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?

Forum|Forum|6 years ago
June 3, 2019
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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?

TurboTax Deluxe Online

Best answer by MinhT1

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.

SweetieJean

Employee

And exactly how do you generate income from this?

brittany-h0331Author

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).

MinhT1Answer

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

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brittany-h0331Author

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

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

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

Employee

@2717099 wrote:

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

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.

mgd1231

If I'm just starting out with Youtube and have created a DIY & Cooking channel, but haven't made any income yet, am I able to claim any of the expenses yet?

ThomasM125

@mgd1231 You can only start deducting your expenses in the year that your activity is open for business. So, technically you could deduct the expenses in 2020 if you were available for sales but no one purchased anything yet, but for practical purposes you would not be open until the year you actually started receiving income.

You can write off expenses you incurred before you opened your business as start-up expenses in the year you are open. You can read more about start-up expenses here:

https://quickbooks.intuit.com/r/taxes/3-tax-deductions-available-only-to-startup-businesses/

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TaraTa

I have a similar question- we review campgrounds- am I able to expense the cost of the overnight fee and gas? Or is it only a portion of it?

Also- if we purchased a product for a video- but continue to use the product (rarely- but did not sell it) do we expense a portion of it and how do we tell what portion to expense?

ThomasM125

You can expense the cost of overnight fee and gas as travel expenses. The whole expense would be deductible if the trip was 100% business, otherwise you should prorate the cost based on the time of the trip spent on business. As far as the product is concerned, I think you mean your purchased it for the business, but then used it for personal purposes. If so, you can set it up for depreciation in TurboTax where you will be asked to enter when you stopped using it for business purposes, and you will get a depreciation deduction for the period of time it was used in the business. That would apply to a large purchase. If you purchased something of nominal value, you can apply a percentage to it to reflect the business use portion of the product versus personal use and take a partial deduction for it.

@TaraTa

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