Last Minute "Blogging as a Business" Tax Tips

I finally finished doing my taxes (looking forward to a whopping refund of $1147- wish there was more, but beggars can't be choosers, now can they?) and I thought I would share with you some tax tips for those working at home.  Back in 2009, I shared some last minute tax tips, and this post will talk about work-at-home expenses for your own business, specifically.

The CRA views income earned through blogging as a business (with you as the sole proprietor of the business if you are not incorporating your blog business), and this amount get added  onto your regular income as your total gross income for the tax year, and it gets taxed at your marginal tax rate (unless you incorporate your blogging business).  You would use form T2125- Statement of Business or Professional Activities.

2010 was a good year- I have finally started to make some income off my blog.  2009 was a negative year, the $3.42 income for December's 2009 Google Adsense (ha!) didn't even get paid out, so I was able to subtract my business expenses of my blog from my regular full time income.  Namely, I took advantage of the 100% Capital Cost Allocation for computers (class 52) and got a nice discount on my beloved MacBook Pro courtesy of the tax man (this goodness unfortunately ended in February 2011- so if you bought a computer, keep the receipt!).  This however, can't of course be done consistently as CRA will smell something fishy and assume you're not actually running a business.

The Canada Revenue Agency understands that all businesses might not get off to a good start and be profitable, but you will eventually have to be making money somehow in a year or two, otherwise that might trigger the tax man's suspicions, and you might smell an audit coming. If you're planning on expanding, you may find that you need to compare Canadian accounting software deals and upgrade to a more robust product that's better suited to corporations.

Here are some deductions you can take off from blogging income to lessen the burn from the CRA tax man:

  • Blogging Pictures, Images and PhotosDomain name expenses
  • Web hosting expenses
  • At home internet (you need to calculate the % for business use)
  • Computers (any data processing equipment)- up until February 2011 (from January 2009), you can deduct any computer purchase for 100% Capital Cost Allocation (class 52).  If you bought a computer before February 2011, keep your receipt and you will be able to use it for your 2011 tax return next year.
  • Any depreciable property including an office desk, a printer, a camera that is used for business purposes.  Because these are used over a period of time, they are deducted over numerous tax years.  CRA's website explains which these assets should belong to.
  • Proportion of your home you use for business– you can use a portion of the rent that you pay, or if you own your own home, you can deduct things like the proportion of property taxes, mortgage interest, home insurance, utilities etc.  Again you would need to calculate the % that you are using for business use, in terms of square footage for business use/ square footage of entire home

This is what the CRA has to say about how to calculate the amount you can deduct:

“If you use part of your home for both your business and personal living, calculate how many hours in the day you use the rooms for your business, and then divide that amount by 24 hours. Multiply the result by the business part of your total home expenses. This will give you the household cost you can deduct. If you run the business for only part of the week or year, reduce your claim accordingly.”

  • Advertising costs – Things like spending on gift cards for giveaways hosted on other blogs, buying supplies for giveaways and direct payment for advertising space would be applicable
  • Office supplies like pens, papers, pencils, highlighters.. any stationary you would use for your blogging business
  • Legal or Accounting fees– If you pay an accountant to do your taxes, you can deduct the fees associated with this expense.
  • Travel– For those going to the PF Blogger Conference in Chicago hosted by PT Money,  you can deduct the costs associated with that- including the flight, the hotel accommodation and meals.  Meals would be deducted at 50% according to the CRA.
  • Telephone and Utilities– I plan on deducting the data portion of my cell phone bill because it is used for my blogging business (checking my emails, tweeting, getting into wordpress etc.).

Readers, are there any tax tips for bloggers that I might have missed?  Big bloggers, do you have sole proprietorship or did you incorporate your blogging business?  Who's going to the PF Blogger Conference (I unfortunately am not).

The most important thing, I think, in terms of tax preparation is be a receipt hoarder and when in doubt, keep your receipts.  Remember also that I'm no tax professional, so do your own due diligence! 🙂

46 Comments

  1. Kanwal Sarai on April 4, 2011 at 7:04 pm

    Thanks for the excellent tax tips! You might be able to deduct car expenses if used for the purpose of running your business. I use it for attending meetings, giving talks, and meeting clients.



