Tags: social media influencer tax deductions | irs

Influencers' Tax Write-Offs Dumbfound Accountants

By    |   Wednesday, 12 April 2023 02:56 PM EDT

Social media influencers, who number in the millions in the U.S., are testing the limits on what they can write off as legitimate business expenses on their taxes, The Wall Street Journal reports in “Tax Refunds Gone Wild.”

Outrageous write-offs—like $864 worth of sex toys, a red baby grand piano and 40 pounds of cotton candy—have caused a number of accountants for TikTok and other online stars to throw their hands up in exasperation and simply walk away.

Undeterred, many influencers are pushing back, saying IRS rules are antiquated for the hip influencers of today.

Sima Gandhi, who used to work for the Treasury Department and now funds influencers through her San Francisco-based company, Creative Juice, says the tax code was written “before the internet existed, let alone YouTube.”

“I need an accountant that understands outrageous,” adds Ali Spagnola, who earns a living publishing funny music and art videos online.

Creative software company Adobe estimates 14 million people in the U.S. earn money through social media posts, deriving revenue directly from internet publishing companies via bonuses, as well as by getting advertisers, selling merchandise or charging subscription fees.

However, cutbacks at big social media publishers, such as Facebook, Snapchat, Pinterest, Rumble and YouTube, have extended to influencers' cash bonuses, even for viral posts, on top of which TikTok is now in danger of being banned in the U.S.

This is prompting social media celebs to push the envelope on what they are writing off on their taxes this year.

Take Rachael Johnson, who to this point has been traveling the country with her husband and two dogs in a RV, documenting their adventures in 3-4 outlandish videos each day.

The $200 Johnson spent for costumes for her dogs, Peanut Butter Brickle and Fruitycake, were for a reenactment from “The Sound of Music” atop a mountain. But the social media companies Johnson relied on are no longer publishing her videos, so she isn’t sure if the pooch costumes will qualify as a legitimate tax expense.

Gandhi thinks “reasonable and necessary” expenses by influencers and gig economy workers should be permissible “in the eyes of the IRS.”

Thomas Jackson, who films videos about cars and goofy antics, once live-streamed himself throwing questionable objects at a building, hence the $864 worth of sex toys.

Then there are incentive and promotional costs to consider, such as $3,000 in ticket prizes to a mixed martial arts fight that Paul Matreselva offered viewers to boost viewership to one of his videos on sports betting.

Besides a penchant for the outrageous, another thing social media influencers are finding in common is a slew of accountants unwilling to sign their name to a tax return filled with deductions that some people would call borderline, at best.

Videogame short film producer Tommy King of St. Augustine, Florida, is optimistic, nonetheless, that he will eventually be able to win over an open-minded accountant.

“Once you get a good understanding of everything, it’s pretty easy,” King says. “You just have to make sure you’re doing your due diligence.”




 

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StreetTalk
Social media influencers, who number in the millions in the U.S., are testing the limits on what they can write off as legitimate business expenses on their taxes, The Wall Street Journal reports in "Tax Refunds Gone Wild."
social media influencer tax deductions, irs
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2023-56-12
Wednesday, 12 April 2023 02:56 PM
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