We all have our reasons for starting a blog. Some people are motivated to write about topics they care about, whether it’s a hobby or a social cause. Others blog to express themselves and to process their thoughts.
But one thing is certain: Blogging can be a lucrative source of income.
Maybe you’re one of the lucky few who have made a living from writing. But if you are making money from your blog, you are expected to report and pay taxes on that income. You’re also expected to stay on top of your tax situation yourself.
We’ll walk you through the basics of taxes for bloggers, plus tips that might help you save money come tax time.
What type of blogger are you
Your blog might have started as a side project or a hobby, but if you earn money from it, you need to think of it as a business. But before you can start filing taxes, it’s important that you think about the kind of business you want to run.
Blogging as a hobby
Perhaps you started blogging as a hobby. You wanted to talk about food, music, or whatever it is that interests you. Little did you know that your blog would explode in popularity and, with it, your income.
If this sounds like your blogging journey, then there’s not much accounting work required. Record all self-employed income from your blog and report it as “Other Income” on your tax return.
While your ability to claim deductions for your blog-related expenses is heavily curtailed, you’re also off the hook for the 15.3% Self-Employment Tax on your income.
Blogging as a business
You started your blog with the intention of earning money. Maybe it’s something you do on the side, or you’ve given up your day job to focus on your blog full-time. At this point, your blog has become, for all intents and purposes, a business.
If you derive most or all of your income from blogging, you need to think about a legal structure for your business. Establishing a legal entity that represents your business activities can save a lot of headaches down the line.
Since the IRS treats your blog as a business, you are expected to maintain accurate records of all income and expenses. In some cases, you may also have to file two separate returns.
Estimated taxes for bloggers
Since your taxes aren’t automatically withheld from your earnings, you may be required to pay quarterly estimated taxes to the IRS. The due date is the 15th of the month following the end of the previous quarter (e.g. April 15 for taxes owed from January to March).
Failure to pay on time may lead to additional fines and penalties. Ask a tax professional if you are liable for estimated taxes.
What legal structure to choose
If you want to turn your blog into a business, then you need to think about adopting a legal structure. Most bloggers are classified as sole proprietorships, partnerships, or limited liability corporations (LLC), but others set up S corporations (S Corp) or C corporations (C Corp).
Sole Proprietorships and Partnerships
Sole proprietorships are the most popular legal structure for small, one-person businesses such as blogs. The moment you start doing business activities, you automatically become a self proprietorship. If there are two or more people involved in the business (excluding employees), then it’s classified as a partnership.
These legal structures are regulated at the local level, so your best option is to contact your state’s Small Business Administration District Office. They can provide you with instructions on how to set up a sole proprietorship or partnership that complies with all local laws and regulations.
Limited Liability Corporations
Another popular legal structure for bloggers is the LLC. This structure provides extra legal protections and tax options for its owners. The reporting requirements are similar to self proprietorships and partnerships, with a few exemptions.
S Corporations and C Corporations
Another option is to form an S Corp or C Corp. Shareholders of an S Corp or C Corp are not personally liable for the debts of the company, shielding them from business forfeitures. Corporations also enjoy tax benefits and protections that aren’t available to self proprietorships, partnerships, and LLCs.
Choosing a legal structure for your blogging business shouldn’t be taken likely. We advise that you consult with a professional tax service before making any big decisions.
What is Form 1099-MISC
Employers give W-2 forms to their employees at the end of the year. This form reports each employee’s compensation and withheld income taxes and is used to file state and federal income taxes.
However, most bloggers are classified as self-employed and do not receive W-2 forms. Instead, they receive 1099-MISC forms from payment processors, sponsors, and the brands they advertise. Make sure to keep all the financial forms you receive as they may come in handy come tax time.
Single-person LLCs also receive 1099-MISC forms. However, businesses that function as a C Corp, S Corp, or an LLC that is taxed as a corporation do not receive this form.
Tax deductions for bloggers
The IRS allows self-employed bloggers to deduct business expenses from their income, reducing their tax liability. Some business expenses you can deduct include:
- Legal and professional services: You can claim the cost of a third-party accountant that prepares your tax return.
- Equipment and supplies: You can claim the cost of a computer or laptop, camera, and other electronics you use in your blogging business.
- Internet costs: You can claim blog-related bills such as hosting fees, software fees, and paid image or audio downloads.
Make sure to maintain clear and accurate records. Every deduction must be backed by evidence to justify the claim.
Filing taxes as a sole proprietor
As a self-employed blogger, you’re expected to stay on top of your tax situation. But blogging is a relatively new business, and the rules aren’t quite as clear-cut. If you have any questions about your taxes as a blogger, you might want to talk to a tax expert.