Is Your Blog a Business? A Beginner’s Guide To Tax

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Being able to earn income from your hobby is the ultimate dream for most people, and in the case of blogging it’s something that many of us are now making happen. Companies have caught onto how influential bloggers can be and how promotion and endorsement from them can hugely boost their business, and are happy to pay for the privilege. But the line between hobby and business can often become blurred, you probably started your blog with no profit motive but over time it’s grown and expanded and you’re now being offered work on a regular basis. According to the IRS, if you work as a blogger it means you run your own business and it’s covered by the same tax laws that apply to most other jobs. Any money you make from your hobby must be reported as income, and according to the Internal Revenue Code all income is taxable unless it is specifically exempted. This is where things get complicated- as it could mean that even if you’re not breaking even, any money you gain from your blog has to be included when it comes to filing your tax.

Is My Blog a Hobby Or Business?

The very first thing to decipher is whether your blog is actually a business, or classified as a hobby. This is a bit of a grey area, the IRS state that you must be actively engaged in trying to make a profit. If you’ve made a profit for three out of the last five years (even if the profits were small), then you’re likely to be considered as running a business. Not only is it important to know whether you are classed as a business or hobby for the purposes of paying the right tax, but as a business you can claim any business losses on your tax return. You are permitted to deduct any reasonable and necessary expenses in regards to your profession. A variety of things from office furniture, electronics, utility bills, insurance or anything else that directly relate to your business can be included, and the expenses can be deductable from the income you earn as a blogger.

Self Employment Tax For Bloggers

Self-employment tax is a social security and Medicare tax mainly for people who work for themselves. It provides you with a host of benefits including retirement, disability, survivor and hospital insurance benefits. You will usually pay self employment tax once your net earnings from blogging exceed four hundred dollars. It’s important to be aware that even if you only work a blogger on a part time basis (and work full time somewhere else where you earn a salary) the blogging part of your income WILL still qualify as self-employment income. This of course means you must pay self-employment tax on that income, and must be paid regardless of whether you owe any federal income tax. If you didn’t pay enough tax throughout the year (either through withholding or by making estimated tax payments) there is a chance you will have to pay a penalty. If you run into any problems or legal tax issues as a result of your blogging business, it’s important to contact a specialist in the field such as MCC4Tax who will be able to make sure everything is put right.

Estimated Tax For Bloggers

As a blogger you are likely to face estimated taxes, which is something that most employees in the traditional sense do not have to worry about. You will be paying quarterly estimated taxes to the IRS, as you don’t have an employer who withholds taxes for you. As a sole proprietor, someone who is in business for yourself, you will generally have to make estimated tax payments if you expect to owe tax of one thousand dollars or more when your return is filed. Estimated tax is used to pay towards income tax, as well as self-employment tax and alternative minimum tax.

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