Expense This, Not That: What Newsletter Operators Need to Know for Tax Season

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Congratulations! Your newsletter made money in the last year. Here’s the really thrilling part: you can start claiming deductible expenses on it if you’re an American taxpayer.

OK, maybe “thrilling” is too strong of a word. But there are some tips and best practices for you to know that might save you time and money when you file your 2023 taxes — that’s at least a little bit exciting, right?

I spoke with four tax experts to learn what newsletter writers need to know about tax time, including two certified accountants and an enrolled agent. They had a few tips that you should keep in mind that can save you time, money, and pain come April 15. Keep in mind: this advice does not replace what your accountant (or the U.S. government) may say about your own filings. If you’re not sure, check with an expert or IRS.gov for advice tailored to your specific case.

Fair warning: it’s impossible to provide advice that applies to everyone, and much of this advice in this article boils down to an annoyingly nebulous disclaimer of “it depends!” But we hope this provides some guidance to those who have never filed on this kind of income before, helps you identify new expenses you can write off on your taxes, helps get you organized, or steers you in the direction of experts who can help.

Hire an accountant to make tax time easier

Ads for TurboTax make it seem simple to file your own taxes, but if you’re a newsletter creator, you may have more than one source of income and probably have a variety of expenses you can write off. In that case, you’ll want a professional tax preparer to help you discern what expenses you can reasonably claim and other credits you may miss. “More stuff is missed by people using TurboTax than anything in the world,” said Steve Siegel, a CPA based in Wilmette, Illinois (and, full disclosure, my husband’s and my personal accountant). He said that because taxes are filed once a year, people tend to forget how much they spent on what. “Once someone becomes self-employed and tries to navigate it all by themselves, they’re just leaving money on the table,” he said. Also, an accountant can help you with how much to pay in quarterly taxes — if they recommend that — so that you don’t overextend yourself on those or underpay your way to an unpleasant tax payment total in the spring.  

You don’t necessarily need to track down an accountant who works with a lot of newsletter writers, but you should try to find one who works with small businesses — they’ll be familiar with the types of questions you may have about your business and prompt you to consider deductions and issues that apply to individuals or small teams. 

Jesse Dukes, a Chicago-area audio producer who teaches an online bookkeeping course for freelancers, agreed that most people should hire a professional unless they happen to find the tax code exceptionally interesting. (Like Dukes! Takes all kinds, as they say.) “The tax code is so complicated; it changes all the time,” Dukes said. “In teaching this class, I have found many examples where I misunderstood the tax code — and I’ve been doing this for a long time.” Tax preparers typically charge by the hour, so bringing an organized list of itemizations and W-9s will save them time and you money. And good news: you can claim this fee next year as a business expense.

Caveat emptor: There are plenty of financial experts on social media, many with good general advice, even. But that advice isn’t a substitute for that of a qualified professional working on your taxes. Rus Garofalo, founder of tax preparation firm Brass Taxes, mentioned a trend online recommending taxpayers “hire” their children, at any age, in order to set up a tax-free Roth IRA for them that will magically grow over time until it’s ready to pay college tuition. That hack probably won’t work for most people. If it sounds too good to be true, said Garofalo, it probably is. 

You can expense more than you realize

Do you pay for a subscription to other newsletters? Or pay for online tools to help you with your newsletter? Maybe buy an e-book with tips on good writing? You can write these off as an expense and deduct it from your final tax bill.

Siegel said that whatever sources you pay to get professional insight from, you can claim it as an expense. Even if the newsletters (or other publications) you subscribe to don’t apply directly to the subject matter you cover, you can still claim them as an expense — as long as they provide an example of best practices or give you ideas that help you with your work. “If it helps you with one article throughout the whole year, to me, it’s valid,” he said. “If [you get the] New York Times, and there’s one section that you basically pull information from and 90% of the paper you don’t, to me, that still would be valid.”

Garofalo agreed. “You need to know what’s going on in your industry to be good at your industry, and I think that’s a good test for a category like research,” he said. “These fields are changing: they’re not fixed. Writing a blog post can lead to a book. Putting an academic study together can end up as a TED Talk.” Resources you use for research should count as an expense.

When you tally up your business expenses, don’t forget other online tools you pay for to write and produce your newsletter. If you pay your email service provider a monthly or annual fee to send your newsletter, that’s something you can write off. You may pay for a service like Calendly to set up interviews or pay for streaming services if you write about entertainment. Just this week, I used paid-for tools to interview sources (Zoom), transcribe interviews (Rev.com), and store copies of my articles (Dropbox). All of these are potential expenses. Keep a record of how much you pay for these tools annually so you can accurately deduct these expenses.

Expensing travel? Use your best judgment

How much travel you can claim as a business expense comes down to that annoying answer of “it depends.” Let’s say you plan to fly to New York this year to The Newsletter Conference (Editor’s note: Tickets still on sale! Buy yours now!), and the majority of your costs are focused on that work event. When next year’s tax season rolls around, you can count the registration fees, travel, and hotel for that trip as an expense.

