Taxes. It’s the one thing we can all agree that we hate. Unfortunately, as your brand becomes more successful and profitable, it is inevitable that you will need to pay them. BUT, why pay more than you need to? The best way to minimize your tax bill is to maximize your tax write offs. Keep reading to learn about the tax write offs influencers and content creators can take advantage of.
What does the IRS say about tax write offs for influencers?
Understandably, the IRS is silent on what are legitimate write offs for influencers. Which makes sense given each influencer has a unique brand and therefore unique write offs. Also, the whole idea of content creators and influencers is so new that the IRS has not been able to keep up with these changes. Write offs for content creators is really the wild west right now.
So to understand what are legit write offs, we need to apply the general tax code to your specific situation. There are some things that are very easy, clear write offs that would apply to any independent contractor or small business owners. And then there are the not so clear expenses that will apply to your unique situation.
That is why it’s super important you work with a CPA (like us!) that focuses exclusively on the creator economy so that you can ensure you maximize your write offs.
Tax write offs for influencers and content creators
At a high level, don’t try to get too cute with your write offs. All write offs need to pass a “reasonability test”. We have seen some crazy examples that did NOT pass that test.
In the short term, you may get away with writing off everything that is even tangentially related to your brand. But if/when the IRS catches you, anticipate some hefty fines. Also, you’ll be on the IRS’s naughty list which means they’ll likely keep a closer eye on your going forward. Not good.
You can most likely write off and deduct from your income any expense related to starting, running, and growing your brand. Here are some major expenses your can write off to help keep your taxes to a minimum.
Technology
All of the items below are pretty clear cut tax write offs for influencers. These are easy expenses you can deduct to help lower your tax bill.
Equipment
Content creators require the right tools and equipment to do their jobs. Whether we’re talking about computers, cameras, microphones, or lighting, these are business investments and can be deducted from your taxes.
Don’t forget your smartphone. Today, a decent smartphone can take the place of many other pieces of equipment, from cameras to audio recorders and much more. So, investing in a feature-rich phone is a smart business decision and also gives you another write-off on your taxes.
Materials for Content
These expenses are a bit squishier, so you will need to use your best judgement here. If you want some free advice on your write offs, feel free to contact us and we can help you work through your expenses and see if they are legit write offs.
At a high level, you can write off things you buy that are used to create or promote your content.
For example, a food content creator could write off any ingredients they buy for their content. Or a YouTuber that focuses on gaming can deduct the cost of their gaming subscriptions.
Also, if you rely on affiliate links, the cost to buy the materials you are selling can be written off.
For example, if a fashion/life style influencer who makes money from affiliate links can write off the cost of an outfit so long as it leads to affiliate link income.
If a brand gifts you something and you spend money to create content around that gift, those expenses are deductible.
Where it gets really squishy are the expenses around travel, meals, and clothing which we’ll explore in just a bit.
One comment we get frequently is: I’m an lifestyle influencer and so everything I do is business related. Can I write off everything? No, no you cannot.
Home office
If you have a dedicated office space in your home (not a kitchen or bedroom), you can take a home office deduction. The easiest way to figure out your deduction is to take the total square feet of your office divided by the total square feet of your home. You are able to write off that % of your rent or mortgage (plus utilities).
You can also deduct any cost to get your home office set up including your desk, chair, and decorations.
Professional services
Lawyers, accountants, and any other professional that provides a direct service to your business can be written off. Also, any editors you hire to edit videos/pictures can also be written off.
Ads
If you run any type of ad for your platform, you can write off the cost of the ad and any associated cost to get the ads up an running.
Professional development and training
Every professional should be committed to ongoing learning. Of course, that training comes at a cost, but the good news is you can deduct it from your taxes. From eBooks to courses, consultation fees with industry experts and coaches, and even the costs of conferences, you can improve your training while recouping your costs.
Tax write offs you may be able to take
Because each creator is unique, there is not a one-size-fits-all for write offs. Here are some expenses you may be able to write off.
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Travel
Unless you are a travel content creator, it can be very hard to justify writing off travel expenses. In fact, even travel creators need to be careful here!
Some creators will book a trip to Greece, post a few pics, and then claim the whole thing was a “business trip”. Or book a weekend trip with their friends and try to write that off. “Nice try” is what the IRS would likely say to those write offs.
Some examples of clear business travel includes:
The big thing for the IRS is that travel needs to pass the reasonability test. If you can reasonably prove that the cost was related to your business, you should be in good shape.
Meals
Meals while travel for business (see above) can be written off. That’s easy. Other meals that can be written (or partially written) off include business meals with collaborators, agents, or contractors. Just deducting a random Uber Eats will never be allowed.
Automobile
If you use your car to travel to different shoots to post content, you can deduct a portion of your car. There are two ways to go about this. You can either track the mileage of business related travel or deduct a certain portion of all expenses (for example assume 20% of all car usage is business related). Just be careful. The auto deduction is a higher audit risk area so make sure there is good justification for the deduction.
Conclusion
There is no need to be a hero and pay more than your fair share of taxes. You should take advantage of every deduction and write off you can to minimize your tax bill. But make sure you are doing it legally and not getting to cute.
If you want to be sure that you are taking full advantage of your write offs, we highly recommend working with professional (shameless plug for our business) to help you with that. They will provide the guidance you need to make the best financial decisions and maximize the dollars in your pocket.
Here at Cookie Finance, we provide tax, bookkeeping, and other accounting services specifically for content creators and influencers. We lift the weight of write offs, taxes, and finances off your shoulders so you can focus on what you do best: creating content. Contact us to learn more today!
