As a full-time content creator, managing your finances & optimizing taxes can be just as challenging as creating engaging content.

Taxes, in particular, can be a headache if you’re not sure where to start. The good news is, with the right strategies, you can keep more of your hard-earned money in your pocket.

In this post, I’m going to share four essential tax strategies (that I’ve personally used) that can help you navigate the complexities of being a content creator.

Tax Strategy #1: Earn Tax-Free Credit Card Rewards

I remember when I first started out as a content creator, I was excited about all the credit card rewards I could earn. But I quickly realized that not all rewards are created equal, especially when it comes to taxes.

Credit card rewards, points, and cashback are often seen as a bonus, but there’s more to them.

The good news is that most of these rewards are considered a rebate or discount on your purchases, making them not taxable.

However, non-spend bonuses, like those sign-up bonuses you get without spending, and referral rewards are taxable. This is a crucial distinction to keep in mind.

  • Maximizing card benefits is key. Choose the card that best aligns with your business spending. Not only will this earn you rewards, but it also helps keep your business and personal expenses separate.
  • And here’s a friendly reminder: Spend wisely! Only buy what you truly need for your business. Don’t let tax considerations push you into unnecessary spending.
  • Also, be sure to pay off your balance in full each month. This way, you avoid interest charges that could eat into your rewards.

Tax Strategy #2: Deduct All ‘Ordinary and Necessary’ Expenses

The IRS is pretty clear about deductions: they have to be both “ordinary and necessary” for your business.

Ordinary means it’s common in your industry, and necessary means it’s helpful and appropriate for your business.

So, what can you deduct?

Think about things like equipment, software, and even some travel expenses if they’re related to your work.

But don’t forget the less obvious deductions. Education, courses, and conferences can all be written off, as can foreign transaction fees and even costumes or business-specific outfits. Others:

  • Home Office Setup Costs
  • Internet and Phone Bills
  • Subscriptions
  • Website Expenses
  • Professional Services
  • Training
  • Travel Expenses
  • Equipment Repairs and Maintenance
  • Props
  • Marketing and Advertising

Just make sure all of these expenses are recorded on your profit and loss statement and reported accurately on your tax forms—Schedule C if you’re an LLC, or on the front page of the 1120S if you’re an S Corp.

The key here is to keep detailed records and make sure everything you’re deducting is truly related to your business. This will reduce your taxable income and keep you on the right side of the IRS.

Tax Strategy #3: S Corp Election for Federal Tax Purposes

Electing to be taxed as an S Corp can be a game-changer for many content creators. It allows you to declare a reasonable compensation as your salary—typically suggested as 60% of your earnings.

You only pay payroll taxes on this amount, rather than on all your earnings. The rest can be taken as a distribution, which isn’t subject to payroll taxes. This can lead to significant tax savings.

We once had a new client who was overwhelmed by the idea of making their business an S Corp. But once they understood the tax benefits, they couldn’t believe they hadn’t done it sooner.

However, it’s not without its downsides.

  • There are additional administrative costs, like filing an 1120S tax return and handling payroll processing.
  • Plus, your contributions to Social Security might be lower since you’re paying yourself less in salary.
  • But if the savings outweigh the extra costs and complexity, the S Corp election could be a smart move.

To make the election, you’ll need to file Form 2553 with the IRS. This must be done for the next tax year, so plan ahead.

Tax Strategy #4: Solo 401(k) for Retirement Savings

When I started thinking seriously about retirement, I was a bit lost in the sea of options. But once I discovered the Solo 401(k), it felt like I’d struck gold.

As a full-time content creator, you might not have access to a traditional employer-sponsored retirement plan. That’s where the Solo 401(k) comes in.

It’s the perfect solution for solopreneurs and their employed spouses. The contribution limits are high—up to $69,000 per participant in 2024, plus an additional $7,500 if you’re over 50.

Setting up and maintaining a Solo 401(k) is easier than you might think. It offers a great way to save for retirement while also reducing your taxable income.

  • If you have employees, a SIMPLE IRA might be a better fit.
  • Or if you’re still side hustling, consider a SEP IRA.

But for those fully in the game, the Solo 401(k) is tough to beat.

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These strategies can make a significant difference in your financial health as a content creator. Remember, it’s always a good idea to consult with a CPA who understands your specific needs.

These tips are a starting point, but your situation is unique—make sure you’re getting the advice that’s right for you. Book a discovery call with us today.