Tax Deductions & Food Bloggers

➯ UPDATED for 2016: Check out a new post with tax tips for bloggers. 📌 🍴 💵  👓

*Full disclaimer below. This post is not tax or legal advice.*

Tax Day is Tuesday! Are you ready?

I'm not. And I'm doing a great job of further procrastinating by doing this post before my taxes! Luckily, we have a three day weekend here in Massachusetts. Hopefully I'll finish in time to enjoy some of the 80 degree weather expected for Monday. 

The plan was for this post to be up this time last year. Long story short. I was busy and there are only so many times a year when writing about income taxes is relevant for most people, so it didn't happen. However, it seems that Americans are increasingly turning online for tax information, so I decided that I would make sure to write this post for 2012 and maybe it will be helpful for some of you. 

What inspired this blog post? Last year I was reading a blog post on Carrots 'N' Cake about how she deals with her taxes as a full-time blogger. It struck me how over the years, blogging has transformed into something far more serious and legitimate than could have been imagined just a decade ago. Maybe even too legit to quit!

Once the Federal Trade Commission imposed rules on blogging, we bloggers knew things were changing. Most of us will not become full-time bloggers where we can actually live off just our blogging earnings. However, more and more bloggers are finding ways to earn part-time income and maybe eventually grow their businesses into something more by adding related work, like teaching, photography, social media consulting, and other types of writing.

H&R Block and TurboTax both have tax information on their websites specifically for bloggers. If blogging income weren't becoming a larger part of what they were seeing, at least in my opinion, they would not have included it.

Food blogging is a subset of blogging in general and has specific issues, like the tax deductability of food, that aren't relevant in the same way or at all to other types of bloggers. That issue raised on Carrots 'N' Cake really piqued my interest. How were other food bloggers handling this?

A quick search landed me on taxgirl's website. She wrote two posts specifically addressing tax issues related to food bloggers. Take a look: Eating Your Words (Food Bloggers and Deductions) and Paid Campaigns for Bloggers.

On Food Blog Forum, I found a string of comments and questions about whether a blog can be a business and decided that I wanted to seek input from some accountants directly.

Patricia V. DeSoto is a Certified Public Accountant (CPA) licensed to practice in the state of California. De Soto shared her insights with me on the issue of food bloggers deducting the cost of food as a business expense.

My automatic response is "it depends." Is the blogger doing this full-time or as a hobby? If it is full-time and the blogger has a business plan and is doing this with the purpose of making a profit, then the expenses may be deductible against income and could actually create a net loss. However, if the blog is merely a hobby, then only the expenses to the extent of income can be deductible, meaning no income or loss.

Whether an expense may be deducted against income is really a matter of intent. As I mentioned above, if the blogger's intent is to make this a profitable business venture, then, more than likely expenses incurred that are considered ordinary and necessary in the course of business would be deductible. It is always wise for a budding entrepreneur to seek the advice of a tax professional to guide him/her in the early stages of the business planning phase.

Ebong Eka is a Finance Expert and CPA licensed to practice in Virginia.  Eka provided some important information as well.

First, ordinary and necessary expenses can be deductible as business expenses.  Generally speaking, expenses associated with for-profit endeavors are deductible.  Also those expenses can't have multiple uses.  For example, I bought a suit to wear because I'm a CPA and I need it for my business to meet clients. The problem is the suit has multiple uses in addition to my CPA business. I can wear the suit to a wedding, or event etc. The key is a food blogger or any blogger should operate in a for profit manner.

Also, the IRS may not allow deductions if they believe the food blogger is a "hobby".

Based on all the information that I've read and gathered here, it seems that the best answer to the question of whether a food blogger can deduct food as a business expense is going to be that it depends. 

Hopefully I've given you some food for thought. Here's a link to the IRS website giving further guidance on deducting business expenses.

*Updated 11/5/2013* The food blog Pinch of Yum gives some outstanding information about making money from a food blog in a monthly section where they break down each month the income they made on their blog and their traffic. It's quite informative. Plus they give tips to help inspire other bloggers as well.

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Disclaimer: While I am a Massachusetts licensed attorney, I'm not in private practice and not seeking clients. Although this post contains accountant interviews, it is not meant as legal or tax advice. Every individual has unique circumstances and questions. While I love comments on this blog and emails, no tax or legal questions will be answered here or via email. Please consult an attorney or accountant licensed in your jurisdiction for specific questions. The information contained in this post is for general informational purposes only and geared toward bloggers in the United States.

Photo: Image courtesy of Benjamin Miller /  Freestockphotos.biz


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