As a content creator, taxes are often an afterthought. Let’s face it, you didn’t start making content because you wanted to pay more taxes. But here’s the deal: once you’re making money from your content, you’re running a business. And the IRS wants to make sure you’re playing by the rules.
Let’s talk about IRS red flags and the actions that can raise eyebrows and potentially lead to an audit.
Here’s Our Full Video About IRS Red Flags!
First Things First: What Even Is an Audit?
An audit is when the IRS takes a closer look at your tax return to make sure everything adds up. There are a couple of types:
Paper audits happen through mail. This type of audit is the most common and by far the easiest to deal with. You’ll get a notice in the mail asking for more documentation to support something you reported on your tax return.
Full audits are much more in-depth. It’s highly unlikely that you’ll have to experience a full audit. These audits involve in-person meetings and a detailed review of all your business records.
The good news? Audits are rare. But they can happen if you’re unknowingly raising red flags. So let’s talk about some of the common audit triggers for content creators and how to avoid them.
Trying to Write Off Your Entire Life
For a lot of influencers, their life is their content. While it may be true that a lot of the content you create revolves around your life, it’s pretty unlikely that everything in your life is 100% deductible. The best thing to keep in mind is: is this purchase an ordinary and necessary expense for my business?
The IRS expects deductions to be “ordinary and necessary” for your business. So if you’re a fitness YouTuber, that gym membership makes sense. A Twitch streamer who streams video games can write off the games and consoles they buy. Without these purchases, you can’t make money. These are your costs of goods sold.
Platforms like Instagram and TikTok have blurred the line between personal and business, but don’t let that confuse your taxes. If you try to deduct absolutely everything, that’s going to raise some eyebrows. Be thoughtful and intentional with what you claim as a business expense.
Writing Off 100% of Your Vehicle
Unless your car is strictly used for business (think: mobile pet grooming or an on-the-road food truck, or construction worker), trying to write off 100% of it is risky.
Most creators use their car for both business and personal reasons. Driving to a brand photoshoot? That mileage counts. Road trip with friends for fun? Not so much.
Done-for-you taxes and bookkeeping for creators
Not Treating Your Business Like a Business
The IRS wants to see that your content creation is a legitimate business, not just a side hobby. In fact, if they see your work as a hobby, you actually can’t write off all your business expenses and you’re left owing more in taxes. This is why it’s crucial to treat your business seriously.
Red flags include:
- No business bank account
- No LLC or EIN
- No bookkeeping system
- Sporadic or low income year after year
Even if you’re a micro influencer just getting started, treat your work like a real business. That means consistent efforts to grow, professional outreach, and tracking income and expenses.
Platforms like YouTube, Twitch, and TikTok are full of creators turning content into real income. Show the IRS that you’re in it for profit and growing your brand.
Writing Off Too Much of Your Home
Yes, you can claim a home office deduction, but it has to meet certain criteria:
- Used exclusively and regularly for business
- Not part of your living room, kitchen, or shared bedroom space
Trying to write off your entire apartment because you film or edit in every room? That’s not going to fly. Instead, measure your actual workspace. Even a small dedicated desk in your bedroom can count, as long as it’s used only for business.
Failing to Report All of Your Income
This is one of the biggest IRS red flags, and it’s a common mistake for creators. You’re required to report all income you earn from your content creation. Even if you didn’t receive a 1099. That includes:
- Affiliate payments from platforms like Amazon Associates or LTK
- Brand deals paid through Venmo or PayPal
- Patreon, Ko-fi, Buy Me a Coffee
- TikTok Shop and YouTube Partner Program payouts
If the IRS finds out you earned more than you reported, they can hit you with penalties and back taxes. Keep clean records and report everything, even the small stuff.
Not Sending 1099s to Contractors
If you paid any freelancers or contractors $600 or more in a calendar year, the IRS expects you to send them a 1099-NEC. This includes working regularly with video editors, virtual assistants, graphic designers, or social media managers. Basically anybody you’re paying to help you with your business!
If you don’t file your 1099s correctly and on time, you could face penalties. And worse, if your contractor gets audited and you never reported the payment, the IRS could come knocking on your door too.
Pro tip: Keep a W-9 on file for every contractor you hire and send out 1099s each January.
Let Cookie Finance Keep You in the Clear
You don’t have to do this alone. Cookie Finance helps creators like you track your income and expenses, stay audit-ready year-round, form LLCs and open business bank accounts, and file your taxes the right way, on time.
Whether you’re working with brands on TikTok, monetizing your newsletter on Substack, or uploading content on YouTube, we’ll help you keep your business legit.
You Focus on Creating. We’ll Handle the Rest.
IRS red flags are avoidable when you treat your content creation like the business it is. With the right tools and support, you can stay organized, compliant, and stress-free.
Check out our tax and bookkeeping services to set up your finances the smart way, so you can keep creating without the chaos. You can always schedule a free call with our team, and we’d be happy to help!