A Bloggers Guide to Taxes
All of us want to earn money doing something we love, and in the case of blogging, it’s completely possible.
If you have a blog that you regularly write content for and want to take things to the next level, there are lots of ways to monetize and start earning an income. While a blog is a way to earn some extra pocket money for many, others have been able to make it a part or full-time job.
However, it tends to not happen all at once, and as your site grows and you get more and more paid opportunities, the line between hobby and business can often become blurred. It’s tricky because once you are earning money, it means you’re bound by the same tax laws that apply to most other jobs and your revenue must be reported. Read on to find out more
Hobby or business?
According to the tax authorities, you must be actively engaged in trying to make a profit for your blog to be a business. This does mean that there’s a bit of a grey area as if you’re a hobby blogger who occasionally gets some paid work you might be wondering where this leaves you.
If it helps, if you’ve made a profit for three out of the last five years then it’s likely you’d be considered as running a business, even if the profits were small. If your blog is a business, you’ll need to fill in the relevant paperwork, pay self-employed taxes, and submit a tax return for your business each year.
Self-employment tax
You can be employed and self employed at the same time, meaning that even if you have a full time job and earn taxable income, you will still need to report income as a self-employed blogger. Taxes on your business income are paid separately, although the income from your other job is taken into account.
Most countries have a ‘tax free allowance’ where you can earn a certain amount before you pay tax, income you earn from all sources will be taken into account here. For example, if you work a full time job, you’ll already be over the allowance and will start paying tax on your blog earnings right away. If you’re a student or a homemaker, for example with no other income, you might not ever earn over the threshold to pay tax.
You still need to file in a tax return each year to report your income.
Getting help
Filling in a tax return can feel a little stressful and overwhelming. It’s such an important document that you don’t want to get it wrong, if you make a mistake and don’t end up paying enough, you may be subject to interest and penalties.
In extreme case, if the IRS believes that you intentionally underpaid taxes, you may need a criminal defense lawyer to fight your case.
The best approach is to consult with a tax preparer and never file your own tax returns. Hire a professional, so you have peace of mind that it’s all been done correctly.
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Ken Boyd
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies
(email) ken@stltest.net
(website and blog) https://www.accountingaccidentally.com/