Tax season is still three months away, but it’s good to start preparing now. After all, 2016 has been an incredible year for bloggers. There are more of us doing this professionally than ever before. With all the newcomers, it’s always good to remind them that the income you make from blogging or writing online is still taxable. Furthermore, if you aren’t careful–Uncle Sam can give you a nasty surprise at the end of the year.
So, how should we file taxes as bloggers? Here are a few quick and dirty tips for bloggers filing taxes.
Squirrel Away A Small Percentage Every Time You Get Paid
A fairly obvious little trick that we hope you’re already doing, setting aside a small percentage of each check you collect and depositing that money into a savings account is the easiest way to make sure you’re covered come tax season. Even ten to fifteen percent is more than enough, especially when compounding interest is added.
As an added bonus, your owed taxes are usually less than what you’ve saved–giving you a nice bonus to play around with.
As a Blogger, You’ll Owe the Government ‘Estimated Taxes’
‘Estimated taxes’ are something people with “regular” jobs don’t have to worry about. Basically, the IRS usually deducts small amounts of money from each paycheck you receive from an employer. This all goes toward your end-of-the-year tax statement, and usually means a Government tax refund.
As a blogger, however, you’re an independent contractor. Taxes typically aren’t taken out of what you’ve earned because you’re a self-operating business. Therefore, you’ll usually owe estimated taxes to the IRS every quarter. The due dates for these taxes are April 15, June 15, September 15 and January 15. For more information on estimated taxes, visit the official website of the IRS.
Don’t Forget About Self-Employment Tax
You may think of yourself as a writer, or an artist, or a “blogging extraordinaire,” but to Uncle Sam you are your own private business. As such, you’re required to pay the Social Security and Medicare taxes your employer would typically be required to take care of.
It’s a financial pain, yes, but if you save accordingly–it’s an easy expense to meet. Think of it this way: would you rather let your great grandpa Irving, who fought in World War II, won the battle of Iwo Jima single-handedly, worked hard all of his life, and gave birth to your grandpa continue to collect his Social Security checks? Or would you rather skip out on paying your fair share and make poor great-grandpa Irving have to hire a Phoenix bankruptcy attorney because he’s going broke and too old to work? Taxes are a necessary due we all must pay, and being a blogger doesn’t make you exempt from that.
It’s not all bad news for the tax-paying blogger. Being your own business makes you eligible for a number of tax deductions related to your work. Buy a new computer for your office? How about a desk? Office supplies? Spend any money on advertising? It can all be deducted. Even your rent or utilities can go toward a deduction if you use your home as your office. This helps offset the extra taxes you’re required to pay as a self-employed person.
In conclusion, know what you’re going to have to pay ahead of time by estimating how much you make and what percentages will come out at the end of the tax year. Try to set aside some cash to use for paying off your tax balance (and giving yourself a nice bonus), and remember: as a blogger, you are your own business. Most tips and tricks that can be used by business owners can be used by you. Take advantage of a good tax consultant, or have a knowledgeable friend help you file.