  2. retirebyforty on April 4, 2011 at 7:46 pm

    I didn’t have much expense last year, but every little bit helps. This year I’m hoarding receipt and logging all expenses. 🙂 Next tax year I’ll have better records.



  3. James Anderson on April 5, 2011 at 4:07 am

    People often to forget to claim for things like printing ink and paper so my advice would be to keep all receipts so at least you have them if claiming is an option for those items.



  4. the cynical investor on April 5, 2011 at 4:21 am

    “so I was able to subtract my business expenses of my blog from my regular full time income”

    I thought this is not possible. I mean if you have any expenses they can be deducted only from the income produced by the business.



  5. Ravi Gupta on April 5, 2011 at 5:57 am

    Interesting deductions. I’m not sure how it is in the United States but I’ll be sure to look into it. If I can deduct some hosting and domain expenses then that would be icing on the cake on my low federal taxes and possible state exemption from taxes.

    -Ravi Gupta



  6. My University Money on April 5, 2011 at 5:34 am

    Wow, great tips, I even bought a computer this year! I vaguely knew about a couple of these, but thanks for going in depth.



  7. SavingMentor on April 5, 2011 at 5:36 am

    Thanks for all these great tips. I’ve been avoiding doing anything tax related for my blog up until now. I’m planning to hire an accountant next year for the 2011 tax year because it will be the first year I’ve made any significant money.

    I’m planning to hire an accountant at that time and get them to help straighten me out. I know I have physical receipts and electronic receipts scattered all over the place so it is going to be really time consuming to pull them all together.

    I have expenses for the blog dating all the way back to 2007. I was thinking about it then and buying stuff planning for it that long ago. I wonder if I will still be able to claim them as expenses or if that is too long ago? Might trigger an audit because I only really launched the site in 2010 even though I had been thinking and planning it along with doing some preliminary work as early as 2007.

    What can I say? I’m slow!



  8. young on April 5, 2011 at 7:02 am

    @SavingMentor- If you claim the expenses you had dating back to 2007, it will be non-capital losses until 2010 🙂 And I think this would probably trigger CRA’s fishy-smelling senses…unless you make significant money a la John Chow style… e.g. leading up to the business boom in 2010? But I think the best bet would be to keep all your receipts from 2007 and ask your accountant. Good idea you’re using an accountant- make him work for his money! 😉



  9. young on April 5, 2011 at 7:02 am

    @MUM- It has to be before the February 2011 deadline though- if you bought it after February 2011, it won’t count, unfortunately!



  10. young on April 5, 2011 at 7:04 am

    @the cynical investor- You’re right- the business expenses can be only subtracted from the income produced by the business. However, if the business expenses exceed the business income from the business, one will have a non-capital loss. Non-capital losses can be deducted from income that did not originate with the business. However, if this is done repeatedly (year after year), this will trigger CRA’s suspicions… because if the business is not making money, CRA will assume that you’re not actually running a business but using it as a tax grab.



  11. young on April 5, 2011 at 7:06 am

    @Kanwal Sarai- You’re right! I didn’t include it because for my blog, I don’t use my car to run my blog. Unless I start blogging in my car I suppose??? LOL



  12. Sheila on April 5, 2011 at 10:30 am

    Thanks for sharing those tips:)) It is always best when the tax man does not come knocking at your door:))



  13. Big City Beer Budget on April 5, 2011 at 10:54 am

    I love this post – have you done any about the process (applications/paperwork) to register a blog as a business?



  14. krantcents on April 5, 2011 at 11:11 am

    Good tips, even if you are US citizen!



  15. BeatingTheIndex on April 5, 2011 at 2:52 pm

    I didn’t declare a proportion of my home for business this year, wouldn’t you pay a capital gain on this proportion when you eventually sell the house?



  16. young on April 5, 2011 at 7:31 pm

    @BeatingTheIndex- Great comment and excellent point, Mich. It depends on the size of the ‘office’. For me, it would be relatively small, and I’m not sure how long I’ll be in the blogging business (plan to own the home for longer, that’s for sure!)- I found this answer www.bookkeeping-essentials.com/home-…nses1.html Scroll down to the answer/ comment/question on April 2, 2010.

