Here are a dozen expenses domainers should consider when filing taxes.
It’s 1099 season, when domain parking companies send a flurry of 1099s to U.S. unincorporated taxpayers informing them how much they paid them in 2008.
Although it’s not fun paying the associated federal income taxes (and self-employment tax), here are some expenses you can likely deduct from your revenue this year if you have proper documentation. Don’t leave any stone unturned.
1. Domain conferences – don’t forget to add up the cost of admission, hotel, airfare, and ground transportation. Mileage to the airport in your personal car may be deductible, too.
2. Annual domain registrations
3. Internet access – if you use your home internet access for business, you can expense a portion of it.
4. Home office – have a room (or area) in your house that you use almost exclusively for domaining? Talk to your accountant about taking a home office deduction (which may include a portion of your utilities). There are depreciation consequences for taking this deduction.
5. Mobile phone – a lot of domain transactions take place on the phone. If you use your mobile phone for business, you may be able to expense a portion of it.
6. Domain software – don’t forget to expense purchases of software related to your domains. Depending on the cost, you may choose to amortize it.
7. Domain services – subscribe to DomainTools, keyword finders, or other recurring services? Don’t forget to tally them up. Magazine subscriptions related to your business count, too.
8. Web hosting – My web hosting bill is about $400 a month. You certainly don’t want to miss that.
9. Advertising – if you paid to promote your domains on Google Adwords or bought ads on great domain sites like Domain Name Wire, you can deduct this expense.
10. Meals and Entertainment – did you go to a business lunch with someone? 50% of these expenses can be deducted.
11. Legal expenses – hopefully you didn’t face a UDRP challenge this year. But don’t overlook your legal expenses.
12. Office supplies – even if you don’t have an “office” per se, you may use various supplies in running your domain business. Think paper, printer ink, envelopes, etc.
Note: Of course you should discuss any expense with your tax accountant before including it on your tax return.