I watch YouTube videos at night on lifestyle, exercise, cooking, dog training, and a whole lot of other topics. Apparently, I’m not the only one. More than ever, people watch content on demand on their computers. And YouTube is a great delivery system.
It’s also a way for content providers to make money through referrals, advertising, and sponsorship deals.
The income YouTubers make is taxable, as a business. Without a business structure, it’ll be reported on a Schedule C (Sole Proprietorship). Deductions reduce the taxable income and that means less tax.
Some deductions that a YouTuber may have will include:
Other expenses directly related to the production of videos.
But there are other expenses as well. The IRS tells us that any expense that is ordinary and necessary to the production of income is deductible. Maybe you talk about travel in your YouTube videos. Your travel expenses will largely be deductible. (It will depend on how much is used in your videos) If your YouTube videos talk about cooking, expenses related to those videos like food, pans, and the like will be deductible.
The one possible challenge from the IRS will be that they might consider that you have a hobby and not a business. A hobby can’t take a deduction against other income. A business can.
It’s probably a good idea to review what it takes to have a business, at least as far as the IRS is concerned.
Does the IRS think you have a hobby or a business?
Remember, it takes a business to get a business deduction.
You’ll also need to have proof that you paid for the expense. In today’s age, it’s easy to scan or take a quick picture of a receipt and then upload to the cloud for your company. Just make sure you take that step.
You need a business. Your expenses need to be related to your business. And you need proof you paid. Other than that, there is a lot of flexibility in what may be deductible for your business.