Blogging can be considered a relatively new type of business industry as the government wants to tax online businesses. When a blogger creates a blog in order to gain business income, figuring out what can and cannot be deducted from your taxable earnings can be a daunting experience. Since the industry is fairly new, the rules can be pretty confusing for someone who is claiming this type of income for the first time. Please see the following list of expenses that can be claimed on your return (if they make sense in your situation of course) along with a few items that probably should not be claimed unless it makes sense in your particular case. In order to achieve the maximum legitimate tax savings, is of course, to hire an expert to help analyze your individual scenario. Here are some examples that may apply to most bloggers.
The following are claimable:
Hosting fees, internet access fees, blog template and design fees are all part of running an internet-based business and can be deducted. There may be times that design fees should be capitalized such as if the templates designed are going to be used for many years to come (though this is hard to determine so most people probably just expense it).
Domain name registration fees, trademarks and patents are considered eligible capital property but they depreciate yearly. I would make the argument that yearly domain fees are charged on a subscription basis rather than being an asset.
Computer software such as Adobe Photoshop can be considered capital in nature. The depreciation rate is 100% and is subject to the half-year rule, which means you can only claim half the cost in the year of purchase. Please note that some software changes year after year and as a result an argument can be made for expensing it as opposed to capitalizing it.
Ads purchased to promote the blog (such as facebook ads for example) or money spent on SEO services, can be deducted from earned revenues. You can also deduct items that you buy for prizes to give away on the blog as part of contests and promotional giveaways.
If you use your home as your principal place of business, you can claim a portion of home expenses (insurance, property taxes, mortgage interest). The amount you can claim depends on the percentage of the total square footage of your home that you use for business. If you aren’t exclusively using the space for business, the amount you claim must also be prorated based on the amount of time you use it for business. This rule applies to any home based business – common sense applies.
Blogging equipment such as smartphones, laptops, or cameras are capital assets that you can be claimed on your return. However, you will have to deduct the cost of those items over a period of several years as the value of the asset depreciates.
Things that should not be claimed (unless they can be justified):
Outfits you photographed for the blog can seem like something you may be able to write-off, but this is not the case. It may be able to be claimed if it a uniform or a costume and is only used for business purposes, such as promoting the blog itself. Most clothes and accessories you buy and wear in everyday life cannot be deducted as an expense. People should take caution when making these types of claims although I have seen some fly such as the Remax Realtor who has the Remax logo embroidered in a few of his suits but again this may be a one off.
Unless you are a fitness blogger and can prove that your gym membership is a business expense, gym and other fitness fees are not tax-deductible. I would tend to be careful with this one as a fitness blogger may use the membership for personal purposes as well.
You may feature your pet on the blog or other mediums such as Instagram, but any animal-related expenses such as doggy daycare fees and pet insurance cannot be claimed.
While professional association memberships are tax-deductible, you cannot deduct club membership dues (including initiation fees) if the main purpose of the club is dining, recreation, or sporting activities. Please note that this applies to all other business types as well.
When saving receipts for your blogging business, you should consider it a business first and foremost which means applying the rules the same way and asking yourself if the expenditures make sense. Common sense needs to be applied to what is claimed.
Like any other business it is important to keep track of all revenues and all expenses and bookkeeping is very important.