Thanks to Mom on Dealz for sharing her series, Ask an Accountant! Sharon is married to an experienced accountant. Although tax season is over, tax questions arise year round.
Question:
I am a blogger and frequently attend conferences. I accept sponsorship from companies for these conferences. How would these sponsorships be taxed?
Answer:
The sponsorship would be recorded as ‘Other Income’ and the costs related to the conference would be an written off as an expense. If the amount of the sponsorship and the amount of the conference were equal, there would be no taxable profit from the transaction. If the sponsorship did not cover the total expenses of the trip, there would be a net loss on the transaction. If the sponsorship exceeded the expenses of the trip the difference would be ordinary income(profit) and included in the Net Profit of the business, thus taxed at the appropriate income tax rate
*Please keep in mind this post is for informational purposes only and answers given are very general. Many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.
Actually nice to know that answer… thanks for answering it. Many times I get items from companies for review and I had no idea how to categorize them at first on my taxes. So I know this is a much needed question/answer for many mommy bloggers out there that are just starting out!
Have a blessed week!