The role of an influencer is a relatively new one. This profession only became widely accepted within the last decade or so. Therefore, there are quite a few questions regarding the ins and outs of the job.
For many, influencers have the ideal job; they get to be their own boss, set their working hours, and pursue their passions. However, they also have the gruesome responsibility of filing their own taxes.
As freelancers, influencers are expected to declare and calculate their self-employment taxes. Nevertheless, working out your influencer write-offs and invoices can be a rather complicated task to take on.
Whether or not influencer write-offs include clothes and accessories depends on one poignant question. Do you represent your business? Or are you the business itself? If you resonate with the latter, you can probably include clothes as part of your influencer write-offs.
What Are the Tax Rules for Writing Off Clothes for Influencers?
In the eyes of the IRS, influencers and content creators are considered sole proprietors. This means they are responsible for reporting their income and managing their influencer write-offs.
For each brand partnership totaling more than $600, influencers will receive a 1099-NEC. Even if a partnership does not bring in this much money, you must still report your earnings on your tax return.
To reduce the amount on your tax bill, you can claim tax deductions on expenses you incur while running your business. For most freelancers, this would include items such as their home office equipment.
Clothes and influencer write-offs tend to fall into a slightly gray area. The IRS does not specify whether influencers can add this expense to their tax deductions. However, any “costumes” or “uniform” bought for your job is deductible.
As an influencer, you could argue clothes are an essential aspect of your business. You need to represent yourself as well as possible to attract a greater audience. Clothes you wear for a video, review, or performance as well as merchandise you create could count as influencer write-offs.
However, you must keep hold of your receipts and show proof that these clothes were used as a “costume” or “uniform”. As this is a gray area, we suggest you reach out to an experienced accountant for further guidance.
What Else Can Influencers Claim on Taxes?
There are plenty of influencer write-offs you can take advantage of. Here are just a few:
Home office equipment
Items such as your work computer, desk, and even some household expenses can benefit from tax deductions.
Advertising and marketing costs
Promotions used for your business, such as sponsored posts and Google AdWords, are also deductible.
You may decide to organize a giveaway to attract more followers. Any prizes you purchase count as influencer write-offs.
If you pay for any apps, such as social media management software or photoshop, you can add these to your list of tax deductions.
If you have to travel for work, these expenses also form part of your influencer write-offs. This includes transport, accommodation, meals, and entertainment expenses for international and national travel.
Phone and internet bills
As an influencer, you are likely to spend a lot of time online, which means you can also deduct phone and Internet bills.
Another influencer write-off includes the fees incurred to set up and maintain your website.
Last but not least, you can deduct tax advice from your taxable income to ensure you remain compliant with tax laws.
Work With an Experienced Accountant
Let’s face it. Dealing with taxes and deductions can be confusing and, at times, incredibly frustrating. Your finances are vital to the upkeep of your business, so you’ll want to ensure you have all your affairs in order.
Truthfully speaking, there is a fine line between what counts as influencer write-offs and what doesn’t. Some influencers write off more than they can chew, whereas others don’t deduct enough for fear they might be wrong and encounter trouble with the IRS.
Working with an experienced accountant can help you gain peace of mind as you won’t have to worry about the state of your taxes. While a professional focuses on your bookkeeping, you can prioritize your efforts on what truly matters – creating content and influencing followers.
At ZenStrategies, we care for your business as if it’s our own. With over thirty years of experience in the industry, we can help you maximize your financial opportunities.
If you feel like you could benefit from an experienced accountant by your side, don’t hesitate to reach out. We’re here to help!