    As long as you don’t claim CCA on the building part of your home you use for blogging, I don’t see it as a problem that would trigger capital gains tax on your principal residence.

    In Changing part of your principal residence to a rental or business property( see footnote), you will not have considered to have a deemed disposition of a portion of your principal residence if you meet all of the following criteria:

    “(1) your rental or business use of the property is relatively small* in relation to its use as your principal residence;
    (2) you do not make any structural changes to the property to make it more suitable for rental or business purposes; and
    (3) you do not deduct any CCA on the part you are using for rental or business purposes.”

    If you do not meet ALL of the criteria, then … at the time you change the use of the property, you will have been deemed to have sold and reacquired it. The rental/business portion of your home will be subject to capital gains when it is sold.



  17. young on April 5, 2011 at 8:00 pm

    @krantcents- Thanks! Hope it applies, not sure if the terminology is the same 🙂



  18. young on April 5, 2011 at 8:02 pm

    @Big City Beer Budget- Thanks BCBB! (Reminds me of BCBG and makes me want to shop). No, i haven’t (because it’s not like I’m making full time income, or even part time income, on this little time-sucking venture of mine), but that form that I mentioned doesn’t ‘register’ your business per se, but it does acknowledge that it is your business and you can name it. I know some people have incorporated their businesses so that they don’t have to pay the marginal tax rate (or add on to their current income) but I would think one would be making the big $$ for that to happen.



  19. young on April 5, 2011 at 8:06 pm

    @Sheila- You’re right! 🙂 Do you own your own business creating/managing senior homes in the states?



  20. young on April 5, 2011 at 8:17 pm

    @Ravi Gupta- I’m positive that you should be able to deduct hosting and domain expenses, even if you are in the US 🙂



  21. young on April 5, 2011 at 8:47 pm

    @retirebyforty-That’s my goal for next year too- to have better records. Maybe we can have “Recordkeeping updates” on our blogs 😉



  22. Little House on April 7, 2011 at 6:52 am

    I think you’ve listed just about all the expenses I can think of as well, even for US tax payers. I’d also be interested to know how the big bloggers (as in equal to a full-time salary) file – as sole proprietor or incorporated.



  23. Sandy @ yesiamcheap on April 9, 2011 at 1:49 pm

    Bookmarked! I haven’t done my taxes yet and needed to be reminded of some of the things that I can deduct.



  24. young on April 10, 2011 at 11:30 pm

    @Sandy @YesIamcheap- Great! I’m glad I could be of assistance 😉 Good luck with your taxes!



  25. young on April 10, 2011 at 11:40 pm

    @Little House- I think the big bloggers probably do proprieter if they don’t have another non-blogging job. I know I read that Million Dollar Journey (my idol blogger) has his blog incorporated, but he also works at a non-blogging job, I think.



  26. Edwin @ Cash The Checks on April 16, 2011 at 1:13 pm

    I’d advise to make all your business related purchases on one credit card to more easily keep track of your business expenses.



  27. John K on February 9, 2012 at 5:12 pm

    Hi,

    I made about $4000 last year from Adsense through Youtube and my blogs. Wouldn’t it be easier to declare it as “other income” on line 130 of the T1 Schedule? Or do you really have to declare it on another from the T2125? Is there a proper way?



  28. young on February 20, 2012 at 1:46 am

    @John K- But don’t you want to deduct expenses to offset this income?



  29. Pogi on February 21, 2012 at 1:39 pm

    What will happen if I bought a computer after February 2011? I acquired my computer on November 2012, and I planned to include this on my tax return. Thanks.



  30. Pogi on February 21, 2012 at 7:14 pm

    *November 2011 instead of 2012. thanks



  31. young on February 22, 2012 at 1:41 am

    @Pogi- If you bought a computer after Feb 2011, it won’t be 100% tax deductible and instead you will have to CCA it. I believe it will be considered Class 50 (55% instead of 100%). www.cra-arc.gc.ca/tx/bs…ml#class10



  32. Liza on March 18, 2014 at 1:56 pm

    Hi,
    I am a food blogger. Started my blog in June 2012 but did not report any income on my 2013 income tax because it was just earning a few dollars. Do you think CRA will give me hard time for this? I am doing my tax now and I am planning to report the blog’s 2013 earnings together with the expenses. Having problem what industry code to put in form T2125. And for the fiscal year, is it from Jan 1, 2013- Dec, 31, 2013. Take care and thanks for the awesome tips!



