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  • 28 June, 2010

    Blog Profts And Your Tax

    Every time tax time comes around I have to get a huge stack of documentation in order. "But blogging income doesn't really count, does it?"

    Well, yes it does and you need to speak to your local tax agent or accountant to get it sorted out. When I first started blogging, I made a few thousand dollars a year. That may not sound like a lot but it is hard to explain the origin of this mythical money come tax time.

    I wasn't entirely confident in my accountant even knowing what the internet is, let alone a blog but he surprised me. Not only did he know about blogging, it also turned out I could claim a certain number of deductions for blog related expenses.

    For example, during 2009 say I bought a number of websites, hired a designer, bought some domains from Go Daddy, domain hosting from Host Gator, Philip Mansour's Confidential Conversions and various other blogging-type expenses (these are excerpts from actual expenses this financial year).

    After speaking with my accountant, I found that I could claim for these purchases against my blogging income.

    Now for the income:

    Say I sold $5,800 in blog advertising, $10,100 in sponsored posts and affiliate sales.  From that $15,900 your accountant can deduct all the blog related expenses to minimize your tax (and help you to keep your earnings!).  You have spent all this time promoting your blog and making money, it's important to keep your profits in the bank, rather than paying it all to the tax man.

    I now use Dynacom Accounting Software (which I have claimed as a deduction under "software") so I can keep all my records in one place and print out a report for my accountant at the press of a button.

    So, at a glance for your blogging tax checklist:

    Keep records of all income and expenses

    Use accounting software unless you like pulling your hair out

    Think of what you can claim based on your blog's topic.

    If you are a shopping blogger, your reviewed purchases are claimable.  If you run a food critic blog, restaurant meals that you review will be claimable.  If you are a golf blogger, your rounds, tournaments visits etc. are claimable.  If you run a gardening blog, fertilizer, trees and shrubs are claimable.  You get the idea.

    The most important point to remember is that your earnings can be offset by deductions.  The first step is to make money, the next is to make sure you keep it!