Carla Marshall has 10+ years of experience in video marketing, social media management, content marketing, DRM, and SEO. She was previously Editor in Chief at ReelSEO.com, and as a journalist and video marketer, she's covered news stories, creator journeys, and digital-first publishing initiatives across all the major online video platforms. She is YouTube Certified and a judge for the Shorty Awards, as well as the UK, US, Canadian, Global, and EU Search Awards.
10 Last Minute Tax Filing Tips for US YouTube Creators
Tax Day is April 15th if you are resident in the US, and If you're lucky enough to make any kind of income from YouTube you have just a few days left to file your personal income tax return including your Schedule C for any self-employed earnings you received in 2019. If you haven’t filed yet, we confirm 10 types of expenses you can deduct if you are a YouTuber in the USA.
We spoke with Devin Weber the VP of Operations for Braille Skateboarding. Devin is a Certified Public Bookkeeper and Enrolled Agent with the IRS. She has managed the finances for Braille Skateboarding for 6 years and is one of those rare people who enjoys preparing taxes.
Disclaimer: This post is intended as purely informational. You should always consult a professional tax attorney or CPA if you are unsure about your tax filings.
3 Essential Things to Know About Filing Taxes as a US-based Video Creator
Before we dive into the expenses you can claim as tax-deductible let’s take a look at some essentials that every YouTuber or video creator that’s making a living online should know:
#1 You Must Declare ALL Income
The bottom line is if you earned more than $400 from YouTube in 2018 you need to declare that to the IRS. If your income from YouTube was more than $600 in 2018, Google is legally required to provide you with a 1099 form (you can request one here). If you’ve worked with any brands or sponsors as part of a YouTube collaboration or promotion, and you earned more than $600 from those sources, each brand or sponsor will also need to provide you with a 1099 form. Even if they do not provide you with a 1099, you know you earned that money and you should report it as part of your total receipts.
#2 There is No Gray Area for the IRS When it Comes to Declaring Income
According to Devin, far too many people claim tax deductions are a ‘gray area’ but when it comes to the IRS there are absolutely no gray areas, to them it’s “black or white" and while you as a contractor might believe you can slip questionable expenses through, the IRS is not here to play. You better be 100% confident that, if you got audited, you could argue and win the case for that expense. If you don't and you feel like you're getting away with something, don't take that chance.
An IRS audit will shine a spotlight on every part of your financial history, and uncover every penny of unreported income, and every penny of expenses that were really personal rather than business use. That is something you really, really want to avoid.
However, the IRS understands that it costs to live and to run a business as a freelancer, so there are so many deductions they allow you. At the end of the day, it’s foolish to keep any income hidden, as, in most cases, you legitimately can find deductions to balance out the majority of that income.
#3 You Can File an Extension (On Paperwork not Payment)
Filing taxes in the US can be an overwhelming experience and the IRS does offer the option to file an extension if you need it. However, if you believe you will owe the IRS money on 2018 earnings, you will still need to submit that payment on April 15th 2019 - the extension is simply an extension of time to file, not an extension of time to pay.
10 Tax Deductible Expenses for US YouTubers
For the IRS to recognize a legitimate business expense that qualifies as tax-deductible, it must be classed as both ‘ordinary’ and ‘necessary’. You can find out further information regarding these rules on the official IRS website, or your CPA will be able to advise.
#1 Filming Expenses
For any YouTuber, the process of video creation is going to come with some kind of cost, especially if that creator wants to publish content with higher production quality. Even if the creator films with an iPhone (more about that in section 4), the chances are they might progress to a dedicated camera and microphone as well as other hardware. Keep the receipts and as a dedicated video creator, you can absolutely claim back these expenses as tax-deductible.
#2 Computer Expenses
It’s a super talented creator that can upload every video they make to YouTube without any tweaking or editing. If you invest in a computer that you use to edit and upload, you can claim that purchase as part of your tax-deductible expenses - as long as the main use of that computer is for your business. Yay.
#3 Home Office Expenses
If you create or edit video content from home and have a specific area dedicated to that pursuit (i.e. a desk or a corner of the living room or bedroom), then the IRS will allow you to claim a percentage of your home costs (rent, utilities) against that.
However, it takes some working out to understand what percentage you can claim against. A very simplified example is ff your home is 1,000 square feet and, the space that you use is 100 square feet, well then 10% of all the costs of your home are going to count against your home office. You can find out more about writing off home office expenses in this excellent guide from Nerdwallet.
#4 Cell Phone & Internet Costs
You can legitimately claim against Internet and cell phone costs - but only the business portion of the usage. If a YouTuber buys an iPhone for $1,200 and they use it for personal stuff 40% of the time, and they make and edit their videos and upload them and answer comments 60% of the time then, they can only take 60% of that cost as an expense, not the 100%.
So many business owners make the mistake of taking 100% and that is not correct You will, if you get audited, owe money. Find out more from this updated guide from TurboTax.
