Content Creator Tax Write-Offs: The Do’s and Don’ts
All business owners must file taxes. That includes content creators who earn the minimum allowed under IRS rules ($400 per year). However, there’s no reason that you need to part with a sizable portion of your income. As a content creator, tax write-offs can help reduce your tax bill and your taxable income.
That said, you must balance maximizing your deductions with adhering to tax laws. You’ll need to understand what write-offs you’re entitled to take and the correct way to claim them. In this post, we’ll explore the do’s and don’ts of tax write-offs for content creators.
The Do’s: Valid Tax Write-Offs for Content Creators
Let’s kick off the discussion with a quick rundown of the valid deductions content creators are entitled to take (with proper recordkeeping, of course).
Equipment
You can and should deduct the costs of essential equipment that you need to run your business. This includes things like computers, cameras, microphones, cell phones, editing software, and even subscription services like Adobe or Canva. These are pretty straightforward deductions because they usually relate directly to running your business.
Home Office Space
The home office deduction is one of the most important write-offs on your taxes, but it’s important to go about it the right way. First, make sure that the space you want to claim qualifies.
Under IRS rules, it must be for the exclusive and regular use of your business. What that means is the space should be primarily for business use. You can’t claim your den or game room as office space because it’s also frequently used for personal needs. Same with the kitchen.
Under the simplified rules the IRS established, you can claim $5 per square foot for qualifying home office spaces, up to 300 square feet (or $1,500 per year). Alternatively, you can deduct a percent of your rent and utilities. For example, if you spent $18,000 on rent and 20% of your apartment is considered home office, then you can deduct $3,600 ($18,000 x 20%).
However, don’t forget that you can claim more than the space itself! Chances are good that you’ve purchased equipment for that space – your desk, office chair, printer, office décor, and other expenses are all write-offs. Just make sure you accurately document those expenses and tie them to your business.
Travel Expenses for Business Purposes
Do you travel for business? It might be to review a restaurant or hotel. It could be for a photoshoot or video production, or even for a conference or collaboration. Whatever the case, business-related travel costs are tax write-offs.
Again, the most important thing is accurate recordkeeping. Detail how each expense relates to your business, including accommodations, car rentals, airfare, meals, and more. Without supporting information, the IRS may challenge your write-off.
Education and Training
Professional development is critical to building a successful brand. Workshops, online courses, and books directly related to enhancing your skills as a content creator are all write-offs.
Promotional and Advertising Expenses
Promoting and growing your business costs money and you can write those costs off on your taxes each year. This includes the cost of running ad campaigns, hiring PR services, and promoting your posts through social media, as well as a wide range of others.
Professional Services
Don’t forget to write off the costs of professional services that tie into your business. If you hire an accountant, use a video editor, retain legal counsel, or pay a consultant specifically for content creation endeavors, you can write those costs off.
The Don’ts: Common Misconceptions and Pitfalls
It’s even more important to know what not to do when it comes to tax write-offs. Avoiding these missteps and pitfalls will help keep you off the IRS’ radar.
General Clothing Purchases
Some clothing purchases are tax deductible, like necessary attire or specific costumes, but personal wardrobe items (clothes you wear on an everyday basis) are not.
Personal Trips and Vacations
Yes, business travel costs are tax deductible, but personal trips and vacations are not. If you mix personal and business travel, only the costs directly related to your business can be deducted.
Vague and Undefined Business Expenses
It’s tempting to aggressively write off expenses on your taxes. However, that raises red flags with the IRS and increases your risks of being audited. Any business expense should be clearly defined and immediately related to your business.
Entertainment Costs
Think twice before writing off entertainment and meal costs, particularly if you cannot clearly connect them with your business.
Can I write off the cost of attending a general entertainment event if I document it on my platform?
Only if the primary purpose of attending was business-related and integral to your content creation.
I bought a new phone mostly for content creation, but also for personal use. How do I handle this?
You can likely deduct the entire cost of the phone on your tax return. Documentation and justification are crucial.
Can online platform fees (like YouTube Premium or TikTok’s Creator Fund cuts) be written off?
Generally, fees directly related to earning income from a platform or enhancing your content creation can be deducted.
Conclusion
As a content creator tax write-offs offer you the chance to reduce your tax bill and your taxable income. You’ll find a wide range of legitimate write-offs, too. However, it’s important to understand the boundaries here, as well as to practice diligent recordkeeping and conducting periodic reviews to stay compliant and informed.
While write-offs can help you save money, it’s important to stay proactive in your efforts. Consult regularly with financial experts who have experience in the content creation industry, and make sure you prioritize financial health alongside creative efforts.
