Tax-deductible expenses are usually straightforward with many traditional businesses that manufacture or sell a tangible product. However, the rise of the freelance economy and social media influencers has blurred the lines a bit. If you’re in a non-traditional line of work it’s essential to know which expenses can serve as tax write-offs. This is especially true if your own your own business or have a side hustle. Fortunately, there are many tax deductions for social media influencers to take advantage of.
Tax write-offs essentially allow you to reduce the income on which the government taxes you. You’re subtracting the amount of money you put into your freelance business from the money you got out of it. The following list isn’t comprehensive. However, it’ll give you a good idea of what you can write off to minimize your tax bill.
Contributions to a Retirement Account
Though you’re probably not thinking about retirement yet, it’s always a good idea to plan ahead. Additionally, certain types of retirement accounts will let you lower your taxable income. These accounts will enable you to defer the tax bill to later in life when you’re in a better financial position to pay it.
A 401(k) is just this kind of retirement account. The money you deposit into a 401(k) is not taxed until you take it out. You should be ware that there are different kinds of 401(k) accounts. Consider doing some research or talking to a financial advisor to set one up.
You may also want to consider opening an Individual Retirement Account, or IRA. Similar to a 401(k), these accounts let you put in pre-taxed dollars which can grow over time. There are many types of IRAs, so be sure to know the differences between a traditional and Roth IRA.
Home Office and Supplies
Deductions also reduce your taxable income each year. The great news is that you can deduct most of the money you’ve spent on your freelance business. These expenses can include typical office supplies like pens, paper, notebooks, and more. But don’t forget about any audiovisual equipment or your vital devices like phones, laptops, and tablets. However, devices that you use for more than a year depreciate in value. You will need to take that into consideration over the life of the device.
Additionally, many influencers produce or edit content from home. This means that your home is also your office. In fact, you can designate up to 300 sq. ft. of your home as an office. This can equal a tax write-off of up to $1,500. Utilities like electricity, water, and Wi-Fi are necessary to run your business and can even be deducted. The furniture you sit on while you work is even a possible deduction!
If you are trying to make money from TikTok by being an influencer, you may want to travel. This can be a great way to share your experiences from around the globe. If you travel as part of your influencer job, such as to make content or attend a convention, you can deduct these expenses on your taxes.
Note that these trips must involve at least one overnight stay away from your home to qualify. Travel expenses can include gasoline, airfare, bus or train tickets, cabs, rideshares, or rental vehicles. Plus, if you’re staying in a hotel or AirBnB, these are also part of the business trip and are deductible.
Advertising and Marketing
Since marketing yourself is a massive part of being an influencer, don’t forget to keep track of your advertising costs. This might include paid ads or promotions. Remember that anything you purchase as a giveaway for your followers also counts as a marketing expense.
Software and Online Fees
The tools of your trade probably include a decent number of software tools and subscriptions. With that in mind, anything you use to create or edit your professional content counts as a business expense.
Also, be sure to consider things like purchased stock footage, photos, and music. Of course, if you have a website, the various costs associated with the domain name, hosting, and maintenance are also deductible.
Other Operating Expenses
There are other tax deductions for social media influencers as well. These are the purchases you make specific to the type of content you produce. For example, if you’re a beauty vlogger, makeup and hair products you use for your videos count as a business expense. Likewise, Twitch streamers can write off the video games they play on stream. Food bloggers can deduct their meals, and so on.
For a specific example, I create videos about the CPA Exam. All expenses associated with making these videos are tax write-offs for me. These costs include production fees, stock footage, as well as paid promotions that drive viewers to the videos.
However, particular to this category, make sure you’re careful about separating the purchases you make and use for your business from the ones for personal use.
If you’re paying anyone else to help you with your business, you can deduct the money you pay them. This might include paying someone to film or edit your content. It may also include paying someone to manage your social media accounts or websites, help with digital marketing initiatives, promote your creations, or even generate captions.
Tax Deductions for Influencers – Summary
Getting and staying organized will go a long way toward reducing your stress when it comes time to file your taxes. There are plenty of apps and other tools to help you keep track of your expenses as you go. Be sure to take advantage of all of these resources so you’re not struggling to remember what you spent come tax season.
Considering the intricacies of filing taxes for a side hustle, or as a full time social media influencer, you may want to consult with a trusted accountant or CPA. They will be able to help you sort through which expenses may qualify as a deduction. They may even persuade you to set up an LLC or other legal business entity.
Being an influencer is a challenging, yet rewarding position. Be sure you are using the tax code to your advantage and are using these tax deductions for social media influencers.
About the Author
Stephanie Ng is the Executive Committee member responsible for Finance at New Sight Eye Care, a charity registered in the United Kingdom and Hong Kong. She oversees the financial aspect of New Sight in Hong Kong, including accounting, taxation, financial management, and compliance.
Stephanie began her career as an investment banker at Lehman Brothers in New York and Morgan Stanley in Hong Kong. She later joined her client to work in the Group Finance Department, where she spent five years specializing in corporate finance, mergers and acquisitions, and debt refinancing. Stephanie also extended her role to management accounting and financial accounting and obtained her U.S. CPA qualification.
Stephanie also is a published author of the book How to Pass the CPA Exam. Additionally, she created I Pass the CPA Exam, the first CPA help site in 2010. Her guidance and mentorship have helped hundreds of thousands of candidates pass their exams.
Stephanie graduated with Phi Beta Kappa from the University of Chicago, majoring in economics with a second concentration in public policy studies.