  33. Kyle on March 18, 2014 at 7:13 pm

    I don’t the CRA will be too worried (if you get audited it’s a few bucks – no biggie) and you have the Tax Year correct.



  34. Tracy on October 26, 2014 at 1:33 pm

    i have a good job and make a decent wage so I’m in a high tax bracket. I recently started a online business but haven’t made any money. Is there any way of using small business tax deductions to get some money back from the money I’m getting taxed on my career job?



  35. Kyle on October 26, 2014 at 2:42 pm

    As long as your a sole proprietorship the short answer is yes Tracy. Although be advised you’re more likely to attract a CRA audit. For us it was worth using an accountant to make sure we did everything by the book but deducted the max we’re allowed.



  36. Anonymous on March 21, 2015 at 9:43 pm

    If blog does not make money, it can still be considered a business? From reading this post it is still a business and you can claim expenses to run the blog.

    My scenario is a live in a 1 bedroom apartment. I use my computer for both the blog and for personal use. I do not have a separate area. My blog is on blogger so it is free and I didn’t purchase a domain. From what I can tell, the only expense I could claim is percent of internet usage used for blogging. ($69 per month *12 months times 20 percent (for blog and reading other blogs about same topic ). I did not keep track of my the amount of time I was reading blogs, writing posts or for personal use. So the 20% is a estimate.



  37. Kyle on April 3, 2015 at 6:26 pm

    I would consult the CRA on this Anon, but I’m pretty sure in this situation your blog would not be considered a business because it has no reasonable expectation of profit.



  38. Nick on April 4, 2015 at 10:47 am

    Hi thanks for writing this awesome article.

    I’m in the same boat as an above commenter. Started a “blogging style” content, and at first didn’t make much money at all. Now I’m making 125$ a month from it. I’m looking at actually going the T2125 way. Do I need to formally make a business name? or reregister the business? Right now I don’t have one or have not done that.

    Also I have expenses that go back to last year as well that I will claim, and internet usage.

    Thanks



  39. Kyle on April 14, 2015 at 5:42 pm

    If you’re going to claim expenses you have to register Nick. If you don’t want to register, just claim the money coming in as other earnings.



  40. Brianna on July 4, 2016 at 1:32 pm

    Hey, I may have missed this question, but what if you are an affiliate with a USA company (grammarly, bluehost, etc). What is the documentation that you need for that? I tried figuring out the tax forms but I honestly got so totally lost. Thanks!



  41. Kyle on July 6, 2016 at 5:43 pm

    You should get an income statement from them (I forget the form number at this moment), but you do definitely need to claim them and take the exchange rate into consideration as well.



  42. Siobhan on September 18, 2016 at 11:00 am

    Great tips – thanks for posting this!
    I’ll be sure to check it out again at tax time!



  43. Gigi on December 6, 2016 at 2:58 pm

    Can you explain to me if I am able to expense props used for clients? For example Client A hires me to do a blog post and I have to go and buy x dollar amount of props for my shoot. Am I able to purchase that with income earned on the blog? I have incorporated btw! Thanks!



  44. Kyle on December 6, 2016 at 6:09 pm

    Hi Gigi – again best to call the CRA here. If I were you, I would make the argument that these “props” (maybe call them something like “essential items”) were essential to completing the job. If I had to hazard a guess, I’d say you’re in the clear, but that’s just a guess. Keep the receipt in case of an audit!



  45. Lisa on February 4, 2017 at 11:28 pm

    Curious, if I have a blog about a specific type of product, maybe in this case it would be food, I’m blogging about health food. I’m buying food, preparing and creating recipes, taking pictures and posting them on my blog… Is the food a cost I could claim?



  46. Kyle on February 6, 2017 at 1:48 pm

    Good question Lisa – I would argue that it is if it were me. You’ll likely have to convince the CRA it was an essential purchase for the business.



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