Becoming a social media influencer has many perks. Not only do you get to do something you love, but you can share your thoughts and experiences with people from around the world. Social media influencers can make some serious money, and it is a great side hustle or full time job. If you are a social media influencer, you may want to consider deductions to lower your total income tax liability. Here, we will detail the most popular tax deductions for social media influencers.
Tax Deductions Overview
Before we dive in, it is a good idea to answer this question: what is a tax deduction? You may not be an accountant or tax expert, but tax deductions are simple to understand.
In simple terms, a tax deduction is a dollar for dollar reduction in your taxable income. A more fitting term for this concept is really an income deduction. The reason for this is due to the fact tax deductions reduce the amount of income you report on your tax return. If you claim deductions which will decrease your reported total income, you will end up paying less taxes.
To calculate how much a deduction will save you in taxes, you can use some easy math. To get a general estimate, multiply your marginal tax rate by the tax deduction. The resulting number is what you can expect to save thanks to the deductions you claim. Now, let us dive into some of the tax deductions for social media influencers that can save them money!
There are many tax deductions you can claim as a social media influencer. The ones we cover here are the most popular ones that can save you the most money.
Home Office and Supplies
If you are a social media influencer, it is safe to say you probably spend a lot of time in your home office. Most of your time may even be spent on a laptop or computer, or your mobile phone or tablet. The great news is that you can deduct most of the money you spent on office supplies.
Some home office and supply items that you can deduct include:
- Pens and writing utensils
- Electronics (phone, laptop, tablet, computer)
- Camera and other camera equipment
- Audio equipment if your are a podcaster
- Cooking equipment for foodie blog
Not only can you deduct some of the cost associated with these items, but you can even claim a home office deduction. If you do a lot of work from home, you can designate up to 300 square feet of your home as an office. If applicable to your situation, you can claim a deduction of up to $1,500 on your taxes. You can even claim some of your utilities like internet, electricity, and your water bill. If you think about it, all of these are vital to your activities as a social media influencer.
A big part of being a successful social media influencer is traveling. Your followers want to see the world and you may be the way they do it. Considering this, you will probably want to travel. Many popular destinations for social media influencers include national parks, up-and-coming cities, and much more. You may also want to attend social media events around the globe, or go to conferences.
If you travel at all as a social media influencer, you can deduct these expenses on your taxes. The type of travel expenses you deduct can include fuel, air fair, bus or train tickets, Uber rides, food, and rental vehicles. In addition to this, you can also deduct hotel or AirBnB costs.
There is one caveat to claiming travel expenses as a deduction on your taxes. In order to qualify for the tax deduction, these trips must involve at least one overnight stay away from your home.
If you are a social media influencer, chances are you have your own blog. There are many web hosting services that let you design your own website for a small fee. Having your own blog is a great way to get more followers. You can post articles, do affiliate marketing, product reviews, and more. However, having your own website can get expensive. It may cost a couple hundred dollars a year to keep it live. Plus, you may have to hire a web developer or graphic designer to help set up the site and create a personalized logo.
The good news is that all of these expenses count as possible tax deductions. The list goes on and can even include any stock photos or footage, as well as music.
Advertising and Marketing Expenses
One of the most popular tax deductions for social media influencers are advertising and marketing related expenses. Being a social media influencer is all about having your own brand. In order to grow your brand and attract followers, you may have to run ads or create digital marketing campaigns. All of these expenses can count as a tax deduction.
Considering advertising and marketing expenses make up a huge portion of total expenses paid by social media influencers, this can save you a ton of money on taxes. This deduction can apply to a wide range of expenses. Here are some advertising and marketing related expenses you can use as a tax deduction.
- Facebook and Instagram Ads or boosted posts
- Items your purchase as giveaways to followers
- Fees paid to social media agency
- Expenses for graphic designer
- Costs of creating merchandise (or merch) like stickers, hoodies, shirts, and more
- Products you review (make up, apparel items, cooking equipment, technology items, etc.)
As you can see, there are many expenses that can fall under this category.
Keep track of everything!
Because there are so many types of expenses you can use as a tax deduction, keep organized records. You should keep payment receipts and invoices for all of your social media influencer related expenses.
Keeping organized records will help you in many ways when it comes to file your taxes. Your accountant or CPA will be able to determine your total deduction amount. If you can’t prove that you actually incurred an expense, then you will not be able to claim it as a deduction.
One tip is to use a spreadsheet, or even some online accounting software solutions, to track your expenses. As soon as you make a payment, be sure to update your tracking sheet. This will help you and your accountant validate the expenses. You can also use your tracking sheet to total up your expenses throughout the year to help you estimate your total tax savings.
Best Tax Deductions for Influencers
Being a social media influencer comes with many perks. Not only can you get discounted or free products from different businesses, get awesome travel rewards, as well as make serious money, but you can also take advantage of some great tax deductions.
If you are looking to save money on your taxes, then be sure to remember these popular tax deductions for social media influencers!