I recently met with my accountant and went over my taxes and of course, I found out a lot of tax deductible expenses for being self-employed as an online entrepreneur that I didn’t know before. I figured I’d share some of that information with you guys if you ever need to do taxes for your online business.
I’m actually doing my taxes later than I normally do but this is the first time I had to include all my online stuff because I made a decent amount in 2008. On top of that, I also have a day job so it was a hassle because I had double the work when filing my taxes.
When you are self-employed (and anyone making money online is self-employed) you need to keep track of all your earnings as well as your expenses. Luckily, since we are working online, most of our expenses are documented for us already (through e-mails, Paypal, account history, etc).
Though, some of them are not so we want to make sure we save receipts if we can.
Below is a list of various things that I found to be tax deductible expenses for working online (I may have left a few things off, I don’t have my papers in front of me):
- Cost for domain names
- Cost for web hosting
- If you have a separate room like an office dedicated to working online, you can write off the cost of the electricity used in that room.
- Cost for internet service
- Potentially cost for buying products to support your online needs such as computers, monitors, laptops, etc
- Traveling for business purposes. For instance, if you went to any of the blogging conventions of affiliate summits or whatever, that’s for your business and you can write off those expenses too. And make sure you take receipts for all of it such as the cost for the event, airplane, gas, etc.
- Cost for advertising. If you advertised on any site or maybe you’re an affiliate marketer that pays for PPC ads like Google Adwords, then you can write that off too.
I know I’m missing a whole lot of things you can write off but you get the idea. Anything relating to things that will potentially help you with your online income through spending or any sort, you can just about write them off.
Now, you should be reporting your taxes for whatever you make online, especially if you made anywhere over $600 total within the year.
I don’t know how people do it in other countries but I’d be interested to hear how you handle taxes, expenses, etc.
But I hope this quick outline helped with your tax deductible expenses for being self-employed as an online entrepreneur… at least for those of you guys that live in the states.
Let me know if you have questions!
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I believe you work with an email marketing company, and that would be considered deductible. Also, YOU are deductible for us… meaning if I outsource design work (Banner) to you, that is deductible.
Free Golf Tipss last blog post..Srixon Golf named as the title sponsor of the new Single Figure Golfer (SFG) Challenge Tour for 2009
Nice post. One I have not read over and over.
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Good recommendation. I was wondering how many people actually knew about the tax deductions. I assumed most people would realize this but you never know.
You mentioned if you worked in a room you could write off the electricity but if you own your house, I believe you can write off MUCH more. Pretty much anything that was bought and used for that room could be a write off like a printer, scanner, new computer, etc.
I just got a nice tax refund in my account the other day! If you are making any kind of decent money online or even with a separate form of secondary income, it’s worth paying the extra couple hundred of dollars for an accountant because they will get you more money in the long run. They know all the tricks!
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Very cool post. It prompts me to find out what else is deductable.
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This is a great idea Jay. Makes everyone open their eyes about taxes. This year I had to report the dividends I have been receiving through some of my stocks. I learned a lot about how complicated they can be lol. It turns out there are some that are taxable and some that are not.
Thankfully the Canadian Energy trust I have taxes the divided before I receive it.
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If you ever come up with more tax deductible expenses for online businesses, could you please update this post?
Kai Los last blog post..Increase Traffic and Backlinks With Blog Comments
Good post! You have a lot of things you can deduct as a home business owner.It´s a good idea to get in touch with your accountant to see how you can minimize your taxes.
Tom – Home Business Tipss last blog post..Low Cost Internet Advertising
Yes , Since all my payments are made through paypal hence Its the only documentation I have.
Free Golf Tips – You are absolutely right, I’m going to keep adding to this post with things that people may overlook. Thanks!
DJ Ryb – Yeah, I didn’t know you could write off a lot of these things but now I’m going to have to start saving receipts for just about everything this year!
Dennis – Let me know what you find and I’ll add it on here.
Ben – Yeah, I think all I reported were losses in that category lol! But eh, anything you can write off. I mean, you can report losses for the lottery!
Kai Lo – Good idea man! I’ll try to remember to update this post as I remember or find new things.
Tom – Yeah, unfortunately for me, my accountant isn’t a pro when it comes to the online stuff but she does have a lot of knowledge that could help.
Jay
The best way is to speak with accountant. He or she will now all ways to save some income.
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Awesome man, I know there are quite a few things that can be write offs. Like you did, it’s best to find someone that actually knows, an accountant or someone familiar with self employment.
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Thats really good to know. For years I have been paying for this stuff out of my own pocket while still paying tax on the money I make.
Thanks.
I have a business hosted on another site called Kantabiz.com it’s a Business Video Directory. Do I get any tax savings from that. Or I might write to Kantabiz.com to ask the same too. Thnx but, nice article.