7 Essential Influencer Tax Write Offs for 2023
Are you an influencer who dreads tax season? Are you worried about how much you'll owe and whether you've missed any significant deductions? Well, I have some good news for you! There are several essential tax write-offs specifically tailored for influencers that can help you save money and maximize your deductions in 2023. Read on to learn more!
What are Influencer Tax Write Offs?
Tax write offs or more correctly tax deductions, are things that you deduct from your business income to arrive at your business taxable income. The whole goal is to decrease your influencer business income as low as possible.
They are not to be confused with standard or itemized deductions, such as mortgage interest or charitable donations. Those are used to determine your personal taxable income.
Types of Tax Write Offs
Tax write-offs are perfectly legal and can help you lower your taxable income. Influencer write-offs are deductions that the Internal Revenue Service (IRS) allows businesses. The standard for taking a tax deduction for your business is the expense ordinary and necessary. Ordinary means is it a normal deduction for your industry. Many tax deductions for influencers and content creators would not likely qualify as deductible for other businesses.
Write Offs For Influencers
Influencers and content creators have some unusual items that can be used for tax deductions. Things like beauty products, payments to other online influencers, and stock photography subscriptions. Don't forget website expenses, teleprompter apps and your cell phone! All of these items are deductible for taxes.
Office Supplies and Equipment
Virtually all office supplies are eligible as tax-deductible expenses. From printer ink to staples all write offs for content creators. Confusion arises with equipment. The IRS allows you to deduct equipment purchases as operating expenses through a method called depreciation. If the individual item is less than $2,500 then you can deduct the item without using depreciation. If the item is over $2,500 then you will need to review your depreciation options with your tax advisor.
Travel Expenses
Many content creation activities result in tax write-offs. For instance, all business travel, including vehicle expenses, are deductible for income tax. Any time you are traveling for any Influencer Activity counts as would be considered business travel. Generally, travel costs include transportation and lodging. The IRS also allows you a per diem for each business day your out of town overnight. This per diem covers meals and incidental travel expenses such as laundry.
For in town travel vehicle expenses, you have the option of using a mileage rate or actual expenses. You must keep detailed records for all travel expenses in order to deduct them for your influencer business. So when even if you are not a travel content creator, keep those receipts!
Advertising and Marketing Costs
Don't forget to save money on taxes by deducting all of your advertising and marketing costs. All of your Facebook ads, Google AdWords spend and sponsored posts costs are deductible for Content Creation.
Any influencer tools such as props are deductible. Expenses charged to credit cards are deductible in the year you purchased, not when you pay the credit card bill.
Professional Services
All professional services related to your business are deductible. Fees to your tax professional for tax preparation or tax advice are deductible expenses. Fees to lawyers to set up your LLC are also write-offs.
Don't forget payments for editors or other content creators you may use. You can also deduct any professional development costs you pay.
Software and Technology Services
Social media influencers can use a lot of different software, like editing software. Deduct those! Don't forget to deduct your internet connection costs, home or away. Any of the digital products you use in your business are legitimate business expenses.
Home Office Deduction
As a content creator, you probably have a home office. And although you can't deduct most household expenses, If you have a space in your home that is exclusively used for business, you can deduct those expenses against your business income. On your tax return you will deduct a portion of items like:
Homeowner Insurance
Rent
Mortgage Interest (if you own your home)
Property Taxes (if you own your home)
Home Owner's Association Dues
Security
Maintenance and repairs
Utilities
All of these expenses are based on the percentage of square feet that your office is to your whole residence. You do this on form 8829. The IRS now has a simplified option that makes the process much easier than before.
Clothing
The IRS is strict on what clothing that you can write-off for business purposes. In order to deduct clothing it cannot be practically usable everyday wear. Costumes would be deductible, but clothes that you are modeling that you could wear normally would not.
It doesn't matter if you wear it or not, but that you COULD wear it. Of course anything with your logo on it would count as a uniform and be deductible. I've read on other sites that common clothes-related influencer tax write-offs include things that are NOT deductible. There is a reason you need to hire a professional to handle your taxes.
Calculating Your Tax Liabilities as an Influencer
If you are thinking of using a tax software to prepare your own content creation business taxes or are filing your taxes as an influencer during tax season, here is a primer on the process. For this article's purposes we will assume that you are filing your taxes as a sole-proprietor on Schedule C of tax Form 1040.
How to Calculate Your Taxable Income
Make sure you include your income from all business sources, regardless of how your paid. Underreporting your income is a serious crime! You will then have to categorize your various expenses according to the IRS guidelines. If there is a deduction that doesn't fit one of the IRS categories, you will be able to list additional items.
As a self-employed influencer, or sole-proprietor, you are also allowed a deduction for self-employed health insurance, one of the few benefits over filing as an S-Corporation. Once you have determined your total business income, that amount will go on the first page of your Form 1040. This income is subject to both income tax and self-employment tax. This tax is a replacement for social security taxes assessed on employees, and surprises a lot of people. It is computed as 15.3% of your total business income on your Schedule C.
Student Loan Interest
Although student loan interest isn't included in expenses for influencers, it can still be deducted against your over all income if you qualify.
How to File Your Return with the IRS
The preferred method for you and the IRS is electronically. You can file a paper return, but expect delays in the processing of your taxes and any expected refund.
Conclusion
In conclusion, as an influencer, understanding and taking advantage of these essential tax write-offs can make a significant difference in your financial success in 2023. By maximizing your deductions, you can keep more of your hard-earned money and invest it back into your business. So, stay organized, consult with a tax professional, and make the most of these opportunities to thrive in the influencer industry. Here's to a prosperous and tax-savvy year ahead!
