Bloggers are writers, and if they make money by blogging my advice and tax tips apply to them too!
Here’s a great summary of self-employment tax for bloggers from TurboTax.com
When saving for your estimated income taxes, don’t forget to set aside additional money for self-employment tax. From the perspective of the IRS, working as a blogger means you run your own business.
Even if you only work part-time as a blogger and full-time as a salaried employee somewhere else, the blogging part of your income qualifies as self-employment income. As a result, you must pay self-employment tax on that income, which is the combined Social Security and Medicare taxes paid by an employee and an employer. Since you run your own business, you must pay both the employee and the employer portions. Self-employment tax must be paid whether or not you owe any federal income tax.
TurboTax is right: don’t be shocked by owing self-employment tax.
The tax rate for self-employment tax is 15.3% of your profit from a business. If you make money by blogging, it’s a business!
Taxes take a huger bite from your blogging profits:
15% Federal income tax (that’s what most Americans pay, although it can go higher)
+ 15.3% Self employment tax
+ State and city income tax.
Total is about 30%-45% of your profit going toward taxes.
Better set aside at least 30% of your profit, maybe more, to pay taxes.
Carol Topp, CPA
P.S. My book Business Tips and Taxes for Writers can help you take tax deductions and keep good records so you can estimate your profit and tax owed correctly.