I started doing item reviews on Youtube, can I write off the items? If so, how much? If I have to use the depreciated value, how do I determine that value?

[brittany-h0331]

I've started doing fashion related item (i.e purses and shoes) reviews on Youtube & have yet to see a profit (because I have yet to get 10,000 views), can I write off the items I review? If so, how much can I write off (the actual price of the item or the depreciated value)? If I have to use the depreciated value, how do I determine the depreciated value of an item?

[SweetieJean]

And exactly how do you generate income from  this?

[brittany-h0331]

Once you hit 10,000 views, youtube allows you monetize your channel. If I'm not mistaken that means you get pad from views, advertisements, and sponsored videos (People pay you to review their products).

[MinhT · Accepted solution]

If you are doing this with a clear and continuing profit motive (and not as a hobby), you have to file a Schedule C to deduct the items the items you bought specifically for the reviews at cost. If you use items that you previously acquired for personal use, you cannot deduct them. If you bought items for both business and personal use, you can only deduct the business use portion of the items.

If you are doing this as a hobby you cannot deduct these items if you have no income.

[brittany-h0331]

How do you determine the "business use portion" of an item?

[MinhT]

This is an estimate that you have to make and which you can defend in case of audit by the IRS.

[yankee]

One easy way is to see what the item is valued in its (currently) USED condition. Then SUBTRACT that amount from what it cost when NEW. The difference can be considered the "business portion"....Go on Craigs list or Ebay or any other Used Marketplace to see what its going for Used!!........If you are one one those YouTube channels that DESTROYS the item, then you can use all of it as the 'Business Portion"

HERE IS HOW YOU DO IT:

New cost $500 (minus) Used Value $300=$200 is the Business Portion

[yankee]

To use the/a item as a Tax Deduction, you must OWE Taxes....In order to OWE Taxes you need to Make money...Remember you cannot Owe Taxes on NOTHING!...In other words, if you made $0, you owe NO taxes...You are NOT charged Taxes on ZERO income...INCOME is money you get from OTHER PEOPLE........Let say you get $100 from "other people".  AND let say, from the $100, you owe $25 in TAXES....You have Up-To $25 to make deductions against

[VolvoGirl]

No.  You can show a loss on schedule C.  You can have business expenses without income.  A business loss is subtracted from your other income.  But yes if it brings your taxable income down to zero you won't owe any tax and more deductions won't make make a difference.

[magpie91]

Scenario 1: What if I review cars? I buy the car new lets say for $50k. Then I do a review on it when I get it home. Soon as I drive it off the lot the car will only sell for $40,000. Can I write off $10,000 one week later when taxes are due?

Also know that the entire life of the car is for me to test how it holds up over normal pleasure commutes. Every single drive would be documented and uploaded as daily reviews to test how the car performs at pleasure driving over the course of 10 years. Yes each drive may also be pleasure but it’s also making a video for reviews for my business so at least 50% of $50k would be deductible?

Scenario 2: I buy a low milage used car for $50k. When I drive it off the lot it is still worth $50k. But then I park it in storage for 10 to 20 years. After 10 to 20 years I will resell the collectible car for $75k. Until I sell the car can I claim 100% of it as an experience since that the only reason I bought it is 100% for business?

Scenario 3: This is an add on to the original poster’s question.... If they buy an item for $500 and do a YouTube review on it but then every single time they do a future review on a different item that $500 item is on display in the background of their videos as part of their branding image. Each time they review a new item they put it on a shelf so everyone can see it in the background of all future videos. At that point the item is 100% for business use only. Can each item be deducted 100% in this scenario? 

[Anonymous]

I have this same question, I am going to buy a car to "review" for my youtube channel, what do I expense?

[Opus 17]

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@Anonymous wrote:

I have this same question, I am going to buy a car to "review" for my youtube channel, what do I expense?

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You really need professional tax advice.  The standard answer will be "almost nothing."  There may be a way that a professional can structure it for a larger benefit to you.

Under ordinary rules, when you purchase a personal vehicle and also use it for business purposes, you can deduct your actual expenses, or the standard mileage amount which is 57.5 cents per mile.  But only for business use,  not personal use, and not split use.  If you buy a car to review it and drive it 100 miles for a road test, that a $57 deduction.  If you drive it another 1000 miles around town on your usual work commute and errands, that is personal travel and never deductible even if it has a dual business purpose.  You could take a 10,000 mile cross country trip, and if any part of that trip is a personal vacation, the entire trip is disallowed as a business expense.

Then, when you sell the car, you have a capital loss, but capital losses on personal property are not deductible.

Now, suppose you form a business of some kind, and the business buys the car.  The business can still only deduct actual expenses or the standard mileage rate, and only for business-only travel, not personal or mixed travel. The business may have a deduction for depreciation too, but only if it owns the car longer than a year.  When the business sells the car, the business may have a capital loss.  What happens to that capital loss depends on how much income the business has (Youtube ads?) and what kind of business it is.  The business could be an LLC, an S-corp, or a C-corp, and the tax rules for losses and how they pass through to the owner are different for each type and very complicated.   

(Understand that when someone like Motor Trend buys a car and tests it, those are expenses for the business. And they can deduct capital losses in a way that you as an individual can't.  And if they give the car to an employee to use on the employee's family road trip, the value of that car usage is taxable income to the employee, unless the trip is purely business only.)

I think it will be very difficult to meaningfully deduct your car expenses as a business expense, and anything you can get will require the help of a really talented tax professional.  

[david4002]

Not true...Many YouTubers have LLC's for their side business while working full-time jobs. They definitely pay taxes and can deduct expenses to attempt to grow their channel and online subscriptions. Your comment is idiotic saying that $0 means no deduction.  Many small businesses starting out go negative the first many years before they make equity and a profit. Just a dumb response. Do not listen to this guy...

[Opus 17]

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@david4002 wrote:

Not true...Many YouTubers have LLC's for their side business while working full-time jobs. They definitely pay taxes and can deduct expenses to attempt to grow their channel and online subscriptions. Your comment is idiotic saying that $0 means no deduction.  Many small businesses starting out go negative the first many years before they make equity and a profit. Just a dumb response. Do not listen to this guy...

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A single member LLC is the exact same position regarding federal tax laws as an unincorporated sole proprietorship.  Either way, there are strict rules regarding how businesses must account for the purchase, use and disposal of assets such as motor vehicles.  Failing to follow those rules can result in large tax penalties.

[david4002]

Agree, its not that claiming the motorcycle should be done unless you can explain it well during an audit, but the case made that started my response concerned if you make no money, then why try to deduct. I've never met anyone attempting to invest in a business, make no money, and then not claim it as a negative for the next years taxes. Again, expenses, not a new motorcycle folks...The fact is, any sole proprietor or LLC (any corp for that matter) can claim a deduction on a vehicle if it is used for the business purpose of making money (mileage, maintenance, insurance, etc... I agree its not to fund hobbies, but you need to show during an audit a business plan on how you will succeed in making money. You don't think motocycle tour companies claim on the bikes that the tour guides or instructional vids being sold as DVD's, or maintenance DVD's being published?  Ofcourse they are...