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Taxes and Instagram

Did you know that many Instagrammer’s are making some huge mistakes while doing business? Unfortunately, the people making these mistakes have no idea that they are mistakes. I will also tell you how to correct these mistakes as we go.

Mistakes Made:

  1. Thinking that you don’t have to pay taxes on the earnings
    • If you make money online, just like anywhere else you must report this. It is still considered income on your part
    • Fix – Report as other income or business entity. Track income and expenses related to Instagram activities such as ads and things that you pay for for Instagram
  2. Not reporting free products as income
    • by accepting the free product and then sharing about it you entered a barter transaction. Yes, free products are income. It’s taxable income. You need to add in fair market value of any free product. More details about what you have to report. Market value minimums and what you do with it after is what you report.
    • Fix – best to assume that the product has tax implications
    • always ask yourself if the product is worth paying taxes on (Read: Barter Transactions: What They Are and Are The Tax Implications For Inluencers)
  3. Missing out on valuable deductions
    • businesses get tax deductions! Courses and ebooks you go through to learn are considered continuing your education. Buy presets? Boost a post? Upgrade camera? Dedicate space at home for your office? You may qualify.
    • Fix – check every penny you spend and track your spending as well
  4. Ignoring self-employment taxes
    • you are the boss! You make the hours, products, and have the control. The employer while you employed pays half of your FICA taxes. You pay other. Since your both, you pay both. When business picks up you should start paying a quartly basis.
    • Fix – 30% of everything you earn from Instagram. Professionals can tell you if you need to pay quarterlies or not. Not paying can result in penalty

Final Thoughts

If you are currently making money from your Instagram account and you are not keeping track of your expenses and you are not watching what you spend. Then you could possibly be setting yourself up for business failure. Always know where your money is going and if you want to be a business then act like one.

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Published by Sarah

Hello! I'm a self-employed entrepreneur. I enjoy affiliate marketing and photography in my spare time. I am currently in college for communications in social media and working towards my undergraduate degree in graphic design.

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