The goal of many podcast hosts is eventually to make at least some money on their podcasts. Whether you hope to just make enough to cover your costs, or want to make a sustainable income from your show, monetizing your podcast moves you into the potentially frightening new arena of having to deal with taxable income.
The good news is, with taxable income comes tax deductions for podcasters that you may not even realize you qualify for. With that in mind, you may be wondering, what can I claim as a deduction on my tax returns? To answer that, you’ll need to start with asking yourself a few simple questions:
1. Do You Have Expenses?
2. Are You Making Money On Your Show?
3. Is it a Business or a Hobby?
4. Do You Have Thorough Records?
Let’s break each of these questions down a little further to help you determine if you can claim deductions as a podcaster.
1. Do You Have Expenses?
If you’re a podcaster hosting a show on your own, you likely have expenses. Look at all of the money you’re spending on your show each year. Subscription fees for your email service provider, courses that teach how to start a podcast, and even a new computer purchased for editing and storing show files could be considered potential tax deductions for podcasters.
Christian Brim of Core Business and Financial Services said that in his business, he actually works with several podcasters. Common deductions he sees are:
- Advertising (Facebook, Google)
- Credit Card Fees (Squarespace, Paypal)
- Software subscriptions (Honeybook, Podcast Hosting)
- Production Costs (Hiring 3rd Party Vendors/Independent Contractors)
Licensed tax professional Charles Corsello Jr. of TaxDebtHelp.com said, “Podcasters who are filing their taxes have deductible expenses just like other businesses.” In addition to the aforementioned deductions he added, “If the podcaster works from home and uses a room solely and regularly for business, they can take a home office deduction. Generally, it must be the principal place of business. The home office deduction can be calculated by taking the square footage of the home office relative to the total square footage of the residence. So for example, if the home office represents 10% of the total square feet of the residence, then the podcaster can deduct 10% of utility costs, such as electricity, gas/oil, and so forth.”
If you are traveling to do interviews or go to industry conferences Charles said, “Travel expenses for the podcaster can also be deducted as well. Hotel costs, airfare, 50% of meals can be deducted too.”
When it comes to healthcare he noted, “If the podcaster pays for their health insurance, their spouse, and their children’s health insurance (if the children are under 27 at the end of the year) and the podcaster is not eligible to take part in an employer sponsored health insurance plan, they can take the self-employed health insurance deduction. As a result, they can deduct 100% of the premiums from their federal taxable income.”
Of course, before you can claim any of the potential tax deductions for podcasters, you have to address the next couple of questions.
2. Are You Making Money On Your Show?
Get really serious when answering this question. If you brought in any revenue from your podcast, how much did you make? What were the sources of the income? It’s not just the money you’re pulling in from ads/sponsorships, but also anything that comes into your Patreon or crowdfunding accounts, affiliate partnerships, merchandise sales, etc.
Don’t forget to include any gifts such as swag that was sent to you by sponsors. All of the income you’ve earned from your show must be tallied up as it will play a huge role when you ask yourself the next question.
3. Is it a Business or a Hobby?
The IRS defines a business as an institution that “operates to make a profit.” A hobby on the other hand is “for sport or recreation, not to make a profit.” TurboTax explained this further stating, “The Internal Revenue Service allows you to take a tax deduction for legitimate losses incurred in the operation of your business. However, if your business claims a net loss for too many years, or fails to meet other requirements, the IRS may classify it as a hobby, which would prevent you from claiming a loss related to the business. If the IRS classifies your business as a hobby, you’ll have to prove that you had a valid profit motive if you want to claim those deductions.”
Charles said, “If podcasting is a hobby, a podcaster can only deduct up to the amount of income the hobby generated. In other words, they cannot deduct podcasting related expenses in excess of hobby income.”
If you want to claim deductions on this year’s taxes, you need to decide if you are producing your podcast as a business or as a hobby. However, you can change this in the future if you claim it as a hobby one year but start earning money from it the following year. If you’ve decided you want to claim your podcast as a business, move on to the next question.
4. Do You Have Thorough Records to Back Up Your Deduction Claims?
If you are claiming tax deductions, you need to have thorough records of every expense you report. As TurboTax explains, “Running a hobby as a business could very possibly trigger an IRS audit. If your business is legitimate, keeping accurate and extensive records could help prevent the classification of your business as a hobby.”
If you are audited, you’re going to need to prove that you spent that money you said you did on the production of your podcast. If you’ve kept the receipts from your purchases and can easily produce the records of things like recurring subscriptions, so you should feel safe taking deductions. If not, though, you might find that the deductions you are trying to get aren’t worth the trouble that you can face during an audit.
Christian said, “Generally, a taxpayer must provide documentation to substantiate the amount and business use of an expense. For obvious business expenses this can be [as simple as] a receipt, bill/invoice, or other document. For items that do not have a clear business purpose (e.g. postage), additional documentation might be required to prove business usage. Certain expenses (e.g. travel, gifts) require additional documentation. No documentation is required to claim the deduction, but a taxpayer should be able to provide documentation upon request or audit by the IRS.”
Bottom line: Keep thorough records, claim your deductions accurately, and be prepared to produce your records in the event an audit is triggered.
Where to Go From Here
While you can use the above information to determine if you can claim tax deductions for podcasters on your returns, that doesn’t necessarily mean that you should go about this alone. It’s always a good idea to talk to a tax professional about your filing status, especially if you’ve just started making (or spending) money on your podcast.
Though podcasters are definitely entitled to take deductions for several different types of expenditures, it’s not something that should be taken lightly. Getting into hot water with the IRS is no joke, so you want to make sure you’re handling your profits and losses correctly.
