- Hi everyone.
I'm attorney Aiden Durham with 180 Law Co. in Colorado.
Welcome back to All Up In Your Business
where today we're gonna talk
about some tax deductions that might be available
to you if you are a YouTuber or a content creator.
Before we get into all that fun stuff though,
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And while I am a lawyer, I'm not your lawyer,
the stuff I talk about in my videos should not be taken
as a substitute for actual legal advice.
If you need help with any legal situation,
you should consult
with a lawyer who's licensed in your state.
So if you, like me, spend much of your days talking
to yourself in front of a camera,
you may have some unique opportunities
for tax deductions that many other businesses
and business owners might not have.
And this doesn't just go for YouTubers.
I'm talking about other kinds of content creators as well
potentially even other influencers, influencer types.
Some of these deductions are gonna apply to all of you too.
First, though, we need to make sure
what you're doing is actually a business
because you can only take business deductions
if what you're doing is a business.
You can't take deductions for hobbies, unfortunately.
This doesn't necessarily mean you have to be making money
because certainly you can be in business
and not be making any money.
That's not all that uncommon.
But whatever you're doing,
whether it's creating YouTube videos
or creating other content,
whatever you're doing, you should at least be doing it
in the pursuit of making money.
And there are a few different things
that the IRS will look at
to kind of determine if something is a hobby
versus a business.
Like if the activity is carried out
in a businesslike manner, and if the time and effort
that you're putting into it shows that you're trying
to make a profit.
If you try things out and change methods
in order to figure out what's going to be more profitable
and what's going to work better
in your pursuit of making a profit.
So these could be things like maybe you've created
a business plan for your YouTube channel
or for your content creation business.
You've researched other creators in the industry
to try to figure out what works and what doesn't.
Maybe you've hired a coach or taken some courses
to learn how to start and grow a successful
and profitable YouTube channel.
Hopefully you've got a system in place
to track your income and expenses,
because certainly that's a big part of being a business,
is keeping an eye on your income and your expenses.
And maybe you have advisors like lawyers
and tax professionals.
These are all just examples, but these are some
of the things that the IRS might look at
if there's a question of
if what you're doing is a hobby or a business.
So let's just assume, assuming your YouTube channel
or what you're doing is a business and not just a hobby.
Now let's talk about what you can deduct.
Just like any other business
you can take business deductions.
And the general rule from the IRS
is that you can deduct any expenses
that are ordinary and necessary.
Ordinary means it's common and accepted in your industry
and necessary means it's helpful and appropriate
in your business or in your industry or trade.
So the things that I'm gonna mention in this video,
it's obviously not an exhaustive list
of every possible business deduction
because the possibilities really are endless.
As long as we can demonstrate
that it's both ordinary and necessary
then it's probably gonna be a deductible business expense.
So let's start with some of the more obvious
but maybe not so obvious potential deductions
for people like me, and maybe like you YouTubers.
Our camera and our filming equipment.
Of course, the thing that we spend
all of our time talking into,
screaming into the void, our camera.
That's going to be deductible.
It is both ordinary and necessary for a YouTuber
or a video content creator to have a camera.
Your other filming equipment like your mic,
maybe your lighting, if you've got one
of these nice fancy ring lights or any other kind
of lighting, that lighting's going to be deductible.
And then all the other things
that go into creating these videos.
So if you're doing your own editing,
then your editing software.
If you use other social media platforms
to cross promote your videos
or your channel and to bring in your audience
then maybe like your social media scheduling tools
or maybe you don't do those things yourself.
Instead, the cost of the people that you hire to do those.
So if you have hired a video editor
or a social media manager, those people's expenses,
those costs that you pay to them are going
to be deductible too.
Costs associated with your website.
If you have a website or other advertising expenses
are usually gonna be deductibles.
So maybe you do some paid advertising
on Facebook or Instagram or something.
Those advertising expenses are deductible business expenses.
And again, if you are like me
and you do all of this fun stuff in your home
then you're gonna most likely be able to qualify
for some home office deductions as well.
Maybe taking a portion
of your rent or your mortgage interest,
your utility costs, your insurance costs.
You can't deduct all of it, but you can deduct the portion
of your home that is used for your home office.
So for simplicity's sake,
if your home is a thousand square feet
and your home office is a hundred square feet,
10% of a thousand, so you can deduct 10%
of those home expenses as your home office.
Some other less obvious
potential deductible business expenses.
These are gonna really, really depend on the nature
of your channel or the type of content that you make.
Food, for example, nope, don't go crazy.
Food as a general rule, food expenses are not deductible
because we have to eat food,
regardless of if we are in business or not.
But if your whole thing, if your whole shtick is food,
maybe you review food or you have a cooking channel
then some of those food expenses could be deductible
because they are ordinary and necessary
for the pursuit of your business.
Same with stuff like makeup.
If you're a beauty influencer
and you teach people how to do makeup
or you review makeup or skincare products
then the money that you spend on those products to review
or to do those tutorials could be deductible as well.
Travel expenses, too.
Travel costs, generally speaking, are deductible,
if you're traveling for business.
I've attended VidCon before,
the big like YouTuber convention, I've attended that before.
And those expenses, traveling to VidCon, attending VidCon
those are deductible business expenses
because I wouldn't be going to VidCon,
but for my YouTube business
or if you're a travel blogger, same idea applies.
But it does get potentially kind of sticky
in those situations.
Just because you're a travel blogger doesn't mean
all of your travel expenses
are gonna be deductible business expenses.
Ultimately, it still comes down
to that ordinary and necessary thing
and you might find yourself in a situation
where you have to defend those business deductions.
The biggest thing, especially with respect
to these expenses that are kind of on the line,
may or may not be deductible
is to take and keep really good record
of those expenses and why you incurred them.
Keep your receipts, keep your receipts for everything.
Make notes to yourself about what was the purpose
of this purchase and why you think it's a business expense.
If you're a beauty influencer and you purchased a product
for a particular review video, maybe write a note
on that Sephora or Ulta receipt saying
"brand review video posted on X date."
That's not necessarily gonna make it
a hundred percent a deductible expense, but at least
if the IRS comes around, does an audit or something
and asks, "hey, why did you take this
as a business deduction?"
You can look at the receipt and say,
"well because I bought this for the purpose
of making this video"
and you have something to back up
why you made that deduction.
And along, of course, with keeping those receipts
it's always a good idea to work with a CPA
or a tax professional who hopefully has some experience
and knowledge with content creators and maybe influencers
and YouTubers so they can help you figure out what is
or is not deductible so that you can maximize
your deductions to pay as little tax as you can,
but also minimize the risk and chances of getting
into some trouble with the IRS and the taxing gods.
That's all for this episode, folks.
If you learned a thing or two,
gimme a thumbs up, subscribe if you haven't already,
click that little notification bell
so you get notified anytime I post a new video.
Follow me on Instagram and check the description
for links to additional information and resources.
If you wanna keep learning about business deductions,
I've got another great video talking
about more business deductions
that might be available to you.
You can check it out right here.
I'll meet you over there.
Thank you so much for watching.
I'm Aiden Durham and I'll see you next time.