Hola!

Today I want to blog about blogs. Fitting, no?

In this day and age, blogs aren’t just another web tool used by people and businesses to share content… although that is how I like to use this blog! For many, blogs can become little businesses themselves.

Most people don’t make anything from their blog. It’s just a fun, profitless hobby. As soon as a blog becomes a source of income for some lucky bloggers, however, the profits become taxable – and those profits include all non-monetary earnings such as electronics, clothing, luxury goods, etc. In a word, the swag. Cash and swag combined must be reported to the IRS as income.

Of course, as long as you report your earnings, you’ll also be able to report expenses for extra deductions! If you had trouble reporting your income and your business expenses to the IRS as a full-time or part-time blogger this year, gimme a call sometime! I’d love to arrange an easy-to-follow tax plan for you for next year.

Blogging has really been a viable profession for over a decade. Now, in the mid-2010s, there’s a newer, faster way of making money online that the IRS is eager to dip into and that’s crowdfunding. Money gathered up via crowdfunding websites such as Kickstarter, Indiegogo, and GoFundMe has been used to build animal shelters, pay medical bills, program videogames, produce feature films and more. Every campaign has a unique mission with unique rewards for its funders. Because no two campaigns are alike, it’s taken quite some time for Uncle Sam to decide how to tax campaigners’ profits. Should the donations be considered income or some sort of non-taxable gift?

The answer is almost always income… and you’ll save yourself a lot of trouble reporting them as such. This answer is different for non-profit (501c3) organizations and for campaigns with no real “reward” options but it holds firm in almost every other situation. Until someone takes this issue to tax court, the Internal Revenue Service is unlikely to de-murkify the matter. And yes, that’s a technical tax term. So until then, reporting it as income should protect users from IRS investigating whereas reporting crowdfunding dough as a gift is more likely to result in an eventual audit.

The crowdfunding websites themselves recommend going to a tax advisor or a certified accountant (hey, that’s me!) to make sense of your particular tax situation. They’re resistant to offer any specific instructions for two reasons…

  1. The obvious: each case is very different.
  2. They don’t want to discourage anyone from signing up for the site by revealing outright that, for most campaigns, income taxes DO apply!

Unlike the crowdfunding folks, I’d be happy to look over your finances and tell you exactly how to go about filing taxes as a crowdfunder this year or next. Raising money to do what you love and staying in the good graces of the IRS shouldn’t have to be a pain in the you-know-what but until it is good luck out there, bloggers, Kickstarters and Indiegogo go-getters!

Smooches,

Buffie