The best advice that a tax professional can give a blogger is to set up like a business and keep accurate records. Most bloggers post to the web because they are very interested in what they are doing and not looking to make money. With that being the case, the I.R.S. will likely try to classify your blogging as a hobby. If you're classified as a hobby then you can't deduct losses against your other income even though you have to pay taxes on positive hobby income.

Lets address the first issue of setting up an actual business. Just like any other business you should file with your local and state agencies. Forming an entity such as a LLC isn't necessary for blogging. That means that you should be able to make do with filing a DBA (doing business as) and operating as a Sole Proprietor. You need to open a separate bank account to deposit revenue and make payments for expenses such as hosting fees, magazines, books and other items used in research or any other truly related expenses you have. Clear a specific area in your home (an entire room isn't necessary) that will be used to conduct this activity.

The second part of the equation is record keeping. You must keep meticulous records of everything. The I.R.S. will allow you to deduct any expense that is a legitimate business expense, but you must prove it. So that means keeping receipts of research materials. Taking someone to lunch to interview them for your blog keep the receipt. Want to write off the mileage for that interview or meeting, keep a log. You want to deduct the business use of your computer? Log the amount of time used for blogging activities versus personal use. Want to deduct business calls? Detail your phone bill for business versus personal calls. You get the point. Take all legitimate business expenses, but make sure you can back them up.

The I.R.S. has a reputation of being mean, relentless and ruthless. While some who have dealt with them may feel this way, they just want to make sure you pay your fair share. Acting like a business and keeping good records will assure that,

Although I have ten years of tax experience, your situation may be unique. I strongly suggest contacting a tax professional to review your specific situation.