When it comes to income taxes and the IRS, if the activity you are doing is being done “with the intent to pursue a profit”, then you are running a business! This also applies to blogging “if” you are in fact blogging for a profit. Let me give you an example. Let’s take a fashion blogger for instance, a person who is a fashion fanatic and likes to share and talk about the latest fashion trends and give fashion ideas, and tips, etc. But maybe this person is just using their blog platform to be sort of like a “fashion inspirer”…this activity is just a hobby for that person. But now let’s take another blogger, in the same industry of fashion blogging, but they are also using Google AdSense in order to generate money from their blog posts, or maybe they’re involved in Affiliate Marketing so in some of the blog posts, they’re promoting different products and receiving affiliate income for it, now your blog is actually becoming a business. Especially if your blog income begins to get so large that it becomes your sole source of income and/or a major income contributor to your finances. You also have some bloggers who begin to create informational products and other content which is another form of generating income through your blog.
Let’s also not lose sight of the “art and act” of blogging…blogging does fall under the umbrella of writing and sometimes even publishing, which brings me to the way that you should be describing your business activity on your tax returns. You may or may not be familiar with the term “Principle Business Activity Code” but this is a unique identifying code that tells the IRS what type of service or product your business does. Even if you have multiple things that you do or sell, always choose the best code that generally describes your business. So for this purpose, a Blogger has a choice of two codes to choose from:
- Code 711510 is for Independent Artists, Writers, and Performers or
- Code 519130 is for Internet Publishing and Broadcasting and Web Search Portals
Blogging like any other business can often involve expenses. As a Blogger, you are paying for website hosting, domain purchases and renewals, advertising costs, marketing, Internet, and many other expenses, even Travel costs if you are a Travel Blogger. You might also have an assistant whom you pay to handle some administrative tasks for you or a graphic designer to create some of your blog post images. All these types of costs you incur, are tax deductible to your blog business. So it is important that you treat your blog like a real business.
You might even want to go as far as registering your blog business name as an LLC or Sole Proprietorship in your State. Also get a tax ID number for your business name and open up a business bank account. This will provide a way for you to have all the blog income you earn be directly deposited into your business account and then you will use that same account to pay out your blog business expenses. You may want to have an office address in case some sponsors want to send you promotional items. Now the post office allows the street address to be used instead of having P.O. Box appear as your business address. The UPS Store also provides a business address service and there are companies like Then you also have companies like Anytime Mailbox that have opened up all across the country for business (and even personal) address usage.
In keeping with “treating your blog like a business” do not forget that the income you earn from your Blog is taxable and your income is subject to Federal Income Tax, State Income Tax, and Self Employment Taxes (which cover your Social Security and Medicare Taxes). So be sure you are staying in tax compliance and paying Estimated Quarterly Taxes (if required) to Federal and to State. Whether or not you will be required to pay estimated tax, it is still a good idea to put some money aside into a separate account. This way when it’s time to file your taxes, if you do happen to owe a balance, you will be ready because the money would be put to the side. The thing with figuring out how much tax you will owe varies because due to the business tax deductions you’re entitled to claim, your “taxable income” will be less than your “gross income earned” if you follow what I’m saying. So let’s say you gross $40,000 of blog income by the end of the year, but you spent about $18,000 on running your blog, you will owe taxes on the Net Income which is $22,000
It is also a good idea to have bookkeeping set up and maintained so that you have your business financials well organized. Use free bookkeeping online services like Wave Apps and My Bright Books. When it comes to There are so many If you’re anything like me, I personally love running a paperless office so for receipt management purposes, I use Shoeboxed.com.
On the flip side to all this, even if your Blog is more of a hobby…if you are earning some sort of income through your “hobby” blog, there are still rules so be sure to check out this article on IRS.gov “Hobby or Business? IRS Tips To Decide”.