The idea of a personality sharing opinions and information for mass consumption might seem like a fairly novel idea in the age of business. Now, more than ever, we are aware of “the influencer,” a word used to describe someone who delivers influential content online in short segments. But there have been talk shows, news segments, and editorial and advice columns for this type of information transfer long before YouTube, Instagram, and TikTok came along. Why, even Wayne and Garth of Wayne’s World could have been considered influencers with their public access cable show. So, what if you are good at what you do and garner a large enough following that you start to make money from your online postings? What kinds of expenses can you deduct against that income?
Let us look specifically at some of the more aesthetic costs, like hair and make-up, and discuss whether they are deductible. The IRS has pretty strict requirements for being able to write off expenses for things like hair products, haircuts or styling, make-up, and wardrobe. A general rule of thumb is that if it is acceptable in everyday wear, then it cannot be deducted on your tax return. If you are thinking “I would never wear khakis and a polo in my everyday life” (no offense, Jake from State Farm), that does not matter to the IRS. The fact that you could wear them around town is the point. Generally, the only clothing items you may be able to deduct are specific to a certain need of a job – such as safety goggles or a welder’s helmet. So, if your influencer posts involve demonstrating how to weld two things together or creating chemical reactions in a lab, you may be in luck.
The same goes for make-up. Of course, you want to look your best in your segments, but the IRS again feels that if you are wearing the same make-up that you could wear on a day-to-day basis, then it is not a deductible expense. If, instead, you use prosthetics and stage make-up to make yourself look like a chicken in your videos while you talk about the wonders of flightless birds, you might have yourself a deductible expense. However, the IRS would like to see a receipt confirming that you purchased these things from retailers who sell professional stage make-up and not from your local big box store or pharmacy.
Finally – and I think you are seeing the trend here at this point – is whether you can deduct your haircuts, styling, and product. And again, generally, the answer would be no. Unless there is a specific style or product that does not translate to personal use, you would be hard-pressed to get the IRS to agree that this is a specific expense to offset your influencer stream of income.
It is important to be clear that you must be monetized and earning income before considering which expenses, if any, to deduct in your influencer line of work. Buying a halo light and a funny hat for your pet so you can share videos with your friends and family no more makes you a paid influencer than me using the beauty filter on my smartphone makes me a professional photographer. It comes down to 1) if you are receiving income from this venture, 2) if the IRS believes you have a profit motive and that you demonstrate business intent, 3) if your expenses are considered ordinary and necessary in conducting your business, and 4) if expenses related to personal appearance can be shown to be required and exclusive to your online activity. And do not forget to keep records – the IRS will absolutely want to see that you are keeping receipts, invoices, and proof of payment for the things you say are business-related expenses. There have been Tax Court and Supreme Court cases where wardrobe and grooming expenses have been denied over and over again.
If you find yourself and your online business suddenly dealing with an audit of your expenses, the Tax Professionals at TaxAudit have a vast amount of experience and knowledge to help you through the entire ordeal. You can reach out to TaxAudit at any time to inquire about their audit defense or by calling 1-800-92-AUDIT (2-8348) to see if their assistance is right for you.