50% off and you grabbed a new sweatshirt to show off to your readers, you can write that off! You bought the sweatshirt with a blog post in mind and were eager to review it to share your joy with your readers. That experience counts as an expense. Think of things you would not purchase if you did not own a blog (blog planner, stitch fix, etc. ) and record those under expenses. Don’t go crazy over board with this – stick to purchases that are honestly for you blog and that you use blog money for (not personal allowance or fun money). If you go overboard on writing everything off (coffee for my blog fuel, my $1000 bed for my blog dreams, $15 wool socks for my feet in the winter when I want to blog on the couch…) you make yourself a target for the IRS.
TIPS & TRICKS
1. Even if you make under $400 on you blog (or etsy) I encourage you to create a google doc tracking all your income as well as all your expenses. It is a good practice to get into and also makes you aware of what is really happening with your blog monetarily. It is also great just in case you have a wonderful year and end up making more money than you ever imagined. If you already have it all recorded it is easy to file it with your taxes!
2. I recommend Turbo Tax for everything. Do all your regular taxes (your other jobs, husband’s job, giving, loans, intrest, ect) and then they also make a space for you to enter your self employment. Thank you Turbo Tax
3. Consider how much of your office space (gas, electric, water) is being used for blogging and put that amount on your expenses. PS: also be wise about this don’t go crazy overboard with deductions.
4. Don’t be alarmed if your expenses are larger than your income at the end of the year. For the first three years the IRS expects that trend in a small business but the goal is to eventually make more than your expenses (it would be nice to have some take home, huh?!)
5. Enjoy the process! I know if sounds crazy to work on your taxes but it is actually pretty fun seeing where you money is going and how it is being spent. You spend so much time and energy on your blog – you should take care of it!
6. Use Turbo Tax. We’ve done our own taxes at home every year with the help of Turbo Tax. They walk you through all these things!!
*Please do not take my words as truth. I am not an account or government tax employee. I am just a girl who works at a non-profit, loves people and blogging, and is trying to be a good citizen and file all my income.
** If you see something wrong please correct me! I don’t want to be doing it wrong for the next forever and teaching everyone else to do it wrong as well!