How Do I Report My Podcast Earnings at Tax Time?
Guest Post
While some people start up a podcast as a hobby, many choose to turn it into a profitable business and hope to make money through advertisements. If your podcast gets around 10,000 downloads for each episode, you can make over $500 from your sponsors.
Needless to say, that kind of cash flow can add up fairly quickly. But, if podcasting isn’t your full-time job, how do you report your earnings at tax time? It’s still income, and you’ll probably want to continue the growth and success of your podcast to make even more money next year.
So, how can you make sure tax time goes smoothly? Let’s look at what you need to know about reporting your podcast earnings, write-offs you might be entitled to, and how to ensure things are done the right way now, so you can have faster, smoother tax experiences in the future.
Do You Have a Business?
Whether or not you report your podcast earnings will depend greatly on whether your podcast is a business or a hobby. The IRS defines a business as an “institution that intends to make a profit”. If you aren’t making much money yet but you intend to, you’ll still qualify as a business. It’s your motive that makes a difference.
There are pros and cons to each option. For example, if you choose to consider your podcast a hobby, you won’t be able to deduct as many expenses or claim business losses. Additionally, you could trigger an audit where the IRS looks into whether your podcast is truly a hobby and how much money you’re making.
If you decide to claim your podcast as a business, you might end up owing more, but you can also take more deductions – we’ll cover some of those below.
For starters, keep track of all of your expenses, including:
Industry events
Equipment
Home office setup
Graphic design
Setup fees
Additionally, keep track of every cent of income you receive because of your podcast. Whether it’s funding directly from advertisers, free items, or exchanges, keeping a detailed record of everything will make it easier to know exactly how much you’ve made throughout the year.
Know Your Deductions
Even if it’s not your full-time gig, if you consider your podcast to be a business, you might be entitled to certain deductions and write-offs. The more you’re aware of these deductions, the less money you’ll owe when tax time rolls around. Some of the most notable deductions for podcasters include:
Advertising
Credit card fees
Production costs
Software subscriptions
You might also be able to deduct certain home expenses if your studio is in your house. Consider what you regularly use for your podcast, including electricity and Internet. Do you have a pet at home that you need for a medical condition or even as a “spokespet” for your podcast? You might be able to write off things like their food and toys, as well! That might sound like a stretch, but some pets can have legitimate write-offs if they are being utilized in certain ways.
The last thing you want, especially if you’re just getting started, is to miss out on any valuable deductions that could save you money. Thankfully, there’s an easy solution to that.
Talk to a Professional
Even if you’ve recorded every expense and you’ve kept detailed receipts, taxes can be overwhelming. You probably got into podcasting because you were passionate about a certain subject.
Unless that subject was accounting, it’s okay to get some help with your taxes!
An accountant can help you decide whether you should be labeling your podcast as a hobby or business. More importantly, their entire job is to know and understand possible deductions you’re entitled to. When you work with a skilled tax preparer, they’ll be able to make your entire process easier from start to finish.
When you’re just starting out, an accountant will also help to ensure you’re filling out all of the proper forms and using the right verbiage. If you find an accountant you can trust, you can develop a professional relationship with them and use them to keep track of the financial side of your podcast. Doing so will make filing taxes even easier because they’ll already have the information they need on hand.
It’s exciting to start to see money roll in as your podcast continues to grow. When listener numbers go up, you’re more likely to be contacted by sponsors and be viewed as an “influencer” within the podcast world. But, as with everything else, making money comes with a cost (literally). Depending on how much you’re making, your motivation for your podcast, and how many items you can deduct from your expenses, you may end up having to pay taxes on your podcast.
The best thing you can do is to report your earnings accurately and truthfully. Whether you try to handle it on your own or with an accountant, keep some of the ideas listed here in mind as you try to navigate the waters of the IRS and your podcast expenses.
Disclaimer: The information provided in this article does not, and is not intended to, constitute legal or accounting advice; instead, all information, content, and materials available on this site are for general informational purposes only. If you need advice about reporting income, please seek the advice of a professional accountant.
About the Author
Dan Matthews is a writer, content consultant, and conservationist. While Dan writes on a variety of topics, he loves to focus on the topics that look inward to help develop one's self, in turn developing mankind to make the surrounding world a better place to reside. When Dan isn't working on new content, you can find him with a coffee cup in one hand and searching for new music in the other.
Photo by Volkan Olmez on Unsplash