Social Media Influencer Tax Deductions
What are some of the tax deductions that an influencer can take as an independent contractor? As an influencer, it’s very likely that your employment relationship with all the sponsors is going to be that of a 1099 independent contractor. And what that means is, at the end of the year, you’ll be provided with 1099 from the sponsors, and then no taxes will be withheld from your compensation throughout the year. So, you are going to be responsible for the self-employment tax at the end of the year. Now, a smart influencer is first going to talk with an accountant, and then that accountant is going to have you set up an LLC in whatever state that you’re living in.
You’re going to create a bank account with that LLC, and then you’ll have a tax ID number. And by doing that, you can then deduct many of the expenses and things that go into being an influencer. For instance, you could do travel expenses, home office deduction, advertising and marketing, legal fees, travel, whatever industry you’re in, fitness, fishing, or whatever, things like that. A product that you buy to be an influencer in that arena, you can likely deduct that as well. There are dozens of things that you can deduct as an influencer. Now, I’m not a tax attorney or an accountant, I’m just a contract attorney. As I said, I would suggest absolutely reaching out to an accountant that you feel comfortable with, and they can walk you through exactly the things that you can and can’t deduct and then things that you can track throughout the year as well.
One of the worst things to see is when you have someone who is new to the industry, they haven’t been an influencer before, they haven’t made money as an independent contractor before, and they just simply don’t realize that no taxes are being taken out. And then they’re going to be responsible for potentially a very large amount of money paid to the government, either quarterly or at the end of the year. And it’s a shock to them and some of them spend more than they save. And then they have a problem at the end of the year. So, just be aware that almost every relationship that an influencer is going to have with a sponsor is going to be that as a 1099 independent contractor. There are certainly some great tax advantages that you can take advantage of as an independent contractor. I mean, the main downside to not having an employment relationship is as an employee, you would get benefits that most employees would get like health, vision, dental, disability, life, retirement, and paid time off. Other topics of interest include:
They’ll pay for your licensure and continuing education. They will provide a lot of the things that are needed to do your job. Now, as I said before, as an independent contractor, you can take all of those things and then deduct them at the end of the year. But many people just simply hate having to be the ones to initiate getting those things. So, most of the people I work with hate having to go get health insurance and disability and life, and that stuff they don’t want to worry about, but something you must do when you’re self-employed. So, anyway, that’s a little bit about tax deductions for social media influencers. As I said before, if you have any questions or concerns about your management contract, feel free to call my law firm.
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