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Blogging and taxes: does anybody know what the hell is going on?

I just got back from my accountant’s office.  My new accountant.  My first accountant.  I’ve never needed one before.  I’ve been blogging for almost four years, but before 2009 there wasn’t any money involved, unless you count what I paid to get myself online and go to BlogHer in San Francisco in 2008.  I didn’t, I just thought of it as a hobby.

Then 2009 hit, and I started getting products in the mail.  Some I knew were coming because I had gotten emails asking if I wanted them.  Some I knew were coming because I got emails telling me they were coming whether I wanted them or not.  And some just showed up – I have no idea how those companies even got my address.  I’ve gotten some incredibly cool stuff, I’ve gotten some incredibly lame stuff.  All in all I’d estimate that in the past year I’ve written about 10-20% of the products that have come through my door.   I’m going to do this entire post without mentioning any products or brands, because I just can’t handle disclosure and taxes in the same conversation.  My head will explode.

Then there were the trips, I think seven in all.  Some I paid for completely, some a brand paid for completely, some I got partial sponsorships for.  I wrote about all of them.  And while every single one was enjoyable (I love to travel), they were all work.  That is, if I weren’t blogging about them, I wouldn’t be taking those trips.  And I don’t mean that I took my kids to a water park and then reviewed it to try to deduct it on my taxes.  These were all business trips.  The only problem is, how do I treat them for tax purposes?  I had no clue.

The thing is, not too many people have a clue about a blogger’s taxes.  Or rather, everybody has different clues.  Asking around for the past year and listening in on twitter, here’s what I’ve discovered is “the law” according to whoever is saying it:

  • All trips that are paid for by brands have to be treated like a prize, with sales tax being owed
  • All trips that are paid for by brands are counted as income
  • All trips that are paid for by brands don’t count
  • All products received by a blogger have to be claimed as income
  • All products received by a blogger have to be treated like a prize
  • Products received by a blogger only count as income if the blogger asked for them
  • Products received by a blogger count as income unless they are given away again in a giveaway, in which case they don’t count as anything and the shipping can be claimed as an expense
  • Products received by a blogger only count as income if they are written or tweeted about
  • Products received by a blogger count as prizes unless they are written about
  • Products received by a blogger and given away to charity don’t count as income, unless the blogger takes a deduction for the donation
  • Products received by a blogger don’t count as anything

Basically, if you ask three people, you’re likely to get three different responses.  So what’s a girl to do?

Find a good accountant, that’s what.  I found one who in fifteen years has only had six of the returns she’s prepared get audited.  I like those odds.  The reason is that she’s cautious.  She’s not going to let me claim my home computer and internet as an expense, because if I weren’t blogging they’d still be sitting here, getting used by the whole family.  She isn’t going to let me claim the food the kids ate at the Type A Mom conference as an expense,  because they aren’t on my payroll and didn’t go to North Carolina to work.  That’s all fine, because if she’s that cautious with those types of things, I’m more likely to trust her answers when it comes to trips and products.

So what were her answers?  I’m not going to tell you, for several reasons.  Number one, I’d be giving away her advice for free, and that’s not right.  Number two, what’s right for my situation may not be right for yours.  And last, because if it turns out she’s wrong, I don’t want to be on the hook for giving bad advice.

So instead, I’ll tell you what you should be doing all year to prepare for your taxes as a blogger.  Do these things now, in March, even if you still look on blogging as a hobby.  By October it could be a career, and you’ll be scrambling like I was, looking for receipts for all sorts of things that you were prepared to just forget about before.

  • Don’t just save receipts, track them.  I thought I was off to a good start by bringing in receipts for everything from my laptop to room service to software and web hosting fees, but they need to be on a spreadsheet, not in envelopes.  I mean, you want them in envelopes as proof, but your accountant wants them organized in some kind of money program, or even just an excel spreadsheet showing what came in and what went out.
  • If you go on a trip (no matter who pays for it), keep track of what you’re doing in order to prove that it was a business trip.  If there’s a printed conference schedule, tuck that away with your tax papers.  Keep a log of meetings you went to.  Hell, I asked her jokingly if I should print out my twitter stream from trips, and she said sure, that that would be a great way to show that I was actually working.  If you review a product connected with a trip, or the trip itself, print that out to put with your tax papers.  You need to be able to prove that the trip wasn’t a vacation.
  • Don’t mistakenly believe that you don’t need to worry about income that falls below $600.  That may be the magic number for you to receive a 1099 form about that income, but you have to track and count your income no matter how small.  Again, do it now in case big things happen to you later in the year.
  • If you buy something specifically for blogging – a laptop, say, or some kind of software – document how you’ll use it and why it’s a work expense.
  • Don’t forget about all those expenses you just wouldn’t have except for blogging.  No, I’m not talking about the Valium in your purse, I mean the business cards and the shipping charges for sending prizes and the copies you made at the library for that research you did for that one post (seriously, I’ve heard some bloggers actually do research!).

You may have a stronger stomach for expenses than I do.  I came across this list of 101 deductions for bloggers and freelancers, and actually laughed out loud at a few of them.  My new accountant would never let me get away with most of those.  I would rather pay a bit extra in taxes knowing it’s extremely unlikely I’ll ever get audited.  If you’re more daring, more power to you.  But whichever way you decide to go, make sure you have the paper trail to back it up.

Originally posted on Behind the Screen, a part of SelfishMom.com. All opinions expressed on this website come straight from Amy unless otherwise noted. Please visit Amy’s Full Disclosure page for more information. Amy also blogs at Filming In Brooklyn and the NYC Moms Blog.

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3 Responses to “Blogging and taxes: does anybody know what the hell is going on?”

  1. Melissa Multitasking Mama on March 11th, 2010 2:51 pm
    1

    Thank you for this! Taxes are certainly on my mind…definitely an issue for 2010..I didn’t make any money (worth claiming, I hope) with “the most expensive hobby in the world” (sorry, quoting my husband)until this year.
    Melissa Multitasking Mama´s last blog ..Fleeting Moments

    [Reply]

  2. The Mommyologist on March 11th, 2010 3:45 pm
    2

    I am so glad that you wrote this! My blog has just started taking off and I am clueless on the whole tax thing. I am hiring an accountant next year for sure. I tried doing everything on my own this year with a failed home party business that I got sucked into, and it has been hell on earth!!

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  3. Jennifer on March 18th, 2010 12:47 pm
    3

    I am late reading this, but it’s a very helpful post. Blogging is far from my “main” job right now, but I have always reported any advertising or other income, even if it’s well under $600. I will be sure to keep track of any freebies I receive if they ever do start rolling in :D

    I contract for two different companies, so I’m familiar with keeping track of my own taxes. One book that I have found helpful is “Minding Her Own Business: The Self-Employed Woman’s Guide to Taxes and Recordkeeping” by Jan Zobel. It helped me finally wrap my head around quarterly tax payments, which had me flummoxed for quite a while. If you keep good records and stay organized, taxes really don’t have to be scary.

    I definitely err on the side of caution when it comes to deductions. Being audited would be just about my worst nightmare. I know a lot of people who like to play the odds and get extra money back, but I’m all about being ethical.

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