Do you still have to pay taxes as a blogger even if you don’t make a penny your first year?
Being a self-employed blogger is so exciting isn’t it? I LOVE working from home.
However, as they say, death and taxes are two absolutes in life.
One of the not-so-fun aspects of blogging or working as a freelancer is tax stuff. But never fear, there are some solutions for staying organized and maximizing the money you get to keep!
**By the way, I’m NOT a tax expert. This is basic information, and not to be taken as professional advice. Also, this post may contain affiliate links. If you click and make a purchase, I may earn a small commission. Full disclaimer here.
There are three types of income taxes bloggers need to plan for:
1. Self-employment tax
2. Federal income tax
3. State income tax
Self-employment tax 2018
When you work for yourself, a special self-employment tax will apply to your net income amount. Net income is the amount your business earned minus any expenses you spent.
How much do I set aside for self-employment taxes in 2018?
If you expect to make any kind of profit from your blog or home-based business in the current year, prepare to set aside 15.3% of net income as your self-employment tax.
*The good new is, you can claim half of this tax as a deduction at tax time. Wait till you see the many types of tax deductions there are in the next section!
Self-employment tax calculator
There are several good real-time self-employment tax calculators for 2018. This one is free and simple to use.
And this 2018 self-employment taxes resource offers outstanding beginner information about self-employment and income taxes to help you understand them better.
If you’re brand new to blogging or other type of self-employment where earnings may be slow going, you may come up with losses instead of profits for the first year or two.
If you don’t make any profit at all, you won’t owe taxes of any kind on your business. (This does not apply to other income you or your partner may earn throughout the year.)
Will I claim a profit or a loss on my income tax statement?
If the amount you earn with your blogging or online business is less than the expenses of starting and running your business for the year, you’ll come up with a loss and not a profit.
That’s okay. Lots of home-based businesses and bloggers don’t make a profit at first. And the expenses of starting up your business, investing in courses, home office supplies, and various other things can eat up what little you do make.
You’ll be able to easily figure out what your business profits or losses are if you keep good records and use a tax specialist or reputable tax software.
Use this form on the IRS website to help you get a sense of how to figure out your profits and losses. It’s a great visual for learning more about the financial end of your business!
Should I have a tax advisor?
**Since self-employment taxes can be tricky, especially as your income grows… I highly recommend a qualified professional tax advisor to help with any financial and tax questions that come up. Here’s a great guide to help entrepreneurs find a solid tax advisor.
Federal and State Taxes for Bloggers
Your federal and state income taxes are in addition to the self-employment tax. Again, if you know that your blog or business will definitely make a profit, you’ll need to pay these taxes four times each year. These are taxes that would normally be deducted from your paycheck if you worked for an outside employer.
Quarterly Estimated Taxes
This term refers to the federal and state taxes you’ll need to pay the IRS. If you expect to owe $1000 or more in taxes from your business, you must pay taxes in four quarterly payments each year as follows:
- January 15th
- April 15th
- June 15th
- September 15th
It’s “estimated” because our earnings, profits, or taxes we may owe during the year is always a guess.
You can’t tell the future, but you can get an idea based on what you made last year, plus any increases you might reasonably expect this year.
When in doubt, set aside at least 30% of what you make in profits (monthly earnings – monthly expenses) each month.
I recommend a separate savings or checking account just for this “special” money… taxes are so special, aren’t they?
**Many new bloggers or business owners will not owe at least $1000 in taxes for the year if they aren’t making much/any profit. Therefore, they will not need to pay these quarterly taxes.
If you’re unsure, consult a tax advisor.
This cool calculator can help you estimate the amount of blogger taxes you might owe for the year. Type in some estimated earnings, minus business expenses you have, to get an idea of whether you might owe $1000 or more in income tax.
I’ll include a screenshot below.
Self Employment Tax Deductions
Need some good news?
There are plenty of tax deductions for home-based businesses! Most of these come in the form of expenses. From actual office supplies, to courses you take, and even the part of your home that you consider your “office”.
** The term “home office” (for tax deductions) doesn’t need to be a typical office space. This can be a corner of your living room, kitchen, bedroom, etc. where you have a dedicated table or desk just for work. A kitchen table doesn’t count, since it’s not totally dedicated to working.
Some awesome tax deductions for bloggers:
- Part of your self-employment taxes
- Advertising costs
- Costs for courses related to your business
- Web hosting/domain name costs
- Images purchased for blog
- Email service provider
- Gas mileage (if you drive a lot for business)
- Travel costs for dedicated business trips (FinCon anyone?)