But not everything counts as a business expense. Last year I went to Colombia with my family for a wedding. I wrote about the experience for my newsletter, and that issue drove $435 in new paid subscriptions. Can I write off the passport fees, international plane tickets, hotel costs, meals, and what I spent on my and my children’s wedding attire for that trip? No, according to the tax pros I spoke to. While I’m happy I made back some money from that experience, I did not book that trip with any intent to make it about work. 

However, I also went on a writer’s retreat last year, where the point of the trip was to network with colleagues in the industry and improve my writing skills. I will be able to write that trip off, including the cost of the Airbnb and the fee for charging my electric vehicle.

Siegel proposed one example: “It becomes a ‘gray area’ if you go to Dallas for a two-day conference, and your best friend’s there, and you stay five extra days,” Siegel said. “If the primary purpose of this is a conference, the airfare will still be deductible. The room and lodging, you’re entitled to [expense] two days. The three days you stayed extra to visit your friend would not [count].”

Use your common sense when deciding what to expense, Garofalo said. “An IRS agent told my stepdad once, ‘Just don’t treat us like we’re stupid.’ I try and imagine sitting across from a smart human being just trying to do his job and make the government function and be like, ‘This is why we took that as a business expense.’”

You don’t need to set up an LLC or S Corp

Filing for status as a limited liability company (LLC) once you start monetizing your newsletter may make you feel more like you run a “real” business, but there’s a good chance it won’t make a difference at tax time. “An LLC provides no tax benefits whatsoever,” said Siegel. “All it does is provide liability protection. You write an article about something, someone relies on it, and they hurt themselves trying to do something that was in one of your articles. You have liability protection for that.” But you don’t have to have an LLC for your newsletter — you can operate under your own name, and you won’t miss out on any tax benefits. (This is what I do with my own newsletter, Evil Witches. Inbox Collective, however, is registered as an LLC.)

If you do think about creating a formal company for your newsletter, Siegel noted that the write-offs are the same for LLCs and S Corps. Unless you have employees and clear $60,000 or $70,000 per year net gross, at minimum, filing as an S Corp is not likely to net you any tax savings. (The minimum number you hear from your accountant may vary.)

In fact, even though it’s free to file for one, you don’t even need to acquire an Employer Identification Number (EIN) from the IRS if you’re not incorporated or don’t have a payroll for your newsletter. Garofalo said the main reason to get an EIN is for privacy: You can use it instead of sharing your social security number.

Otherwise, if it’s just you running your indie newsletter, it’s fine to be a sole proprietor, tax-wise. “It feels cool to be like, ‘I’m incorporated,’” Garofalo said. “I just like to pop that balloon and be like, ‘No, you’re legitimate as soon as you start trying to make money doing this thing.’ …The IRS considers you legitimate once you’re trying to make a profit — not making a profit, trying to make a profit.”

Garofalo said that an independent newsletter operator, even one who’s new to the space, shouldn’t spend too much time worrying about whether there’s a formal business behind you. “You’re still a business regardless of whether you’re just yourself or an LLC,” he said, “so you might as well save yourself the time of filing and trust that you’re legit.”

Don’t forget to gather and send your 1099s

If you send your newsletter from a platform like Beehiiv or Substack that collects fees and pays out through a third party like Stripe, Patreon, or Paypal, make sure you get a 1099 from that platform to provide when you declare your year’s income. For my 2023 taxes, Stripe emailed me my 1099, but if for some reason I didn’t get it or I lost it, these forms are available on its website. If you make money in other ways, like through advertising in your newsletter, you may need to reach out directly to those advertisers to get the right tax forms. (That’s assuming that you sold the ads to them directly, not through a third-party marketplace. In the latter case, the marketplace would provide those forms.)

You may need to send out 1099s of your own (the IRS handily provides these on their site.) Many indie newsletters are one-man operations, but others rely on help: Writers from Virginia Sole-Smith to Kareem Abdul-Jabbar hire researchers, editors and proofreaders. Maybe you have an assistant who helps you moderate your Discord, or you hire an artist to illustrate your issues like AJ Daulerio does.  

“The rule is that if you pay someone who’s not incorporated $600 or more, your obligation is to send them a 1099,” Garofalo said. One common misconception around 1099s is that if someone doesn’t receive a 1099 or earns less than $600, they don’t need to claim that income. “A 1099 is more for the sender than the receiver,” Garofalo said, essentially saying, “‘I’m not claiming this money. I gave it to this person — go get it from them.’”

