Q: Can I count digital products I give away for review as an expense?
A: Yes. But there are some qualifying factors you’ll need to meet to do so.
1. If it relates to business you reasonably expect to gain in the future, you can usually deduct the cost of institutional or “good will” advertising that is meant to keep your name before the public.
If you gave away digital product so it could be reviewed and your product and/or name will be kept in front of potential customers, then you meet the requirement.
Examples of good will or institutional advertising include:
- advertisements that encourage people to contribute to charities, such as the Red Cross or similar causes
- having your own business sponsor a Little League baseball team, bowling team, or golf tournament
- giving away product samples
- holding contests and giving away prizes
2. The amount you expense has to be actual dollars. Time and labor that you give away as an advertising expense doesn’t count – so the time you spend reviewing other people’s product can’t be a deduction, nor can the time you spent in creating the digital product. Only the cost in dollars, or the price of the actual product, can be deducted.
Looking for more tax tips for bloggers? You’ve come to the right place. Check out our FREE Taxes & Accounting for Bloggers 101. You’ll find useful tips and ideas on making your blog finances a breeze. Still have questions or want to hire an expert? We can help with that too.
Check out our other Tax & Accounting FAQs for bloggers here:
Ben Sutton is the founder of Mazuma USA, an accounting firm providing tax, bookkeeping and payroll services to small businesses. Since founding Mazuma, Ben has established himself as an expert in the small business world. He’s still driven by that same desire to provide accounting help to all small businesses – from photographers, bloggers and creatives to lawyers, doctors, and dentists, everyone needs affordable accounting help. Ben is a Certified Public Accountant, and a member of the American Institute of Certified Public Accountants. But Ben considers his greatest achievement and credential to be his happy wife and four children.