TurboTax Business: deduction category for content asset subscriptions

[commstrat]

For annual subscriptions to online content asset libraries and video/image generation services (ex: Adobe stock images/videos; Envato graphic templates, videos & audio files; Freepik icons & images; Canva; Animoto; Powtoon; VideoScribe, etc.) would you use the business expense deduction "Computer services/supplies" or "Dues & subscriptions"?

[TeresaM]

If they are annual subscriptions they they should be expenses within the same year and although they could be reasonably aggregated under Legal and professional fees, it may be best to put them under Other miscellaneous expenses, where you can enter the description and the amount. That way you can make multiple entries that may be easier to track from year to year. 

[commstrat]

Yes, Misc is a choice, not so much, IMO, Legal and Professional Services. This is a new category and there seems to be some confusion among the TT experts on what this is about (from other postings). These are content assets (videos, photos, audio, icons, sound effects, After Effects templates, Premiere Pro templates, vector graphics) used by content creators in a variety of applications: websites, finished videos, podcasts, social media posts, online advertising, graphic design projects, publications, etc. It's not a license situation per se, as you are subscribing to archives of visual and audio content for which you receive an individual license for each downloaded item or component. So, going down the list of choices in business expenses, it's a hybrid of computer services/supplies and Advertising expenses, and possibly Dues & subscription. Many of the content asset services provide online editing tools, so that's definitely software under the computer services category. 

[Vanessa A]

When it is a hybrid expense, it is best to enter it as a miscellaneous expense. When you look at Schedule C, you will see all of these expenses are kind of lumped together.  Not saying that you shouldn't split them as best as you can, but if you can't. using the misc category is the best option.  

It will not affect your bottom line.  This is an expense that will be deducted from your gross income to arrive at your net profit regardless of whether you enter it as advertising or dues and subscriptions. 

However, if you are subscribing to something, then it would be a subscription.  So, if you look at line 48 of the schedule C, you will see you can just enter the description and the amount and it will be included in your expenses with details.   This is done by entering it as other miscellaneous expenses as TeresaM described above. 

[commstrat]

Agreed, at the end of the day it's all going to be deducted as a business expense in the given tax year. I would shy away from subscription because most of these services offer many flavors of purchase options, including content for sale by the piece (a la carte), in packages of quantities per month, monthly and annual all-you-can-eat "subscriptions" and other options. The hybrid element complicates things because some services offer content plus online photo/graphic image editing, video editing, and animated video creation, which I would consider "Computer services." Plus you can import content from stock image/video/audio services into the online creation services, which creates the "Misc" + "Computer services" conundrum. To keep it simple, leaning toward Misc as the catch-all.