Tax Tips Every Blogger Should Know
Being a blogger doesn’t mean that you don’t have to pay taxes like any other US citizen. You need to know them well to avoid any problems and keep doing your thing. This Q&A guide on blogger taxes will help you to become more fluent.
1. How Much Should a Blogger Earn?
In fact, every penny must be reported. However, you don’t have to report about the amount until you receive it or spend it. It means that all the money you have on your Google AdSense or other networks shouldn’t be reported until you withdraw them to your account or get a paycheck. As for expenses, you shouldn’t report about them when you send a bill. Send the payment first.
If you didn’t earn anything, you still have to report about your blogging expenses. If you pay for hosting, WordPress plugins, domain registration, or anything else, report that on your 1040. And don’t forget to use the loss to reduce costs.
2. How Much Do Bloggers Pay?
It’s quite difficult to estimate the size of your quarterly payments, especially when you are a beginner blogger with a growing audience. One of the most frequently used ways of estimation requires you to count the federal tax rate, state tax rate (if exists), and the 15.3% self-employment tax rate. Add these figures and save an equal amount of income to pay. If you want it to be simpler, just save 40-50% or gross receipts.
3. How Many Times Should Bloggers Pay?
The IRS requires bloggers to pay 4 times a year. Even if the total yearly payment doesn’t seem to be too big, we recommend you to make regular quarterly payments as they are much easier to manage. It’s much easier to pay $1000-$2000 every 4 months than giving away $8000 at the end of the year. It’s still up to you, though.
4. Is Low-income Blog a Hobby?
As we already mentioned above, you have to report the IRS about all your income and losses. Even if your AdSense account is still below $5, the IRS considers it a business. All your losses related to blogging are also important as they’re a part of your business. Only if you don’t get income that’s higher than your losses for 5 years, the IRS may consider your business a hobby.
You must tell your accountant about everything that may potentially relate to your taxes, and it’s only the IRS that can decide what matters and what doesn’t. Still, don’t report about the amounts that you have on balances of networks until you withdraw this money to your own bank accounts. You must mention everything and pay for everything.
5. What If Blog Isn’t Registered as Business?
There’s no need to form an LLC or incorporate it to let the IRS recognize your business, so you can avoid this stage. However, forming a business entity through the Secretary of State may give you some extra protection and let you separate your business assets from your personal ones. Speak to your accountant to figure out which structure will work the best for your particular business. You can write off your business expenses in both cases.
6. Do Bloggers Need Accountants?
That’s definitely up to you, but we don’t recommend you to do something that you’re not an expert in without professional help. US taxes are very delicate and complex, so a tiny mistake may later turn into overwhelming problems. Potentially, high-quality tax assistance may cost less than penalties. It’s also a way to learn how to conduct the entire process and save money later.
Although blogging is usually quite a fun job with unlimited opportunities for growth, it requires you to get over difficulties with taxing. Do you have any experience in the field? Tell about it in the comments section and share this guide with beginner bloggers whom you know.