- Legal and professional services
- Computer repair/tech support for business
- Rent or lease for dedicated office space
- Office expenses (material goods)
- Home office deduction (deduct a portion of your house expenses)
- Software or other hardware for business (cameras etc. for video/podcasting)
- Health insurance premiums if you’ve purchased private health insurance
- And more!
How to File Receipts for Taxes
You’ll definitely want to keep ALL receipts related to your business. This is your proof for all of the expenses and deductions you’ll claim at tax time.
File things in appropriate folders as soon as you get receipts and invoices, etc.
You also need to keep excellent records of all income you earn, what you pay others for blogging services (like if you have a VA), and various other earnings or spending that are associated with your business.
Filing your receipts for taxes may depend on the specific categories that apply to your unique business and what products and services you offer. The following are suggestions for categories that you can customize to fit what you need to stay organized.
Receipt Categories for Taxes
Blogger tax deduction categories include:
- Health insurance payments (if you have private insurance because you’re self-employed)
- Computer & website expenses — hosting, tech help receipts, plugins, domain name, theme costs, email service providers, courses related to business, etc.
- Supplies — such as ink, paper goods, anything you use to send physical products etc.
- Gas mileage — if you drive a lot for your business, keep good records and receipts
- Marketing and misc. expenses — money spent on marketing (advertising with Facebook etc.) stock photo purchases, video equipment if you podcast, etc.
- Accounting expenses — including any financial advisor/CPA costs, tax filing services costs, Turbotax expenses etc.
- Office rent or lease (if applicable)
- Travel expenses
General business categories for self-employed taxes:
- Income: affiliate earnings, ad income, sponsored posts or ads, any freelance work you’ve done (VA or freelance writing etc.), money earned by selling your own products, any free products you’ve been given are also “income”, etc.
- 1099 Forms
- Invoices for contractors: amounts paid for VA help, if you’ve paid writers for your blog/website, graphic or web designers, etc.
- Health insurance
- Expenses (see categories above and add others that may apply to you)
- Taxes paid: keep good records of what you’ve already paid for quarterly taxes for the year and keep copies handy of what you had to pay last year.
**You’ll likely come up with more categories according to your unique business.
Receipt Organizer and File Folders
There are a few ways I like to stay organized with my receipts and all of my business files for taxes.
Desktop file holders are really handy to use because they’re great reminders to file and organize receipts and tax information right away. The various receipt categories are really easy to see because this holder has a graduated height design.
Since I love color (my office is bright yellow!), these floral file folders make office organizing fun! If your home office area is more chic… and black and white is your thing, these are gorgeous!
I also have a mini accordion file for my car. When I buy office-related products such as ink refills, paper products, and even postage related to business… I file those receipts right away so they don’t get lost in my purse. Keep driving mileage records here also!
It can be really hard to fit everything on your desk or work table (mine’s super crowded!). I recently hung a really nice wall hanging organizer, and I love it. It keeps to-do lists handy and blog post idea folders at the ready.
I wish I had seen this chic gray over the door office organizer first! If you don’t like the idea of having to hang something on the wall, this one is perfect and needs no tools.
No room for excuses now! Time to get those tax receipts organized and file folders put to good use. 😉
More Receipt Storage Ideas
If you’d like to get much more detailed and specific with your receipt filing, try getting a couple of large accordion style organizers.
For larger businesses that generate a lot of income as well as expenses and receipts, there are attractive portable receipt and paper storage options also… in case you don’t have room for filing cabinets.
Best Way to Organize Receipts Electronically
I don’t organize my receipts electronically (yet!), but when I make a go of it, there are some fabulous services available now.
I do keep all records of business earnings, expenses, etc. in specific Google Doc files. They’re set up in categories just like we discussed above for the physical office files.
Also, I’ve used Freshbooks for a few years now to send invoices AND keep excellent track of my expenses. They do it all for me! I just print out my end of the year statement and put it in my tax binder.
If you love apps and would rather keep track of things electronically, you’ll want to check out this post about the best apps for managing your business receipts.
Taxes can have a happy ending…
Keeping your receipts and tax folders well organized will make your tax preparer very happy! Or, if you use an online tax service like TurboTax, you’ll be overjoyed to have everything you need when you file.
You’ll also save more money in deductions because of good organization practices. That’s definitely a reason to celebrate!
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