My wife made $3000 from a contract job teaching kids dance lessons at school. She got the gig through her YouTube channel. I’m trying to figure out how we can reduce taxes on this income. Here’s what I’ve been thinking:
Can we depreciate her cell phone? If so, how much?
Same for her iPad—can it be written off?
What about the cell phone bill? We share one bill—how do we split it?
Should she open an IRA? If yes, SEP or SIMPLE?
Can her smartwatch be depreciated?
What about her laptop?
Can we expense a home office, even though I’m the only one on the mortgage?
Are clothes, shoes, or jewelry for her videos deductible as marketing expenses?
Is there anything else I’m missing?
Should we go to a tax professional, or would something like TurboTax be enough?
Vesper said:
What do any of these items have to do with teaching dance lessons?
She uses her YouTube channel to get gigs. The iPad and phone are used for recording and uploading videos, and the internet helps her find content to teach.
@Morgan
Does the YouTube channel earn any money? Most of what you listed isn’t deductible for the $3k she earned. Retirement accounts might be worth looking into, but for a one-time gig, it seems like a lot of work.
@Vesper
If she wants to maximize retirement contributions, should she go with a solo 401(k) or SEP IRA? She also has part-time work with no 401(k) option. We file taxes together, and I already max out my 401(k), so she can’t contribute to an IRA due to income limits.
Does she use part of the house just for work? Also, clothing or jewelry worn in videos isn’t deductible. Is this more of a business or just a hobby that got her a gig?
Shane said:
Does she use part of the house just for work? Also, clothing or jewelry worn in videos isn’t deductible. Is this more of a business or just a hobby that got her a gig?
She uses a small room for practice and the living room for videos. This is a business for her, and she hopes to expand it. She also does unrelated part-time work, but dance is her passion.
Tax deductions have to be ordinary and necessary for the business. Also, any personal use isn’t deductible. Most of the things you’re listing don’t qualify.
Adrian said:
Tax deductions have to be ordinary and necessary for the business. Also, any personal use isn’t deductible. Most of the things you’re listing don’t qualify.
She’s using YouTube as a way to advertise her work. I don’t see why the iPad, which she only uses for recording videos, can’t be an expense. The clothes and jewelry she wears make each video unique, so they should count as marketing costs, right?
If she wants to maximize retirement contributions, should she pick a solo 401(k) or SEP IRA? She also has part-time work but no access to a 401(k). We file taxes together, and I’ve maxed out my 401(k), so she doesn’t qualify for an IRA because of income limits.
Ordinary and necessary expenses can be deducted. Most of what you listed doesn’t meet those criteria. You might want to talk to a tax professional this year.
If she’s using YouTube as marketing, then dance-related expenses, like outfits or props, might count if they’re directly tied to her work. Home office deductions are tricky unless the space is used solely for business. For shared items like phones, you can only deduct the percentage used for work.
@Farley
Exactly. The iPad is only for recording videos, so it should count. And the clothes and jewelry add to the uniqueness of her videos, so they’re part of marketing. Am I wrong?
Morgan said: @Farley
Exactly. The iPad is only for recording videos, so it should count. And the clothes and jewelry add to the uniqueness of her videos, so they’re part of marketing. Am I wrong?
The iPad might be justifiable since it’s needed for recording. But new clothes and jewelry aren’t necessary for marketing. Some people might write them off, but it’s risky. An IRS audit could end up costing more than any tax savings.