Depending on the type of subscription and how it relates to your work or business, you may be able to write off that expense on your tax return.
In today’s world, there are subscriptions for everything. Meals, music, radio, TV, magazines, clothing, and more can all be delivered to your door for a small monthly fee. In this article, we explore the different kinds of subscriptions that may qualify for a deduction, and how you should handle it when you file your taxes.
Tax deductible subscriptions
If you own a business or are self-employed, you may be able to deduct the following types of subscriptions as a business expense:
Each subscription must be directly related to your business to be claimed as a deduction. You can’t deduct a subscription if you’re not self-employed or a business owner.
Note: In addition to subscription services, you likely have other recurring business expenses paid on a monthly, quarterly, or yearly basis. Recurring charges such as cell phone plans, electricity, internet, and other utilities may qualify as deductible business expenses. If these expenses are used for both business and personal purposes, it’s important to calculate the percentage of business use each month. The IRS permits you to deduct this business-related amount as an expense, which can help reduce your taxable income.
Where do I deduct subscriptions on my tax return?
Deduct your business expenses on Form 1040, Schedule C under “other expenses.”
It’s essential to keep receipts for any business expenses you plan to claim on your tax return. Make sure to store copies of your receipts, note the date of the expense, and include details on how each expense relates to your business. This practice will help ensure you’re prepared if you need to provide additional information about your expenses later.
How to deduct prepaid subscriptions
If you paid for a subscription for more than one year in advance, prorate the cost for each year to deduct the cost of a single year on your tax return. Determine how much on average you pay for the subscription on a monthly basis and multiply it by 12.
Are streaming services tax deductible?
It depends. According to the IRS, the subscription must be “ordinary and necessary” for your business and only used for your business. You can’t use your business account for your personal use. If the IRS audits your return, you must be able to prove that the subscription meets these requirements.
If you own a business and use a video or audio streaming service to entertain your guests, you may deduct it. For example:
- If you are a dentist and have a waiting room that you play music in, you can deduct the cost of the streaming service as a business expense.
- If you are an aspiring videographer with a YouTube subscription for business use, you may be able to deduct the service. However, as mentioned above, if the subscription is used for both personal and business purposes, you can’t deduct it.
Tip: If you are making money as a content creator and paying for a subscription to a platform like Discord, understanding how to pay taxes on the profit is essential. The fees you pay to utilize your platform or access additional features may also be considered deductible.
Are dues tax deductible?
Dues are what you pay to stay as a member of a professional or trade organization, while subscriptions usually give you access to content or services like magazines, journals, or software. If those dues are tied to your business, they’re generally tax deductible. On the other hand, dues for social or recreational clubs, like country or athletic clubs, don’t qualify. Common examples of deductible dues include a chamber of commerce membership, an industry-specific trade association, or a professional networking group.
Is Amazon Prime tax deductible?
If you’re self-employed and you order supplies from Amazon that are necessary and ordinary for your business, and you strictly use the membership for those professional items, you can deduct the service on your return.
Can I deduct clothing subscriptions like Stitch Fix or Trunk Club?
These types of services are probably not deductible. However, the IRS does have guidelines for what clothes can be deducted. If your job requires you to wear a uniform, and that uniform is not suitable for everyday wear, you may be able to deduct the cost of that clothing as a business expense.
Can I deduct meal kits (Blue Apron, Hello Fresh, etc.) on my taxes?
These types of subscriptions must also be considered “ordinary and necessary” for your business to be deducted on your return as a business owner. Your meal delivery service is probably not deductible unless you use all the meals in the box for business functions.
Here’s how the meal deduction works: an ordinary meal like lunch or dinner is not deductible (unless you are on a work trip). On the other hand, if you’re having a meal with a prospective client to discuss business, the expense could be partially deductible.
What dues and subscriptions are not deductible?
Dues and subscriptions for personal use aren’t deductible. This includes social or recreational club membership like gyms or country clubs, and subscriptions for entertainment such as streaming services or lifestyle magazines. Only expenses that are clearly tied to your business qualify.
