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I dabbled a bit in IM last year and was wondering what business things I spent money on would be considered tax deductible. Here's a list of all the things I bought for business purposes I can remember.

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Thanks for the input.
#deductions #tax
  • Profile picture of the author TheRichLife
    All of them.
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  • Profile picture of the author jasondinner
    Don't forget these...

    - your internet connection
    - any miles you may have driven to purchase items for your computer/business
    - any miles you may have driven to work on your business. ie - driving to starbucks, library, friends house, etc.
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  • Profile picture of the author Tsnyder
    STOP!!!!!! Internet marketing forums are not the place
    to get expert advice on a subject this important.

    Talk to a CPA who specializes in home business tax returns.

    All those things MIGHT be deductible... they also might not be.

    The key here is showing evidence of INTENT to make a profit.
    You say you dabbled... if you get audited you'll need more evidence
    than a few purchase invoices. If you are unable to show INTENT
    to make a profit your deductions may be disallowed as hobby losses.

    A good CPA can show you how to prove the necessary intent.

    Tsnyder
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    If you knew what I know you'd be doing what I do...
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    • Profile picture of the author jasondinner
      Originally Posted by Tsnyder View Post

      STOP!!!!!! Internet marketing forums are not the place
      to get expert advice on a subject this important.

      Talk to a CPA who specializes in home business tax returns.

      All those things MIGHT be deductible... they also might not be.

      The key here is showing evidence of INTENT to make a profit.
      You say you dabbled... if you get audited you'll need more evidence
      than a few purchase invoices. If you are unable to show INTENT
      to make a profit your deductions may be disallowed as hobby losses.

      A good CPA can show you how to prove the necessary intent.

      Tsnyder
      Very good point indeed.

      I am speaking from a place of having been making money consistently
      and being incorporated.

      So take what i say with a grain of salt.

      However, I do write off a ton of stuff.

      - Jason
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    • Profile picture of the author R Hagel
      Originally Posted by Tsnyder View Post

      STOP!!!!!! Internet marketing forums are not the place
      to get expert advice on a subject this important.

      Talk to a CPA who specializes in home business tax returns.

      All those things MIGHT be deductible... they also might not be.
      Bingo. That's the correct answer. Talk to someone who's qualified to give an answer.

      Plus, Brandstrom gave no indication of where he/she is from. Maybe the U.S. Maybe France. Maybe Belize. Tax laws vary widely. Even a certified public accountant living in the U.S. isn't qualified to answer the OP's question if the OP lives in Italy.

      Cheers,
      Becky
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    • Profile picture of the author Lincoln Ryan
      Banned
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      • Profile picture of the author Michael Oksa
        Originally Posted by Lincoln Ryan View Post

        I understand that this is the "responsible" thing to do, but realistically this person is probably brainstorming prior to just doing the taxes themselves.

        Taxes seem to be one of those things that it's taboo for IM'ers to talk about, but programming/design/site security/handling credit card information are no problem. Once taxes come up, even if it's a seamingly small amount, people say "STOP!!!! TALK TO A PRO!!!!!!!!!!!!!!"

        I did my taxes for a few years, even when I was making good money. I'm aware of the fact that you can get audited, but let's be serious here. Most people are just looking for some general advice prior to firing up Turbo Tax.

        I think there is the inherent disclaimer that says "If you follow any advice blindly without vetting the source, you're putting yourself at risk". If the poster doesn't understand that, then that's their fault. If they don't get the answer here, they'll get it from another place.

        I have a CPA so it's not like I'm saying they aren't valuable. But it's not like someone is asking for advice on how to perform a heart transplant. These CPA's don't walk on water you know...
        But note that Tsnyder DID offer some good advice when he said...

        "The key here is showing evidence of INTENT to make a profit."

        A professional would ask that, too, BUT it's also good to know if he's just using Turbo Tax.

        The answer to the OP's question is MAYBE. Personally, based on the scant evidence I can gather from his two posts, I'd say he CAN'T take those deductions.

        So, he has received advice, but the BEST advice IS to seek qualified professional help. Period.

