Netflix is not only entertaining, but it also has several benefits for business in the garb of income tax deductions. Even if you use your Netflix subscription on your own time, you are granted a waiver for business purposes.
You must be able to tell apart between Netflix 1099 consumption for professional purposes and personal use. For instance, if you discover that you use the subscription or item primarily for personal use and around half for company, you should only deduct half of the amount.
When are Netflix subscription fees tax deductible?
You can work for yourself or claim Netflix subscriptions as a self-employed business expense if you operate a business that uses Netflix.
It must be a consistent aspect of your business operations, necessary to function, and limited to those uses. You are not allowed to use your company account for personal transactions. In the event that the IRS examines your return, you must show that the subscription complies with these standards.
Each subscription must be relevant to your business in order for the deduction to be made. If you had a TV in your office’s waiting area and broadcast nature documentaries to customers while they waited, for example, the subscription would be a cost.
Where to mention deductible subscriptions on Schedule C?
You can deduct your Netflix 1099 subscription as “other costs” on Schedule C of Form 1040. Schedule C can be used to determine your net profit, which you can then include as income on your Form 1040.
Subscriptions that cannot be claimed as a tax deduction:
- Before 2018, a subscription could still be written off even if it wasn’t purchased for a business. For instance, the cost of investing in journals and newsletters is tax deductible as a business expense.
- If you bought publications pertaining to your line of work while working as an employee but did not receive payment, you may be able to claim the amount as an unreimbursed employee expense.
- If you paid for publications to assist you in finding a job while you were looking for one, you might be able to write off the cost as a job-search expense.
- If you paid for a newspaper subscription as a pastime, the cost was deducted from the money you made from that endeavor.
These expenses can only be deducted as miscellaneous itemized deductions, together with your other itemized deductions, to the extent that they exceed 2% of your AGI.
Methods for deducting Netflix 1099s from taxes
Your accounting method will determine the window of time during which you can deduct an item. Accounting techniques, a set of rules, control the frequency and structure of reporting revenue and expenses.
Optional purchases
Costs must be both normal and essential in order to be considered business income. Your firm or profession will profit from and accept a required payment.
Even though it’s usual and needed, it’s possible that you won’t be allowed to write off an item in the year it was paid or incurred. It’s possible that the cost won’t ever be deducted at all.
Netflix 1099 deduction through additional and private sources
Consider a hotel as an example. Hotel proprietors are required to provide essentials like streaming, TV, and internet. Contrarily, the typical host only uses their streaming services when they have free time and does not regularly rent out their home. Can they still get their subscription canceled? The IRS has created two mechanisms to differentiate between business and personal expenses.
First Approach
Consider the scenario where a paid nanny or babysitter takes the kids to watch cartoons on their personal Netflix accounts. Then they might make use of this strategy (number of days spent working as a self-employed babysitter divided by days in the year) to partially cover the cost of their membership.
Second Approach
The quantity of rental space available is calculated as the total square footage of the home divided by 100.
Additionally, if you have a guest house or a private room that can be hired (i.e., they don’t keep an open house while they go on vacation), it’s the best method.
Make sure to determine whether you require any additional tax documents, such as documents 1065, Form 1040, 1099-MISC, and 1099-NEC.
Summary
Today, you can get a Netflix 1099 subscription for almost endless things. Although the costs may appear insignificant at first look, they can add up quickly. You might have this question, and a 1099 tax calculator might assist you with it. There seems to be no negative effects to working in the creative industry. The FlyFin app can assist you in choosing to deduct your Netflix subscription, which can lower your tax obligation.
