Top Tax Deductions Every Influencer Should Know

Influencers can enjoy lucrative careers. However, you’re still required to file taxes with the IRS, which might mean paying a taxes. The judicious use of tax write-offs can help you save money, but you’ll need to know which tax deductions to claim.

Why Tax Deductions Matter for Influencers

Influencers can earn hundreds of thousands of dollars a year, or even more in some cases. It can be an incredibly lucrative profession. But like all businesses, the IRS requires a percentage of that income. Tax deductions allow you to reduce your taxable income and your tax bill, boosting your financial health. Which deductions can you claim as an influencer?

Understanding Business Expenses vs. Everyday Expenses

In many businesses, it’s a simple matter to separate business expenses from those the owner incurs in their everyday life. That’s not the case for influencers.

For instance, let’s say you bought a smartphone, and you use it for your regular, day-to-day communication needs, but also to record videos for your social media accounts. Does the cost of the phone count as a business expense or is it a personal expense? Depending on the situation, you might be able to write off the phone’s cost on your business taxes.

Business expenses fall into two categories – common and accepted expenses for your industry and “helpful and appropriate” expenses for your business. That includes things like gear and equipment, but also technology and even professional assistance. We’ll break it down for you below.

Tech and Equipment Deductions

Influencers require equipment to operate their businesses. That means you can deduct things like your computer, cell phone, cameras, and other recording equipment purchased for business use. Other deductions include software subscriptions, such as editing tools, and premium social media management tools. You can even deduct your monthly cell phone and home Internet bills.

Home Office Deductions

All business owners need space to work. For influencers, that usually means setting part of your home aside as office space. The good news is that you can claim this space on your taxes, so long as it is for exclusive and regular use by your business. This just means you cannot claim space that you occasionally use for business needs but that is primarily for personal use.

Travel and Networking Deductions

Chances are good you spend a considerable amount on business travel. Thankfully, you can deduct those costs from your taxes. This includes travel related to brand partnerships, events, and photo/video shoots.

Meals and entertainment are also deductible if they’re related to business networking or collaborations. However, make sure to practice diligent recordkeeping and tie these costs directly to your business to avoid raising red flags with the IRS. Personal meals and entertainment are not deductible.

Educational Expenses

All professionals need to improve their skills and capabilities, but that usually comes at a cost. You can deduct the cost of courses and workshops related to content creation, marketing, or niche skills, as well as subscriptions to industry-related publications or websites.

Professional Services

As a business owner, you wear many hats. However, you cannot take on every role required to operate a successful company. You’ll need to hire professionals for some things, such as attorneys or consultants to help you with brand contract negotiations.

You’ll also need to work with other professionals, like graphic designers, video editors, and other service providers during everyday business. These costs are tax deductible, but make sure to keep your records organized and note any important details required to tie the costs to your business.

Marketing and Promotion Expenses

As an influencer, you’ll need to promote your business. That happens primarily through social media, and you’ll need to pay for these services. All advertising costs for your business are tax deductible. You can also write off the costs you incur through giveaways and merchandise production. Again, accurate recordkeeping is important.

Be sure to check out our Part 2 of this series to get further insights into these deductions!

What qualifies as a legitimate business expense for influencers?

Any expense that is ordinary and necessary for the operation of the influencer’s business can qualify, but it’s important to consult with a professional for specifics.

Can I deduct the full cost of my new camera or computer?

Depending on your country’s tax rules, you might be able to deduct the full cost or depreciate the expense over several. Years. Always keep receipts and consult with a tax expert.

How do I prove that my travel was business-related?

Keeping detailed records, conference tickets, brand meeting schedules, and other documentation can help substantiate business travel claims.

Is there a risk in claiming too many deductions?

Yes, aggressively claiming deductions can raise red flags for tax authorities. It’s essential to claim only legitimate expenses and have documentation to back up every deduction.

Conclusion

Don’t be surprised when it comes to filing taxes. Proactive tax planning can help you reduce your tax bill and taxable income, ensuring that you have a stable financial foundation on which to build your business.

While you can deduct a wide range of business expenses, from equipment to travel, the key to being successful is keeping accurate records and having documentation to back up every single deduction you make. It’s also important to consult with a tax professional to develop the right strategy to maximize your deductions while minimizing risk.

As an influencer, you should regularly review your expenses, gather supporting documentation, and note any important information not already present within those documents. Connect with a tax professional who has deep experience working with influencers to take full advantage of your available deductions.