Almost five years ago, I wrote this post regarding blogging and taxes. I received the equivalent of hate mail for publishing those thoughts. Or truths, really. I obviously hit a nerve with some people. At that time, monetization of blogs was really picking up speed and I was watching bloggers "sponsor" other bloggers or showcase "c/o" clothing. It's kind of crazy to think how earning money from a blog has changed over these past five years.
I've come to realize that after 20+ years of tax work, most tax related topics are of interest to me so when I came across an online discussion of a large blogger and the assumed tax treatment of that blogger's expenses, I couldn't help but read. A common statement is that these popular bloggers, who are most obviously generating a considerable amount of revenue, are writing off everything. "Writing off everything" apparently means they are deducting their expenses directly against gross income. However, some of their blogging expenses would be considered personal (nondeductible) expenses for a non-blogger.
I think we can all agree that with blogging, and social media in general, there's a very fine line between what's real and what's fake (or curated.) A blogger goes on a lunch date with her husband, takes photos of her outfit and food, and generates a blog post about this lunch date. Said blogger makes money off of links to the outfit she wore in the post. Blogger claims that the date was set up specifically for purposes of generating blog content. This is her image. She dresses in these outfits for lunch dates with her lovely husband. Don't you wish you had this outfit? Don't you wish you had a husband like mine to sneak away with during the week for a lunch date? Don't you wish you could eat this meal of carbs? Is the blogger therefore allowed to deduct the costs of the meal (subject to the 50% allowance) and the outfit as business expenses? What percentage of these expenses are personal?
Blogging as a business is still so new that tax standards have not yet been established. Plus, unless you are taking outrageous positions on your tax return, you'll most likely slide right past scrutiny with the IRS. There have been severe budget cuts within the IRS which means that audits have significantly decreased. The odds of being randomly selected for an audit are extremely tiny. I hate to say all of this because it gives off the impression that you can take pushy deductions on your return, keep your fingers crossed and simply get away with it. Tax is not a black and white world. There are so many gray areas that you sometimes have to take a position because there simply isn't a straightforward answer.
If you're interested, here's an article published by Forbes last year regarding bloggers and the US Tax Court. As outlined in the article, a blogger (vlogger, actually) took a position on his return and the IRS and the Tax Court both disagreed with him. Yes, I'm a tax nerd who searches the internet for articles related to bloggers and the Tax Court. As you can see from the article, there have only been a handful of Tax Court cases involving bloggers. This is a new chapter in the tax world.