Being an influencer is AWESOME. You get to share stuff you love with your fans, be creative, have fun, and get paid for it. Best job ever, right? …Until tax time rolls around, that is, and you realize you should maybe have gotten a PhD in accounting, ‘cause you’re drowning in receipts and are so frustrated you might just throw your phone and laptop into the garbage and go live like a hermit in the woods.
Monetize your Channels: Join MagicLinks!
Track Receipts and Expenses As You Go
Yep, there’s an app for that. Check out apps like Shoeboxed, Expensify, and Smart Receipts can help you by instantly scanning and categorizing your receipts as you get them, which will cut down your paper clutter immensely. You can create different receipt categories for business (vlogging/blogging) and personal use. It’s much, much easier to track your expenses and taxes as you go, rather than try to do it in one big swoop in mid-April.
Income Isn’t Just $$$
Commission payments, ad revenue, or sponsored posts aren’t the only form of income you must list on your taxes. Free products received for reviews, free trips/conference tickets, gift bags/swag from conferences: ALL of these things count. Sara F. Hawkins, a social media lawyer, has a great article on what you must declare.
Do you give away a lot of the free products you receive? Great! BUT. If you don’t report those items as income, first, you can’t count them as a charitable deduction.
1099 forms are typically only issued by employers when your annual income with that employer exceeds $600. There is an exception for PayPal-issued payments (i.e. your MagicLinks payments): Only when you earn $20,000 or more and have received 200 or more PayPal payments in one calendar year from one employer or network will you receive a 1099 form. Even if you do not receive a 1099 form from an employer or company, you must still report the income. Report everything, or risk audit.
Even if you are not issued a 1099 form by an employer, you still need to submit a completed W-9 form if you earn more than $600 in one calendar year with that employer. Foreign residents must all submit a completed W-8 form, regardless of how much income they make.
Deductions Are Awesome
Your channels are your business, so therefore, you’re self-employed, and you can deduct a lot of things as business expenses. Internet fees? Website hosting fees? Video & photo editing software? Yup. All potentially deductible. If you have a space in your home that is EXCLUSIVELY for work, not personal use, you can deduct a percentage of your rent/mortgage, utilities, etc. Software like TurboTax will help you figure out what you can deduct when you’re doing your taxes, but you can also check out some great blogger tax deduction lists here and here.
Consider Paying Quarterly Taxes
If you’ve been making the majority of your income as a blogger/vlogger for a few years, think about paying your taxes in quarterly installments. It’s always better to overpay by a little bit each quarter, and get a refund back when you file your returns in April, than to unexpectedly owe a HUGE chunk of change to the IRS. It will also help you to stay organized throughout the year, when you’re doing taxes every 3 months.