Tuesday, April 15, 2008

Can Blogging Be a Tax Write-Off?

Wired's Steve Friess has a great article just in time for April 15th. He profiles how New Media participants such as bloggers and podcasters are increasingly seeking to write-off personal purchases as a tax deduction. For example, the podcaster known as Soccergirl Incorporated, the self-described "podcasting librarian with big tits", who muses about all things sexual and earned a healthy $22,000 doing it last year, has listed "podcaster" as her occupation on her IRS tax forms, and is listing the purchase of condoms as a deduction.

"In an age when bloggers and podcasters are making a living - or trying to - by blogging and podcasting about their personal lives, what exactly is legitimate? And if writing off your personal life is as easy as writing about it online and getting some Google ads, why doesn't everybody do it?"

In other words, it might be possible that someone could buy a pair of shoes and then simply blog about them in order to write those shoes off as a deduction. You could conceivably do that for every dinner you eat out, every beer you every drink, and every fantasy baseball league you ever join. The possibilities are endless.

The real issue here is whether the broadcasting of one's personal life can be considered a legitimate business venture. Many bloggers and podcasters do, in fact, make money off of their efforts, and certainly most of them try. But how should these activities be properly classified under the tax code?

The IRS posts on its website that a deduction is legitimate when "'an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year'. Broadly, the notion is you have to make some money. But there's no further details concerning the IRS' views on how living one's life in public apply to expenses that are 'common and accepted in the taxpayer's trade or business.'"

These types of questions are certainly re-defining traditional classifications, and the truth is that even most experts don't yet know the answers.

While this saga continues to play out over the next few years, The Nerfherder is going to hesitate, at least for a while longer, on writing-off everything that he does in his personal life under the guise of "contributing towards my blogging venture". However, he anxiously awaits the day when the law finally affords him the opportunity to get a nice tax break on all those baseball cards he's been eye-ing on eBay :-)
  

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