        All the best,
        Michael
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        • Profile picture of the author TheRichLife
          The OP asked a general question looking for help from other people in this industry. He/she didn't ask who here is a CPA or a tax attorney, and willing to give him/her free advice.

          For the record, I'm neither a CPA, nor an attorney. I've been a business owner for the last 14 years, and have only dealt with business taxes from that perspective. So, with all the necessary disclaimers out on the table...here is my unprofessional, unpaid answer in an effort to be helpful to the OP:

          The burden of proof for intent to make a profit is on the IRS. However, if you show a loss in any three years of a 5 year period, you'd better be ready to explain yourself.

          Start-up businesses show losses in the first year of operation all the time. That typically doesn't make them subject to a hobby loss interrogation. Possible exceptions to this are if your business is in an industry that is often thought of as a hobby, such as racing cars, showing horses, etc. However, somebody in the IM business is unlikely to be accused of doing it for any reason other than to make money.

          If the items he/she listed were items bought for business purposes, they are in fact, legitimate tax deductions and can be listed as such on their Schedule C.

          Your actual mileage may vary..yada...yada...yada.
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  • Profile picture of the author JETSGIRL
    Very good advice Tsnyder, when it comes to uncle Sam I'd go to the pros for sure, just to make certain. I mean we wouldn't have our kids design our graphics, or guess at keywords etc so naturally we'll want to be certain come tax time.. I think perhaps Jason was just trying to get a point across that there are many hidden things some may not know about which one in this business could go about claiming. Certainly someone would want legal facts and sound advice when it comes to Govt. Great subject this time of year though...
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  • Profile picture of the author paulie888
    Jason, thanks for bringing up some obvious deductions that I failed to think about. How exactly do you itemize and expense your miles driven, and what sort of proof or statement do you provide when you do this? It'd seem to me that it'd really laborious to keep track of all the miles driven for business purposes, would you mind elaborating on exactly how you do it? Do you basically just deduct the gas consumed when driving on these business trips?
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    • Profile picture of the author jasondinner
      Originally Posted by paulie888 View Post

      Jason, thanks for bringing up some obvious deductions that I failed to think about. How exactly do you itemize and expense your miles driven, and what sort of proof or statement do you provide when you do this? It'd seem to me that it'd really laborious to keep track of all the miles driven for business purposes, would you mind elaborating on exactly how you do it? Do you basically just deduct the gas consumed when driving on these business trips?
      Talk to my accountant

      I save receipts for everything, but in this case i go by miles.

      It's easy for me to keep track of since I go back and forth to the office.

      It's 15 miles back and forth.

      So 150 miles x roughly 50 working weeks in the year is about 7500 miles
      driven.

      I think you get $0.40 per mile now as a deduction in the US, but don't quote me on it.

      As TSnyder already mentioned, see your accountant about it.

      I am not an accountant. I am a marketer with some knowledge on the benefits
      of owning my own corporation.

      I pretty much assume I can write almost everything off and then let my accountant
      sort it out from there.

      - Jason
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  • Profile picture of the author paulie888
    Jason, thanks for enlightening me about all this. Do you work with an accountant who's familiar with internet marketing and its expenses, or do you just use a regular tax accountant in your local neighborhood?
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    • Profile picture of the author jasondinner
      Originally Posted by paulie888 View Post

      Jason, thanks for enlightening me about all this. Do you work with an accountant who's familiar with internet marketing and its expenses, or do you just use a regular tax accountant in your local neighborhood?
      No, I work with a regular accountant who is familiar with Business.

      My business is one that is primarily (or completely) marketed online.

      How it's marketed is irrelevant, IMHO.

      Businesses have expenses. I write off as many as my accountant will allow me,
      just like any other business owner would do and expect their accountant to help
      them do.

      - Jason
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  • Profile picture of the author Michael Oksa
    There's an underlying issue with threads like these, but first, here is what normally happens.

