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Is Advertising & Marketing Tax-Deductible From 1099 Taxes?

So, you're running your own business and investing in advertising and marketing campaigns to boost your visibility. However, the main question remains – can you get a tax break for all those expenses? First things first, is advertising tax-deductible? Well, it can be. The IRS says advertising tax write-offs have to be both "ordinary" (common in your industry) and "necessary" (helpful for your business). So, you can write off advertising expenses. They just have to be business-related. That's a good start. The costs of making and distributing promotional materials and running online ad campaigns can often be considered tax-deductible. Sounds promising, right? But are marketing expenses also tax-deductible? Yes, they are! Marketing expenses like hiring a short-term marketing manager are tax-deductible, too. Tax rules can be a bit tricky, so it's always a smart move to talk to a tax professional first. They can help you make sense of the IRS advertising expense regulations and ensure you're getting the most out of your deductions.

Table of contents

Key takeaways...Read more

Is advertising a tax write-off?...Read more

Is political advertising a tax write-off?...Read more

What other conditions impact how much a business can write off for advertising?...Read more

Are marketing expenses tax-deductible?...Read more

Is non-paid marketing a tax write-off?...Read more

How can you write off marketing expenses?...Read more

Using advertising and marketing tax deductions to lower self-employment taxes ...Read more

Key takeaways

Business-related promotion expenses can be claimed as advertising tax deductions.
Marketing costs that are ordinary and necessary to your work can be written off as marketing tax deductions.
Both these expenses are claimed on Line 8 in Schedule C.

Is advertising a tax write-off?

The good news is that advertising can be a tax write-off, but it depends on a few factors. If you're promoting your products or services through advertising, you're on the right track. But how much can a business write off for advertising? 1099 individuals typically write off the entire expense amount from their self-employment taxes. All advertising expenses are reported on Schedule C. This includes things like paid advertising expenses, the cost of creating marketing materials and any promotional expenses that directly benefit your business. When we say promotional expenses, we mean any expense associated with promoting your business. Imagine you're throwing a party to launch your latest product or sponsoring a local community event. The good news is all the expenses you rack up for these promotional events are often tax-deductible. Whether renting a cool venue, splurging on attractive promotional materials, catering to your heart's content, or even flying out to an out-of-town event, the IRS usually gives you a green light to deduct these costs from your business income. But here's the deal: You've got to keep good records, make sure the event has a legitimate business purpose. So, trying to network at your birthday party or handing out flyers at your friend’s BBQ doesn’t count. How about writing off physical items? Can a watch be a business expense? Yes, if the watch is prominently branded with your company logo and is given as a promotional gift to clients or used as part of a marketing campaign. You can also do this for things like hoodies, pens, hats and mugs. The only caveat is that your brand logo cannot be removable. If you give your clients a branded hat with a removable patchwork logo, you can’t write that off.

Infographic entitled Advertising Expenses For Small Businesses listing tax-deductible self-employed deductions.

Is political advertising a tax write-off?

We know that advertising expenses for small businesses are often tax-deductible. You can deduct costs related to promoting your products, services, and brand – it's considered a necessary part of doing business. So, what about political promotion expenses? When it comes to political campaigns or causes, things aren't as straightforward. The IRS has some specific rules about this. Generally, political contributions and expenses tied to political campaigns are not tax-deductible for 1099 employees. That's because these contributions are seen as personal choices, not ordinary and necessary business expenses. To avoid tax complications, separate your business expenses from any political contributions or campaign-related costs. Mixing them up can raise red flags and potentially lead to audits. If you're interested in supporting a political cause or candidate, it's best to do it on a personal level rather than using your business funds.

What other conditions impact how much a business can write off for advertising?

There are a few other advertising expenses that aren’t tax-deductible either. Entertainment expenses, thanks to the Tax Cuts and Jobs Act (TCJA), usually don't find their way into the advertising deduction category. However, there's some room to maneuver when it comes to certain marketing expenses. You can utilize entertainment in the context of promotional events, like hiring a band for a launch party. But if it involves any kind of personal connection with your client, it's a no-go. Let’s say you’re an online seller dealing in audio equipment and you have a loyal customer who shares your passion for music. Occasionally, you invite this customer to exclusive listening sessions where you showcase your latest products. You both enjoy the music and talk shop during these meetings. While these sessions serve a business purpose, attempting to categorize all your music-related expenses as marketing costs might not sail smoothly with the IRS. Why? Because these get-togethers revolve around a shared personal interest – music. It's not just business; it's a hobby that you both enjoy. Another expense that isn’t tax-deductible is putting ads on personal vehicles. While you may think advertising your business on your car is fair game, you can’t write off the car if you don't drive it for work. You can still write off the cost of making the ad for your vehicle, though. If you're using your vehicle for both work and personal errands, you can actually claim the portion of the mileage that's related to your business as a separate expense. But this mileage deduction is separate from the marketing advertising tax write-offs.

