Can you still claim business expenses on your taxes if you’re a blog contributor and the website can’t pay you yet because it’s just barely profitable?
This answer assumes that you live and practice your profession in the United States.
|Bloggers networking at SXSW 2009|
If you practice “blog contributing” as a business, then any and all ordinary and necessary expenses connected with that business would be deductible.
If you already have an established business, then the fact that you have this one client who does not pay is of little consequence. There is simply less income to report. However, the amount of “income” that you failed to receive is NEVER an expense item. You simply have no income to report for that client.
If you only have the one, non-paying client, then the trick is figuring out if you are actually in business as a blogger or if it is more in the nature of a hobby. Hobby expenses are NOT deductible. With time and working at the process, a hobby can be turned into a true business in the eyes of the IRS. Dot the “i’s” and cross the “t’s.”
Several things would go into determining whether or not you have, in the words of the IRS, “a business motive.” The following is not an all-inclusive list:
- Do you have other clients who do pay? Or is the non-paying client your ONLY client?
- Do you have a business plan?
- Do you maintain a separate business checking account for you business?
- If one is required, is your business licensed by the local or state or federal agencies?
- Do you advertise your business? Does your blogging business have a web presence?
- Do you have business cards? Pre-printed invoices? Business stationery?
- Do you attend networking events in an effort to gain new clients? i.e., SXSW?
The IRS has some very good resources to help with this kind of decision.
- Four Things to Know about Taxes and Starting a Business - November 14, 2017
- You probably should be making estimated tax payments to the IRS - November 7, 2017
- 2015 Standard Mileage Rates from the IRS - December 23, 2014
- Deducting your home office – webinar Wednesday - September 8, 2014
- Webinars on hiring independent contractors and avoiding common tax mistakes - April 30, 2014
- IRS? There’s an app for that - February 12, 2014
- IRS Tax Calendar for Small Business and Self-Employed - December 31, 2013
- 2014 Standard Mileage Rates for Business, Medical and Moving Announced - December 7, 2013
- Where can you find answers on the Affordable Care Act? The IRS - August 21, 2013
- Avoiding the Top Tax Mistakes - June 13, 2013