Are you a social media influencer or a well-followed blogger? You may be having fun while working and promoting your favorite brand, but if you are being financially rewarded, the IRS says that you are a business – a self-employed, independent contractor, to be exact.
Here is a guide for what you need to know about paying taxes as an influencer.
How Influencer Income (And All That Free Stuff) is Taxed
So, now what? Well, first of all, you need to figure out what your income is. If you are paid by the brands that you work with, then you will be issued a 1099-MISC at the end of the year if you are paid $600 or more by each of them. And even if you are paid less than the $600 required for a 1099 to be issued, this is still income that you have to report on your taxes.
The value of free stuff you receive is also considered as income to you, such as free products or free trips. An exception is if you receive a sample product worth less than $100 for the purposes of evaluating and reviewing it.
Deducting Travel and Other Expenses
All this talk about claiming income on taxes, but what about all the expenses you incur to generate income? There is a bright side. Ordinary and necessary expenses that you pay in connection with generating your income are tax deductible. So if you need to travel to a location to promote a brand or attend an influencer event, if you pay for supplies, or if you foot the bill for a photo shoot, all of those expenses that are directly related to your income generation would be considered tax-deductible business expenses.
Don’t forget about these commonly overlooked expenses that could lower your taxable income:
- Merchant Fees : Fees deducted by- Square, PayPal, Venmo, etc are deductible.
- App Subscription Fees: The monthly subscription fee paid to use the Apps that keep your online social presence running smoothly are deductible
- Sales Tax paid: Sales tax paid on items purchased and used in your business are deductible
How to Avoid Paying Additional Taxes
In general, if you are self-employed as an independent contractor and expect to owe more than $1,000 at tax-time, then you should pay quarterly estimated tax payments by the quarterly estimated tax deadlines to avoid any penalties. QuickBooks Self-Employed can help you easily track your income, expenses, and figure out your quarterly estimated taxes. When it comes time to file, your information can easily transfer to your TurboTax Self-Employed tax return.
How to Easily Get Your Taxes Done
Don’t worry about knowing these tax rules. TurboTax Self-Employed has “ExpenseFinder”; which helps you manage and automatically find industry-specific business deductions that might be missed. TurboTax has you covered and will ask you simple questions about you and your business and give you the tax deductions and credits you’re eligible for based on your answers. If you still have questions at tax-time, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered. A TurboTax Live CPA or Enrolled Agent can also review, sign, and file your return.