Updated: Oct 15, 2023
You’ve built a thriving business as a social media influencer, but how do you keep more of your money and give less to the IRS? As an influencer, you can maximize your savings by mastering tax write-offs.
You’ve built a thriving business as a social media influencer, but how do you keep more of your hard-earned money and give less to the IRS? As an influencer, you can maximize your savings by mastering tax write-offs.
You spend money to run your business. You regularly pay for things like equipment, clothing, and perhaps even travel. A lot of those costs can be written off on your taxes, allowing you to lower your tax liability.
The problem is that if you’re unaware of which write-offs you’re entitled to claim, you may leave money on the table, which is never a good thing. We’ll help you understand the most important tax write-offs for social media influencers to ensure you’re able to reduce what you owe and keep more of your income.
The costs your business pays to operate are tax deductible. As a social media influencer, that includes those costs associated with your platforms (Instagram, YouTube, etc.). Here’s a quick breakdown of what you should know for each.
Of course, this doesn’t include all current social networks. The industry is also constantly evolving, with new apps and platforms debuting regularly. The rule of thumb is that if a cost is required to create, build, promote, or maintain your business on a specific platform, it’s usually a write-off.
You can deduct platform-specific costs, but you can also write off other costs associated with your business.
We’ve mentioned this a couple of times, but it bears repeating –– you must keep good records. Every deduction must be tied directly back to your business. Track spending, save receipts, and store records to support your deductions. Make notes that help you track how each expense relates to a business activity.
You don’t have to do this all by hand, however. You can use a wide range of apps and digital tools to help, like QuickBooks, Mint, Xero, and Wave to name just a few. For those just starting, Excel can be a viable option, too, but you’ll need something more robust as your business grows.
Finally, make sure you comply with tax regulations when claiming your write-offs. Your home office deduction is a good example of a frequently claimed deduction that comes with stringent rules business owners must follow.
Not sure if you comply with tax rules for the write-offs you want to take? Work with a professional who has deep experience in the influencer industry.
A tax deduction reduces the amount of income that’s subject to taxation, while a tax credit reduces the tax amount owed.
While digital records are becoming more accepted, it’s crucial to keep some form of proof (digital or physical) for every expense you plan to write off.
In an audit, you’ll be asked to provide evidence for the claims you’ve made on your taxes. This is where meticulous documentation becomes invaluable.
If you want to keep as much of your income as possible while reducing your tax bill, it’s essential to understand and claim the write-offs available to you. However, there’s more to it than just claiming deductions on your taxes. You also need to support those claims with detailed records, which means meticulous recordkeeping is vital.
If you’re unsure you know every deduction available to you, seek professional tax advice from a specialist with experience in the influencer industry. You should also invest in the right documentation tools and continue exploring and learning about tax optimization opportunities.