Do content purchases meant to use in your business count as itemized deductions on your Federal tax form? What about other, online-business related expenses that you should be claiming to lower your total income tax amount reported, so you can owe less at income tax reporting time?
Hello! This is Dina from Wordfeeder. I want to tell you something very important about your online business and tax reporting, as it is the season.
Content purchases are tax deductible. YES!
Disclaimer: I am NO tax expert. I’m a copywriter and content writer. But I do want to remind my US based content customers of this nugget of advice.
Use it to lower the total amount of income reported, so you can owe less to the Fed each year.
The ala carte or monthly payments that you make to Wordfeeder for DFY content are TAX DEDUCTIBLE.
If you’re a small business owner who itemizes business expenses on your tax return, you get to add this expense to Schedule C of your US Federal income tax return.
How to report content purchases as a business expense?
Schedule C is Profit and Loss.
Schedule C is the form you’ll submit along with your 1040, to report all of your business expenses.
Remember that business expenses, or a certain percentage of types of business expenses, lower your total amount of income tax reported.
Invest in content marketing to grow your business now… expense this at tax time
I know that some of my customers stress a bit over whether they got a chance to use this or that month’s content. They hop on and off the Wordfeeder membership.
That is too complicated. I keep the content in the membership for TWO YEARS. So you have plenty of time to access it and turn it into emails, blogs, ebooks, etc. without worrying about that monthly expense which is very low.
And… yes, you get to report the expense if you’re itemizing at tax time.
How and what to itemize in your online business
If you paid for content, it shows in your PayPal for the entire year — each month’s payment shows up. Itemize this, if you use Schedule C, on your US federal tax form.
To account for all of it, print out your PayPay records of payments you made for the year.
Other business expenses you would itemize:
- Domain names
- Web hosting
- Business coaching memberships
- Email marketing and list managers such as Aweber, Mail Chimp
- Online business tools, like digital product selling platform memberships, Canva, Adobe
- Paid social media memberships if used to run or marketing your business
- PayPal fees paid out
- Membership software, like AMember Pro
- Paid social media ads – such as on Facebook and LinkedIn, or apps like Twilio
- Computer security, maintenance and other types of tools
- Project management tools
- Office supplies
- Computer related purchases
- Internet bills
- Part of your phone plan used to conduct business or market your business (check with your accountant on this, or visit the IRS website for more info)
If you also entertain clients or travel for business, you’ll want to check the IRS website to see if you can deduct these expenses at tax time and what percentage counts. You may also be able to deduct donations made to charities and fundraisers.
YOU WILL NEED TO KEEP GOOD RECORDS AND SAVE RECEIPTS for these.
Too late for 2024 income tax reporting? Get on a good foot for 2025!
If you have already filed and did not take advantage of these business-owner friendly deductions to itemize and report on your tax form this year, that’s too bad but it’s not the end of the world. You can still do it for 2025’s income taxes reported!
- Start keeping good records now.
- Set up labeled folders on your computer.
- Each month, log into all your memberships and print receipts as PDFs to save in the appropriate folder.
- Pay your taxes quarterly – the IRS has a convenient spot on their website for you to make a payment any time from any computer.
What about if you’re a sole proprietor?
Yes, a sole proprietor gets to itemize deductions, too. Even if yours is a “baby biz” or “just a side stream.” Here are two examples.
Let’s say your website earns you 30K per year, and you paid out $7K in business related purchases online.
That’s all on your PayPal, so itemize it and print out the totals for your records. It’s better to report $23K in income, than $30K if you invested $7K to make $30K.
And if you made $200K but you paid out $50K in marketing and online services, then you report $150K and use the itemized deductions section to list out all your business related expenses.
PLEASE NOTE, I AM NOT A TAX PROFESSIONAL. I CAN’T ANSWER QUESTIONS, and I don’t know how taxes work outside of the US. But all the information you need is available on the IRS website at IRS.gov.
If you use an accountant, mention to him or her all of the things you spend money on in small increments, over the course of the year, that are listed on PayPal or whatever payment method you use. To find record-keeping info, you must visit each of the websites where you pay for business related services.
EXAMPLE: Deduct payments made for email marketing:
Let’s say you use AWeber email marketing. Log into their customer portal, and navigate to your ACCOUNT area. Find Billing and Payments, or some version of those words. Print PDF docs of all receipts from payments made in the past year.
Save these in an Expenses folder on your computer and print out physical copies.
Doing this will help you become more accurate in your tax reporting records, and lower the total amount of online business income reported, so you’re taxed less.
Does this make sense? I hope so, and I hope the information helps you.
Let’s go into 2025 armed with information, and with a mind that’s set for success!
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