YouTube Channel Startup

Question

Hello,Apologies for this long message, I just want to make sure anyone trying to help has all of the information that seems to be relevant to the question about this.So I'm having trouble figuring out on how to handle the tax situation on a YouTube channel I've been working on starting. In August of 2021 I bought some computer hardware that would be up to the task of video editing (fast multicore cpu, plenty of ram, hard drives, etc) along with a nice high quality microphone. The channel is education based and will need to upload courses once all of the videos for that course are complete.Sadly, I have yet to officially "open" the channel since the courses are multi-video and are taking some more time to complete than anticipated but work is progressing nonetheless. Just a couple of weeks ago I was able to acquire a much newer GPU at MSRP as opposed to those scalping them which were the only ones available up until recently so I held off but now I've completed the editing machine.Obviously, I have no income for 2021 from the channel. There is also the fact that income will depend on ad revenue which means qualifying for ad revenue from YouTube in the first place so whether I get any for 2022 is still up in the air.My question is should I report these costs on the YouTube business on this year's taxes I'm about to file or do I hold off until I actually qualify for and get ad revenue at a later tax year?I'm also not sure on how the expenses should be broken up if at all. For example, for 2021 expenses I have a little over $6k in expenses for the equipment being used for the YouTube business. I was able to get started on editing videos with an older GPU while the newer one has made certain tasks far faster to complete.2022 would be the GPU at about $1.5k so would both count as startup costs in this case or would the GPU go under some other category than startup.This is all very new to me and I'm at a total loss of where to go with this one. The one for my delivery gig work was simple because I was making money right off the bat. I'm not sure when the start of business actually qualifies for something like a YouTube channel whether it's when the work on the videos themselves begins or when they're uploaded...or when you actually qualify for ad revenue.Any help would be greatly appreciated. Thanks!

ThomasM125 · Accepted Answer

You should keep separate track of the cost of equipment and furniture, as you will need to enter those in TurboTax as assets in the year the business is up and running.

The other costs should be combined as they will need to be entered in TurboTax in the year you are up and running as start-up expenses. You can expense up to $5,000 of start up expenses if the total of them is less than $50,000. The rest needs to be amortized over 15 years.

You cannot deduct anything until the year you are up and running.

joecrail · Answer

@StarGoyle wrote:Hello,Apologies for this long message, I just want to make sure anyone trying to help has all of the information that seems to be relevant to the question about this.So I'm having trouble figuring out how to handle the tax situation on a YouTube channel I've been working on starting. In August of 2021, I bought some computer hardware that would be up to the task of video editing (fast multicore CPU, plenty of RAM, hard drives, etc.) along with a nice high-quality microphone. The channel is education-based and will need to upload courses once all of the videos for that course are complete. Sadly, I have yet to officially "open" the channel since the courses are multi-video and are taking some more time to complete than anticipated, but work is progressing nonetheless. Just a couple of weeks ago I was able to acquire a much newer GPU at MSRP as opposed to those scalping them, which were the only ones available up until recently, so I held off. But now I've completed the editing machine. For editing, I've been using CapCut pro apk, which has actually been surprisingly capable even on higher resolution content. It’s helped me stay productive while I wait to launch—especially since it doesn’t require a lot of setup and handles transitions and cuts really smoothly. Obviously, I have no income for 2021 from the channel. There is also the fact that income will depend on ad revenue, which means qualifying for ad revenue from YouTube in the first place, so whether I get any for 2022 is still up in the air. My question is should I report these costs on the YouTube business on this year's taxes I'm about to file, or do I hold off until I actually qualify for and get ad revenue at a later tax year? I'm also not sure how the expenses should be broken up, if at all. For example, for 2021 expenses, I have a little over $6k in expenses for the equipment being used for the YouTube business. I was able to get started on editing videos with an older GPU, while the newer one has made certain tasks far faster to complete. 2022 would be the GPU at about $1.5k, so would both count as startup costs in this case, or would the GPU go under some other category than startup? This is all very new to me, and I'm at a total loss of where to go with this one. The one for my delivery gig work was simple because I was making money right off the bat. I'm not sure when the start of business actually qualifies for something like a YouTube channel—whether it's when the work on the videos themselves begins, or when they're uploaded, or when you actually qualify for ad revenue.Any help would be greatly appreciated. Thanks!I am also encountering this issue right now. I'm in a very similar situation where I’ve invested in equipment for a YouTube channel that's still in development, and I’m unsure how to handle the tax side of it. Like you, I haven’t officially launched or earned revenue yet, so I’m unclear whether these should be reported as startup costs this tax year or deferred until actual income is generated. The distinction between what counts as a startup expense and what might fall under regular business expenses (like a new GPU added later) is also something I’m struggling with. It’s definitely confusing figuring out when a content creation business “officially” starts for IRS purposes. Any clarity or guidance from others would be hugely appreciated.