Reader Alex Shalman from Practical Personal Development recently asked me to explain why I blog. I answered this question a few months ago in Give Thanks To Your Blogging Inspirations. So, instead of repeating myself here, I’ll revisit one particular benefit of blogging.
I’m talking about cash money. Believe it or not, Uncle Sam paid me to write this blog. And he might be willing to pay you too.
Licensed to Blog
Blogging is not my hobby; it’s my business. I’ve got a license to prove it. And all the bills associated with my blogging are therefore business expenses:
- Web hosting: $3.95/month from Westhost
- Internet access: $30/month DSL
- Other expenses: Computer hardware and software, office supplies, books, training, etc.
Those expenses alone exceed $500, and as a professional blogger, I can deduct them from my business income. In fact, due to my business structure, I should be able to deduct these expenses from my other income source (i.e. my day job).
Every time I subtract a dollar from my taxable income, I can subtract approximately 25 cents from my tax bill. So, assuming I could deduct $500 spent on my blogging business, I would realize a tax savings of $125.
But actually, I spent much more than that. The martial arts seminars and conferences I attended can also be considered “ordinary and necessary” expenses, and are therefore deductible according to IRS Publications 535 and 463.
When I add in the costs of transportation, lodging, and seminar fees, my total blogging-related expenses exceed $2000. Subtracted from income, this should result in a tax savings of at least $500!
Can You Start a Blogging Business?
For federal tax purposes, a blogging business is simply a blogger licensed to conduct business, operating with a profit motive*. Note that it is not necessary to actually turn a profit, in order to be considered a legitimate business by the IRS.
You do, however, need to operate in a business-like manner; that includes making honest attempts at profitability. AdSense and other contextual advertising programs are a good place to start.
Do you have any blogging tax tips to share?
* This is my understanding, but I recommend you double-check with a tax professional, or at least some professional tax software.
[tags]blogging, business blogging, professional blogging, taxes, adsense[/tags]