#5 Business Supplies & Expenses
Running any kind of freelance business carries its own supplies costs, and it’s no different for YouTubers. For instance, alongside cameras, mics, green screens, etc, a science channel may have a legitimate reason to purchase a microscope or lab equipment, while a beauty blogger might need to invest in the latest Jeffree Star palettes or Kylie Jenner lip kits as part of the reviews they upload to YouTube.
Braille Skateboarding not only invests in skateboarding equipment, but they also claim expenses for any props or extra equipment they use in shoots (like the gummy bears used in this video!)
For any serious YouTuber, the process of video creation can be costly. However, different creators will have different expenses depending on...almost everything. Luckily, the IRS will let you write off supplies directly related to your business if they are ‘necessary’ and ‘ordinary’ which means that YouTubers shouldn’t be held back in purchasing equipment if it directly relates to them earning a living. Just keep every receipt and confirm on every receipt the video that particular supplies relate to. If you're unlucky enough to be ever audited and the IRS discovers a claim for, say, $300 worth of mascara, you can provide evidence via that video you created around the best mascara brands of 2018 that generated 1.2M views. The IRS will think that’s acceptable.
Office supplies also fall under this category so go ahead and claim that printer and ink, those folders and binder clips, that dry erase board, and that desk and chair.
#6 Subcontractor Expenses
No matter how talented a video creator you are, there will be some skills you are going to need help with as part of your YouTube journey. You may take on an assistant, or outsource help with editing, social media, costume design, bookkeeping, or 100 other things, and the chances are those businesses or individuals will require payment for their services. The good news is that you can claim against those expenses!
However, just as any company or individual you work with on a freelance basis should legally provide you with a 1099, you need to do the same for your subcontractors if you have paid them over $600 in 2019. Those individuals can then report the income on their own taxes.
Anyone you pay money to as part of being a YouTube creator is a tax-deductible expense for you, but reportable income for them (via a W9 form from them which confirms their name, address, and SSN). Remember, the IRS wants those taxes no matter who it is so if you deduct it and it goes to another person, they better report it.
#7 Travel Expenses (National & International)
There are a huge number of video creators whose sole focus is on publishing content around travel. Naturally, a good deal of expenses may be incurred as part of their business so keeping a very clear record of receipts is vital. There may be other creators who rack up expenses around travel throughout the year and may be able to make these tax-deductible if they can prove that travel was essential to the business of being a YouTube creator.
But beware - here comes one of those gray areas we talked about. To the IRS, there is a VERY clear distinction between business use and personal use when it comes to travel expenses. For instance, if you have a YouTube channel and you fly to Paris and you do an episode about the hidden gem bistro's of Paris as part of a holiday, you need to separate out the business part of it. Say, you are in Paris for 10 days and, for five of them, you're doing filming and business work, then for half of the time is business, and half of the time is fun. You can claim half of the travel expenses (50% of hotel costs, flights, etc) but you cannot claim for the whole trip if the whole trip is not dedicated to business.
Also note, the IRS only gives you a 50% tax deduction on meals and entertainment so, if you spend $100 on food, you're only going to get a deduction of $50. Again, check with your CPA if you are unsure, these are only guidelines.
#8 Local Travel Expenses Related to YouTube Business
Did you know that if you travel locally on YouTube business - say, to a coffee shop to do some editing, or to Target to pick up supplies - you can claim local transportation expenses? Not only can you claim on the mileage (currently at 55 cents per mile but this differs every year), but if you keep your receipt, you can also claim for any parking expenses. Any local travel expenses incurred, even toll charges can be tax-deductible if you keep proof of payment.
#9 Subscription & Software Licencing Fees
If you are signed up for any subscription services or pay license fees for software or other items directly related to your business, then you can also claim these as tax-deductible. For instance, if you’re a beauty blogger, and you have a regular subscription to a beauty magazine, you can claim against that.
Again, it’s up to you to prove to the IRS that any licenses or subscriptions you list have a direct impact on your business. The subscription had better tie into the way that you're making income, and you need to be honest about the money you’ve spent in order to make an income from YouTube. And, if you can show that it was, you're good. Some examples of the type of expenses you can claim for include:
- Website hosting
- Domain name purchases and renewals
- Editing software
- Computer/Tech insurance cover
- Website plugins
- SEO products and services (like vidIQ!)
- Tax and accounting software
#10 Bank & Shipping Fees
You can also claim against bank fees incurred as part of running your YouTube Channel which includes expenses like Wire transfers, or if you pay a monthly fee for a business bank account, or incur PayPal charges. If you sell merch, you can also claim postage and packaging expenses, and if you have a PO Box, you can claim for that too!
There is no escape from paying taxes to the IRS, but if you ethically report your income and deductions and you're not lying about anything, you have absolutely nothing to be worried about.
Like it or not, everyone should pay their fair share of taxes. We have firemen and schools and roads that get repaired because people pay their taxes. But Devin states that “you should pay your fair share but not a penny more.” and take full advantage of the tax deductibles that are available to you.
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