Income Tax Rules are getting updated day to day. One among the latest addition is the Tax on Blogging Income. As Technology is getting advanced in every aspect, social media is reaching its peak and being helpful for many professionals. There is an increasing need for bloggers and content producers. The popularity of blogging has reached many people and urged the need for bloggers.
Bloggers get good income from blogging. The Income Tax Act imposes a tax on blogging income that bloggers make. We will be seeing more clearly on this concept, and for that first one must be clear about what is meant by blog and blogger.
On this page
Who is a Blogger?
A blog basically refers to a website containing a writer’s or a group of writers’ personal experiences, views, opinions, etc., and in which the blogs help the reader for which they need information. The person who often adds or inserts fresh information to a particular website is called a blogger.
What are the sources of income for Bloggers?
Now it is clear to us what is called a blog and who is a blogger. Now we must know how bloggers make money. A blogger may make money from their site through a variety of channels. The listed here reflects the various channels or sources of income that a blogger gets.
- Promotions:
- The most strategic way that a blogger makes money is through advertisements. The blog ultimately becomes a platform or source for advertising a particular business’s goods or services. The blogger gets money each time when the reader or any person clicks the advertisement. If the content of the advertisement is attractive, then definitely the blogger will see an unexpected increase in his income.
- Demands for the Paid Review:
- Now currently trending one is that a few businesses ask for reviews or promotions for their particular product or services to the bloggers. Bloggers who have good popularity will be personally approached by particular businesses with requests for paid reviews of the bloggers. The blogger will post a review of the product or service and get paid for that.
- Affiliate Sales:
- Here the affiliate sale refers to which the blogger places the links to products or services in his /her blog. For this also, the blogger will be personally approached to popularize particular products or services. If the reader clicks on the links and purchases the product or service, then the blogger ultimately earns money.
- Other methods:
- A blogger can also have more income from various channels as he gets more experience and skills in his work. If a blogger is well-known for designing content on blogs, he can also do blog designing for other websites, in which he will get income and along with that more opportunities.
The Bloggers who earn income from the blogs they make are considered to be self-employed individuals, and their income from blogging is treated as business income. Bloggers must maintain proper records and keep up accounts of their blogging-related income and expenses. They are entitled to claim deductions for expenses directly related to their blogging business, such as domain fees, hosting fees, internet expenses, legitimate business expenses and content creation expenses.
It is quite mandatory for bloggers to file tax on blogging income in a timely manner in which they must mention their income from blogging and availed deductions. If a blogger fails to file an Income Tax Return will be held liable to pay penalties or fines.
Tax on Blogging Income & Tax Implications of Blogger
Now it is quite clear what a blog is, who is considered a blogger, how the income is received by the blogger from various channels and why bloggers should file the Income Tax Return.
Now the main question that arises is in which category the blogger should file tax on blogging income?
So, there is one income field under Business/Profession in which this work can fit well for the bloggers because the blogger is a self-employed person. But here what suits a blogger, a Business, or a Profession? As a blogger provides a lot of services, Therefore, declaring a blogger as a professional sounds good. Hence, the blogger can pay his tax on blogging income which was earned under his /her profession.
How to file Income Tax on blogging Income?
There are two types of schemes under which the blogger can file his tax on blogging income.
- Normal Tax Scheme
- Presumptive Tax Scheme under section 44ADA
If the blogger chooses the Normal Tax Scheme, the blogger must keep a proper record of all the expenses and income that he/she has earned from blogging; it is advised to keep all the receipts and bills for filing the Income Tax Return. While the blogger is filing Tax on Blogging Income, he /she can claim a deduction in tax for the expenses he/she has made for the purpose of blogging.
Following are the expenses for which a blogger can avail of a deduction.
- Expenses for maintenance of the website
- Expenses for Hosting a website by the blogger
- Expenses as the rent of office premises where the blogger works
- Salary which is paid to the hired person for the purpose of blogging
- Daily utility bills like electricity bills for the electricity used by the blogger
- Equipment and tools were brought for the purpose of blogging
If the blogger can’t keep a proper record of his /her expenses, then the blogger can choose the Presumptive Tax Scheme under section 44ADA. If a blogger has chosen this method, he / she must declare the gross receipts from the blogging activities and only 50% of gross receipts as income under the tax. And a blogger doesn’t have to get his / her account audited.
Conclusion
Hence, to conclude Tax on Blogging Income is related to taxes applied for the money which a bloggers earns from blogging. He has to pay tax for it and file an Income Tax Return to keep up his / her profession on the right path. Failure to show the expenses and records of the income will be entitled to legal consequences like paying fines and penalties.
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FAQs
1. Do I need to pay taxes on the income I earn from my blog?
Yes, any income generated from your blog, including advertisements, sponsored content, affiliate marketing, and product sales, is considered taxable income. It is essential to report this income to the tax authorities and fulfill your tax obligations.
2. Can I offset blogging losses against other income for tax purposes?
If your blog operates as a business and you incur losses, you may be able to offset those losses against other income, reducing your overall tax liability. However, the IRS may scrutinize activities they consider hobbies rather than businesses. To ensure eligibility for such deductions, demonstrate that you are engaged in a legitimate business endeavor, seeking profit, and adhering to sound business practices.
3. Do I need to pay self-employment taxes as a blogger?
In many cases, yes. Bloggers who earn income through their blogs are typically considered self-employed. This means you are responsible for paying both the employer and employee portions of Social Security and Medicare taxes. Keep this in mind when budgeting for your tax liability.
4. Are there any specific tax deductions for bloggers?
Yes, there are various tax deductions available for bloggers, such as deductions for hosting and domain fees, website design and maintenance costs, advertising expenses, and home office deductions if you use a dedicated space for your blogging activities. Consult with a tax professional to identify eligible deductions based on your specific situation.
5. How do I keep track of my blogging income and expenses for tax purposes?
Maintain detailed records of all your blogging-related financial transactions, including income and expenses. Use accounting software or spreadsheets to organize and categorize your transactions. This documentation will be crucial for accurately filing your taxes and potentially deducting eligible business expenses.
