First things first. The IRS states that “You can receive income in the form of money, property or services.” As a blogger, you may receive one or all of these types of income, and with very few exceptions they should be reported by law.
Here’s a quick rundown to get you started. As always, it’s best to check with a tax professional if you have any questions or feel that you might be exempt from certain reporting requirements.
Tip: If you’re looking for an easy and free way to file your small business taxes online, I highly recommend FreeTaxUSA.com. They don’t charge anything for forms like the Schedule C.
Review Items
A free product doesn’t arrive at your doorstep out of the blue. It’s there because you have a prior arrangement with a business or individual. Whether you are publishing a review on your blog, sharing across social media or simply posting your opinions on a retail site, the business is getting something of value from you, and this constitutes a barter. It doesn’t matter whether it’s tangible (a sweater) or intangible (a free month of internet hosting); if it has value and was given to you for free with the understanding that you would do something in return, report it, just to be on the safe side. Use the fair market value in your calculations.
Advertisements
Advertisements of any kinds that you sell or barter for are considered taxable income. This includes ads and banners on your blog, paid social media shout-outs and advertorials. If you bartered for the ad, report the value of the item or service you received in exchange – regardless of whether it is more or less than the amount you charge for advertisements. An example: let’s say you charge $50 for a 125×125 size ad for 3 months. A company barters with you by sending $75 worth of free products in lieu of cash. Report the income for this ad as $75 and not $50.
Paid or Sponsored Posts
If you posted on your blog and received something back as payment, or as a “thank you” gift, then it is considered income. This includes Paypal payments, Amazon gift cards, store credit, goods, and other types of compensation. If someone paid you to guest post on your blog, report that as income.
Paid or Sponsored Giveaways
Some companies compensate bloggers just for running a giveaway, either on their blog or some other platform like Facebook. Report any compensation you received for posting/hosting the giveaway as income. However, if your only compensation for hosting a giveaway for someone else was social media follows (i.e. Facebook likes) and/or increased traffic to your blog, then this is not something that has reportable monetary value, as far as the IRS is concerned.
Donated Items
Some bloggers end up donating a lot of their review items, and it’s a very nice gesture! However, you still have to report them. In fact, you’ll most likely need to do it twice – first as business income and then secondly as charitable gifts. Just because you’re giving them away doesn’t mean they don’t exist. Look at it this way: you earn $100 at work and then you give the $100 to a local animal shelter. The $100 must be reported as income; then you can report the $100 charitable contribution as a deduction.
Do you have tips for making tax time a little easier for bloggers?
Great resource for bloggers!
This is perfect! I’ve often wondered how many people actually report anything because they don’t feel like they have to. Both of my jobs are “unconventional” when it comes to tax time, and even accountants have had a struggle understanding! Blogger & Doula 🙂
Doula’s are the best!!
My tip would be … go to a tax accountant. That’s what I do. Dealing with taxes hurts my brain.
I am SO tempted to do this each year….but then convince myself that since I’ve done it before, I can do it again (and save some money). LOL
what a great resource! definitely going to pin this!
Excellent post, and all very viable points. It’s a job, and should be treated as such! Great post!
Great tips! Mine would be be honest! If they find out you are not–well–it’s just not going to be a good thing for you!
Yeah, this is a blogger’s least favorite time of year! Great tips, though. Thanks!
I agree. It’s never fun to “pay the piper,” as they say. ~Anne
Great tips!
Great information!
Great information. We use an accountant to make sure everything is done right.
Great tips! I always see so much confusion about this topic, especially this time of year, so I always recommend asking a tax pro!
What a great list of important i nfo for taxes!!
I keep a spreadsheet and document every single penny I make. I do not want the IRS after me. 🙂
These are great tips! It can be confusing what to claim and how. So many people don’t know that you have to report items and money.
This is GREAT info!! THanks for sharing 🙂
I would say just talk to an accountant for the whole thing.
I will be getting all my tax stuff ready this week and last year was the first year I started making money and other sources of income from my blog. So this post is super helpful! Thanks for making this so clear cut! Pinning it!
i think you almost covered up everything necessary for a stress-free tax season.