Wednesday, February 26, 2014

On Taxes and Fashion Blogging

I spent this morning with my accountant getting my taxes done. Finding an accountant who even had remote idea of what the tax rules surrounding blogging was a bit trickier than I imagined. My office for my day job is in an building full of lawyers so I asked one of the tax lawyers I'm friendly with for a recommendation and I couldn't be happier. The first session I had with my accountant, whom I'll call Cindy, took over three hours. She's an older lady and wasn't familiar with blogging but she was very eager to dive into subject. I know from poking around on GOMI at the tax issues surrounding bloggers is a constant subject so here's a bit of what I've learned:

1. I have to claim every single thing I get from a company as income.
A lot of people think fashion bloggers get a ton of free stuff. While my new c/o $500 Tory Burch handbag may have not cost me a cent this morning, I'll be paying come tax time. I typically estimate that 18% of an item's cost will end up being the amount I pay in taxes. 18% of $500 is $90, so I end up paying that $90 in taxes. I almost prefer it when companies will give me a deep discount, say Tory offers me the bag for $75. I don't have to pay the taxes on it (well, sales tax) and the company gets a tad bit of coin. However, a lot of companies are unwilling to do this as they can count the bags they give away on their taxes as a form of advertising. C/o items, a blessing and a curse.
  • The only things that don't count as income are bonafide gifts. Typically to count as a gift it can't be from the brand's own line (Tory can't send me a pair of shoes for turning 30), but she can send me a nice bottle of wine or a teddy bear or whatever. My accountant tells me that "best practices" dictates if Tory sends me the shoes as a gift, she also includes a document that states it's a gift and will be marked on her books as such.
2. If I don't show a c/o item, I don't have to claim it as income.
There is a long-standing rumor in the blogging community that as long as I don't show a c/o item on my blog it doesn't count as income. I don't know where this rumor came from but it's hella false. If I accept an item it's income, period. I can show it on my blog, on Instagram, tweet about it, sacrifice it to appease Quetzalcoatl, it really doesn't matter what I do with it. The moment I accept that FedEx delivery that c/o dress is officially income.

3. I can count all the clothes, shoes, makeup, etc., I buy as a business expense.
I wish but this is just another rumor. If you'd like to know more about this history of this topic, read this because it explains it better than I can. In a nutshell, if I can wear it running errands I can't deduct it off my taxes.

4. I can deduct my rent/mortgage payment since I blog from home.
Partially true. There are deductions for having a home office but that space has to be exclusively for work (you can read more here). The main point to make here is that the space is used for work only. If you use a spare bedroom as your office you can count that but the moment you put in some boxes of stuff to send to Goodwill, it doesn't count anymore.

5. Blogging gives people an excuse to write off their Starbucks addiction.
A.) Nothing pisses me off more than bloggers who consistently pose with a Starbucks cup. Congratulations, you're a middle class white woman doing the same thing as everyone else. If you're wearing Rockstuds and carrying a Celine Luggage bag along with that Starbucks cup, you better not trip when I fucking come after you with a Kalashnikov.

Um, okay, where was I? Oh yeah, I can write off some of my cups of coffee and the occasional meal but my accountant warns that this is where the IRS catches a lot of people lying. If the IRS thinks you're spending too much on the 'Bucks they're going to investigate you. Tip: Write down who you saw for that coffee/lunch and what you all talked about/did on the receipt. Did you email about the lunch beforehand? Print off a copy of the email, staple it to the receipt, and file away. Pain in the ass but SO HELPFUL in case of an audit.

6. So what can a blogger write off?
Blog designers, pens, markers, a new printer, a desk, hosting fees, a little bit of my utility bill, and other assorted odds and ends. Pretty much the same stuff anyone else with a home office can write off. 

My accountant and tax lawyer buddy have both warned me that the IRS and government will probably crack down hard on bloggers in general and their taxes. The lawyer told me he read somewhere that bloggers have a wickedly high audit rate.

A lot of people tend to get their panties in a bunch over fashion bloggers and their supposed free stuff. Yes, getting expensive things for "free" is wonderful, but it sucks when the taxman holds his hand out. I had to save for months in order to pay those damn things. In the end, the $500 purses and fancy shoes aren't worth having to worry about where I'm going to get money for groceries or how I'm going to pay my rent. Next time you see a blogger selling that jacket she "obsessed about for months" on Poshmark the day after it was posted to her blog cut her some slack. She's gotta eat somehow, too.

Sunday, February 16, 2014

A Sale Means Saving Money, Right?

As a mostly-former fashion blogger, it's hard for me not to shop. I've eaten peanut butter sandwiches every day for two weeks at work because I spent all of my work lunch budget. The winter fashion cycle is currently dying down and so, so many beautiful sweaters are going on sale. I'm trying not to buy ALL the sweaters but it's hard when it's fairly ingrained into your system. Do I really need another sweater? No. I used to be able to try to justify my clothing purchases when I had a montized fashion blog but since I've majorly put the brakes on blogging I really can't use that excuse anymore.
So many pretty things, so little time. And money.

Friday, February 7, 2014

I Shaved My Legs for This?

I went to my first therapy session today. I was interested in learning some better methods of handling stress and anxiety other than heading to the mall all the time. What did I learn? I found out I needed to come up with a location for my "happy place" and that when I was having trouble coping with stress I need to go to my happy place.

So... I basically learned I should just take my $30 copay and hit the mall. Got it.

(I'm probably not going back to therapy.)