    1. Newer person comes in and asks about taxes.

    2. Warriors give various bits of advice.

    3. The ONLY valid advice is to talk to a qualified tax professional.

    4. New person doesn't like advice from #3.

    5. New person follows the advice they like best.

    The problem is that they just wasted their and everybody else's time because they're still going to do what they were hoping was right in the first place.

    Underlying issue? People asking tax questions here are NOT treating their online efforts like a business. Businesses use several different services, most of which cost money up front. BUT the money spent is well worth it for the time, money and hassle it saves in the long run.

    So, to the OP...get advice from a QUALIFIED tax professsional. Saying "Ok, thanks" to the first answer given here (no matter what that answer was) is foolish, and asking for a lot of trouble.

    My personal guess is right in line with Tsnyder's. If you are "dabbling" it could be difficult to prove you are running a business that qualifies for those deductions. You may be able to get them...or not.

    Get advice from a QUALIFIED tax professional.

    All the best,
    Michael
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  • Profile picture of the author NicheCowboy
    obviously, many many many affiliate programs aren't following the tax codes. I've made over $600 on probably 15-20 different affiliate programs this year. Only received 3 1099's.
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  • Profile picture of the author Tizz
    Great thread. I'm going to be dealing with this a lot next year and am meeting with a CPA to get the full skinny. Looking forward to being able to write off a lot of expenses
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  • Profile picture of the author TelegramSam
    Yes, one should always do a bit of homework / groundwork oneself.

    You can also save a lot of money by getting things organised and straight, before you take your information to an accountant.

    Most accountant's charge on an hourly basis and if it takes them a long time to sort through your bags of chaos then you will be paying for it.

    Also, it's good to have an opinion because not all accountants are the same. Some prefer an easy smooth ride and can't even talk to a tax inspector they are so worried.

    All this is at the client's expense.

    Shop around, you need an experienced accountant, who knows your rights and who is willing to push things far enough without rocking any boats.

    You don't want an accountant who gets nervous from the waves in his own bath tub, qualified or not.

    Sam
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  • Profile picture of the author IMStudentforlife
    People do need to get advice to chat with a CPA, if you go in cold to a CPA you may not have all the right questions to get the correct answers!

    So this thread does help some.
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  • Profile picture of the author tj
    Originally Posted by Brandstrom View Post

    I dabbled a bit in IM last year and was wondering what business things I spent money on would be considered tax deductible. Here's a list of all the things I bought for business purposes I can remember.

    Artisteer
    Socialbot
    Articlebot
    Ezine Premium Membership
    Linkvana
    A few domain names
    Hostgator Subscription.
    Dragon Naturally Speaking 10

    Thanks for the input.
    Other question: Do you have a business license or something like that ? Otherwise it is maybe not deductible and the tax office see's that as a "hobby" expense ...

    Timo
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    • Profile picture of the author TheRichLife
      Originally Posted by tj View Post

      Other question: Do you have a business license or something like that ? Otherwise it is maybe not deductible and the tax office see's that as a "hobby" expense ...

      Timo
      That's not correct.
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  • Profile picture of the author paulie888
    Thanks Jason, I was just wondering about that issue as I've come across several "internet marketing" tax accountants on the net who claim to have specialized and intimate knowledge of the tax issues that internet marketers have, and also how to reduce taxes to the bare minimum (legally, of course).
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    • Profile picture of the author jasondinner
      Originally Posted by paulie888 View Post

      Thanks Jason, I was just wondering about that issue as I've come across several "internet marketing" tax accountants on the net who claim to have specialized and intimate knowledge of the tax issues that internet marketers have, and also how to reduce taxes to the bare minimum (legally, of course).
      Paulie, I don't doubt they do have "specialized and intimate" knowledge, but any competent accountant should be able to take on the task in a satisfactory manner.

      It really all boils down to who you feel is the best person for the job for YOUR company.

      Whether it be an "internet marketing" accountant, or just a regular tax accountant that
      serves all kinds of businesses, it's your call and all I can tell you is to do your due diligence.

      And I am not an accountant, so take everything I say with a grain of salt.

      I am just someone with a few tax years under my belt using the same person.

      - Jason
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