Great Ways Bloggers Can Save Money at Tax Time
Tax time can be a very daunting period for bloggers. Since we are self-employed, it’s possible we will owe the IRS lots of money once we file our taxes. Read on to discover how you can actually save money at tax time, so you aren’t too frustrated with making a profit with your blog!
- Track all of your income
Make sure you keep good records of all of the payments you earn related to your blog. Having a spreadsheet is very helpful to write down the name of the network paying you, the date, and the amount earned. Knowing how much you make in a year will help you make sure you don’t miss any 1099s or other earned income – which can really save you if you happen to be audited. You can even use a small mom budget book to keep track if you prefer the paper and pen way.
- Record every expense
Tracking your expenses is just as important as tracking your income. Money you spend on your blog (i.e. your business) can be deducted at tax time. Keep every receipt from in-store purchases as well as any email notification of an online purchase so you can easily file your taxes and get back the money you should. You can also use a software program like QuickBooks or Quicken (much cheaper) to help keep track of your expenses.
- File your own taxes online
Having an accountant do your taxes may be more convenient. However, it can cost you $300 or more to have someone keeping on top of your finances. If you can’t afford such a large expense yet, you can certainly file your own taxes using a program like TurboTax. With their services, you can file your federal taxes as a self-employed business for $115, and your state taxes for $40. Lots of savings over a CPA!
- Make some last minute business purchases
To offset the income that you need to claim at tax time, make any necessary, last-minute purchases before December 31. This could be a new computer, printer, software, or course. As long as it pertains to your business, it can help you save money when it comes tax time.
- Look for discounts on tax programs
Sometimes tax programs will offer deals. I have seen TurboTax have a discount for people who get their taxes filed through their service by a certain date. Even if it’s just a $20 discount, savings are savings!
- Make a charitable donation
You can write off the money or items you donate to an official charity or organization. Take a few boxes of items you no longer need to the Salvation Army. Donate to your favorite children’s charity. Both of these actions would allow you to save money at tax time. I often donate clothes I have received or bought for fancier blog events to the Clothes Closet. It is a program to help struggling women or women who have suffered abuse try to start new lives by offering clothes and classes for job interviews.
- Pay quarterly estimated taxes
Bloggers need to calculate and pay estimated taxes every quarter throughout the year. Since many will be hit with 1099s just before tax time, you don’t have taxes taken out as you complete sponsored posts and other campaigns.To offset this, and prevent paying a penalty for taxes owed, sending a payment to the IRS every three months will help you save money when it’s time to file your taxes.
- Pay off any owed balance in full by April 15
In the event that you do owe money for taxes to the IRS, it’s important that bloggers file as soon as possible. This will let you know how much you still owe, and so you can pay everything off in full before the deadline – April 15. If you still have an outstanding balance after April 15, you may have to pay penalty fees.
As you can see, it is possible for bloggers to save money at tax time. The most important thing is to keep accurate records of your online business and deduct as much as you can when it comes time to file your taxes.