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A new year is here and it’s time to start thinking about filing your taxes. Get this wrong and you could find yourself in hot water with the IRS, or at the very least audited. Bloggers may work online, but they must file a tax return like anyone else. Thankfully, tax filing is relatively easy these days when you use a software such as E-File.com.
Here are some of the main things to keep in mind when you file taxes this coming year.
Most bloggers will only look at their actual income when deciding how much they must pay in income taxes. You may be thinking you have a tax refund ahead, but you also need to include any free items and sponsorships you received.
It’s easy to think you don’t have to include these because who’s going to know, right? But what you need to remember is that the people who gave them to you will include them as expenses. There’s a paper trail. Fail to mention these benefits and you’re willfully avoiding tax.
Make Things Easy on Yourself
The IRS wants to send everyone towards the e-file system. Tax filing online with tax software is the way ahead. It even costs less to file online. Stop filling out the paper forms, when you have the choice and think about how you can file taxes online instead.
For this, I recommend using E-File.com. It’s easy to use and requires little to no effort on your part.
Hire an Expert
Bloggers need to make sure they keep accurate records. This is enough for a skilled accountant to prepare your income taxes and ensure you’re paying the right amount. They’ll also handle any tax refund implications.
These professionals file taxes for a living, so they can complete a job in an hour when that same job would take you the whole day. For a small fee, you can make sure there are no mistakes and no errors. This is an investment that bloggers should consider making especially if you have a complex tax situation or it is your first time filing taxes.
It Doesn’t Matter if You Don’t Receive the Form
Form 1099-Misc is for non-employee income. For bloggers, this is extremely relevant with all the rewards and benefits they receive. You might receive this throughout the year and anything over a few hundred dollars must be reported. But even if you don’t receive the form you still need to file.
The IRS isn’t going to give you a pass just because you didn’t receive the form.
Estimate What You Must Pay
Bloggers and other freelancers don’t have any of their income withheld by an employer. That has its advantages, but one of the downsides is that you should send money to the IRS quarterly. This means you need to estimate how much you’re going to need to pay the IRS. Estimating well requires you to have accurate records.
But sometimes you’re going to get it wrong anyway. One way around this is to maintain a higher level of funds. I recommend saving an extra 20%. You might not need this money, but it’s useful to have. Besides, if you end up not needing it you can always use it towards your vacation or to add extra cushion to your emergency fund.
Did You Send Out the Right Forms?
Bloggers have many streams of income. The chances are you pay out to other people, as well. If you pay affiliates you might need to issue Form 1099-Misc forms yourself. This is part of your tax obligations as anything else. It’s also crucial to show you’ve done this when deducting expenses from your income.
This is also important for anyone who needs to get paid by you. Don’t make things difficult by not sending out these forms.
Deduct, Deduct, and Deduct
Use the software from E-File.com to keep track of the deductions you’re making. The IRS has clamped down hard on the expenses deducted by bloggers in recent years. They have especially hit bloggers who work from home and claim back home office expenses. This was abused for a long time, so the IRS carefully inspect the expenses claimed by freelance workers.
Blogging Taxes are Complicated – Prepare Early
The first few times you file taxes as a blogger you’ll find it difficult to put everything together. This is another reason I recommend hiring a professional accountant to help you with this. But you’ll get better at this process in time. In the meantime, start preparing your tax return as early as possible.
Regularly plug in the numbers on the E-File.com tax software system and you’ll avoid the mad rush when tax time actually comes around.
The tax rules are changing every year, too. Make sure you look up any changes to the existing rules. Pay extra attention to what you can claim back in the form of expenses. These are the rules that change most regularly.
Special Expenses You Can Claim Back as a Blogger
Bloggers are in a unique position. They can claim back expenses on their returns that they would have never considered. I’m going to give you a rundown of some of the expenses you can include when you file taxes this year.
Home Office Supplies – This includes basics like pens and paper. It also includes costs like the camera used to take images for your blog and even your laptop.
Online Expenses – Everything from the cost of web hosting to the cost of purchasing that new WordPress theme you purchased.
Dedicated Office Space – If you have a dedicated office space you should work out how much of your house this room takes up. 8% of your house used as dedicated office space means you can claim back 8% on your overall utility bills.
Business Costs – Need to renew your business license? Claim it back. Need to pay fees for a business credit card? Claim it back. Need to cover for incorporation costs? You can claim that back too.
Final Thoughts on Filing Taxes as a Blogger
One last piece of advice is to make sure you’re not claiming too many expenses back. Bloggers who claim huge amounts back are more liable to auditing than anyone else. Make sure what you’re claiming is fair and you’re not trying to push the boundaries.
Have you ever filed your own taxes as a blogger before?