Infographic entitled Non-Tax-Deductible Advertising Expenses listing instances where promotion expenses are not tax-deductible.

Are marketing expenses tax-deductible?

You can totally write off expenses that directly help your business get noticed as marketing tax deductions. Even if it’s not a paid promotion or advertising campaign, expenses related to marketing your business can be written off, too. Marketing is all about creating awareness, building your brand, and attracting customers, and these activities come with associated costs. Whether it's attending networking events, creating engaging content for your blog or running social media campaigns, these marketing services are taxable.

Is non-paid marketing a tax write-off?

Absolutely! For instance, let's say you’re an Etsy seller attending a local business expo to showcase your crocheted home goods. You've invested in a booth, designed promotional materials, and even bought some freebies. While you may not be directly paying for advertising space, these costs are all part of marketing your business. Similarly, if you have a website to engage with your audience and share valuable insights in your industry, the expenses related to hosting, content creation and SEO are marketing-related. You're investing in creating an online presence and attracting potential customers. If you're on social media, the tools you use to create the graphics, schedule posts and track your metrics are all expenses contributing to marketing your business. Marketing expenses are also claimed on Line 8 of Schedule C, like advertising tax deductions. Multi-member LLCs and partnerships should use Form 1065 when claiming advertising expenses, while S Corps should use Form 1120S. Only sole proprietors and single-member LLCs can use Schedule C.

Alt text: Infographic entitled Marketing Tax Deductions listing some marketing expense examples

How can you write off marketing expenses?

Say you’re a freelance photographer specializing in events. You can write off certain marketing expenses as tax-deductible:

Photography website costs (website hosting fees, design costs, domain registration)
Running online advertising campaigns
Equipment costs (camera equipment, maintenance costs)
Travel expenses (Airbnb rental fees, vehicle mileage, meals)
Software (photo editing tools, productivity apps)

If you use FlyFin, A.I. easily finds expenses you can deduct and categorize. CPAs even prepare and file your returns for you and offer unlimited support on 1099 taxes. What if you’re promoting your business before it launches? Can you write off those marketing expenses? You can, but they won’t be categorized as advertising expenses. Any expenses you incur promoting and marketing your business before its official opening will be classified as startup costs. You can write these off, but they have to be “amortized” over 15 years. A deduction of $5,000 can be taken in the first year of operation, but only if you spent less than $50,000 in startup costs.

Using advertising and marketing tax deductions to lower self-employment taxes

The main point of taking all the available marketing and advertising tax deductions is to pay as little taxes as possible. But you can’t do this if your your records aren’t clear and meticulous so that has to be a priority. This means saving relevant receipts and invoices as proof that are directly related to promoting and marketing your business. Then, you can calculate your 1099 income by adding up your earnings from your 1099 forms. This will give you your gross income. Once you categorize your marketing tax deductions, you can subtract your deductions from gross income to find your net income, which you’ll calculate SE tax on. Self-employment tax is 15.3% of your net income and includes both Medicare and Social Security taxes. Your income tax liability is also reduced because your taxable income is calculated on your earned self-employment income. Lowering this income through deductions helps you pay less income tax, too. If your combined estimated tax liability (both 1099 tax and income tax) is over $1,000, you’ll have to make these payments every quarter.

Infographic entitled How Are Marketing Expenses Tax-Deductible detailing steps to write off advertising expenses.

Understanding advertising as an IRS deduction category is important for business owners trying to increase tax savings while staying in line with tax regulations. Leveraging these advertising-related deductions can reduce your taxable income effectively. Advertising expense tax deductions include expenses such as online and offline advertising, website development, printing promotional materials, and even attending business or trade shows to expand your client base. But the key to making the most of advertising deductions is meticulous recordkeeping. Keep receipts, invoices, and any other documentation to substantiate your claims. These expenses must be essential to your business operations and aimed at generating income or expanding your reach. You should also talk to a CPA if you want more advice. They can help you take full advantage of the available write offs and keep you updated on any rules that might impact your advertising deductions. Tax laws change all the time, so it’s good to have a professional you can rely on. So, the next time you plan an advertising campaign or invest in marketing materials, remember that these expenses can go beyond just boosting your business—they can also help lower your tax bill!

Phone Tax Deduction

Cell phones can be a business tax deduction for self-employed individuals if it is an ordinary and necessary expense. A separate business cell phone can be fully written off.