There’s no one way to track expenses and income

I have a mental block when it comes to spreadsheets, so my system at tax time involves cobbling together records I’ve saved over the year in an email folder, actual physical folder, and credit card statements. Since that works for me and my accountant gets the information, it’s legit. Keep track of your records in the way that is least painful to you. “Some clients use QuickBooks, which is fantastic,” said Siegel. “Some people just send me their check registers and their bank statements, and I put their books and records together. I have some clients who do absolutely nothing and we do everything. It really just varies by the person.” He said that for those who struggle to keep track, he advises opening a business credit card and keeping all expenses on that. (Editor’s note: For a more complex operation like Inbox Collective, putting all expenses on a business credit card has been a huge timesaver.) It’s worth noting: You don’t need to have a formal business set up, like an LLC or S Corp, in order to apply for most business credit cards.

It’s likely that you’ll forget in March why you bought a specific item that past May. You can set up automations in tools like QuickBooks to categorize certain expenses as they come in. Another option: You can manually go through your expenses a few times per month — or at least a few times per year — so you’re not slammed with categorizing your expenses as tax season draws near. But this is optional. I’ve traditionally done all of this over a weekend each spring, and that works for me.

The first time I prepared my expenses for my account, I got more specific than I needed, breaking them down into detailed categories, which was extremely time-consuming and could get confusing. (Did parking and cabs belong in different categories?) So again, check with a professional if you have questions to save yourself time and effort.

Work from home? You can expense some of that.

You may be able to expense some of the cost of your working space, but it depends on where you work.

If you rent an office outside of your home, you can deduct the cost of the year’s rent, as well as any expenses (like internet) that you use at the office.

If you work from home, things are a little different. How much of your personal workspace you can claim as an expense is another example of that annoyingly familiar tune of “it depends.” Let’s say you typically write at a table in your kitchen — but you also use that space to cook, eat, read celebrity gossip, and stream movies on your phone. It may not be OK to claim 100% of that space — as well as the internet you use in that space —  as business expenses.

An accountant will advise you on sorting through what you can legitimately expense. Siegel helps his clients discern what percentage of the mortgage, real estate taxes, utilities, phone, and home internet can be claimed as business expenses. Other household items you may be able to write off part of include mortgage interest, real estate taxes, utilities, homeowner insurance, security systems, and office furniture.

Drinks or dining out don’t always count as expenses

I went to dinner on a recent Friday night with a girlfriend just for fun. She told me one story that I thought might make a good newsletter topic, so I sent myself an email with the idea. Does that dinner now count as a business expense? Not so fast, said the accountants I talked to. But if she was a source or expert in the field and I had taken her out with the intent to interview her or get advice from her, even if we did have a few digressions to talk about our kids or vacations or whatnot, it would count as a deduction. The IRS lets you deduct 50% of the value of that meal from your taxes. (This is where it helps to have a system to log dinners or drinks so you can remember the intent behind the meal. My system involves writing my companion’s name on the restaurant receipt and eventually moving the receipt from my wallet to that year’s receipt folder.) 

“Just talking about work does not make it a business meal,” Garofalo said. But if you learned something that might help you make a profit, or you helped you learn career advice or land a new opportunity, that’s a legitimate expense. “You want to show discernment,” he said. An example: You go out to dinner with a former colleague, and the conversation pivots to your newsletter. You spend much of the evening talking about ways to improve your work, and at the end of the dinner, as a thank you, you pay for the meal. Garofalo said that even if you didn’t schedule the dinner as a work event, you still got value from it. “It’s like what you paid for with that meal was free advice,” he said. “You just got a free consulting session.” You’ll want to note what you discussed so you can explain that expense at tax time. Otherwise, Garofalo said, “If you go out every week with your friend and talk business, the IRS will likely say, ‘That’s just your friend.’”

What about taking yourself out for a meal? The devil is in the details. I would probably save my receipt if I went to Panera to work because my house was under construction, and I couldn’t work in my home. But I wouldn’t expense that meal if I simply needed a change of scenery.

“The only thing that is not deductible anymore, in theory, is if you take a client to a play, a football game, a baseball game, a concert, or something like that,” Siegel said. “Entertainment basically is a no-no, but all business meals are still 50% deductible.”

A few final takeaways

Trying to figure out your taxes isn’t easy, but here are a few things to keep in mind as you file this year:

• Log all of your work expenses for the year — Go through all of your receipts and put each into different categories, like travel, meals, or subscriptions. Note which expenses were not for work — you won’t be able to count those as a deduction.
• Give yourself plenty of time to get organized  — Set a reminder for early March or so to gather your receipts and forms, go through your records, and send everything to your tax preparer, so that you don’t have to file an extension, which will incur a penalty. If you pay quarterly taxes (which you can do online), don’t forget to set reminders for those as well. 
• Try to identify ways to improve your systems for next year — You may waste hours this spring digging through individual receipts and trying to recall which were for work and which were for fun. You can probably set up a better system for 2024. Think about things you can do, like getting a business credit card, setting up an email folder for electronic business receipts, or using a third-party tool like QuickBooks, which might help you improve the process for future years. 
• When in doubt, consult a professional — Trying to figure out what you can expense from a home office, for instance, can be tough to do on your own. Ask an accountant or other tax professional for help figuring out what makes sense for you.

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