What you need to know
It's common to have subscriptions for everything from entertainment to essential services, each with a seemingly modest monthly fee. However, these costs can quickly accumulate, raising the question: "Are these subscriptions deductible on my business taxes?"
The answer isn't straightforward. According to IRS guidelines, to qualify as deductible, expenses must be both "ordinary and necessary" for your business operations.
Examples of Deductible Subscriptions
Entertainment Industry Professionals: For individuals in the movie industry, such as videographers, scriptwriters, or talent scouts, a Netflix subscription used to monitor new releases and industry trends can be considered an ordinary and necessary business expense.
Content Creators: A YouTuber who subscribes to the platform to research competitors or industry trends can deduct the cost as it directly relates to and is necessary for their business operations.
Health and Wellness Services: A traveling massage therapist who uses Spotify to play relaxing music during sessions can deduct the subscription because the music is integral to the service provided.
Mental Health Professionals: A mental coach or physiotherapist using meditation apps like Calm or Headspace during client sessions can deduct these as necessary tools for their practice.
Examples of Non-Deductible Subscriptions
General News and Finance Publications: Subscriptions to general newspapers and magazines such as The New York Times, Bloomberg, or Forbes are not typically deductible unless your profession requires constant engagement with financial markets or investment news, such as financial advisors or stock traders.
Personal Entertainment: Subscriptions to services like Netflix, YouTube, Disney+, ESPN, and Spotify are not deductible if used for personal enjoyment or as background noise while working. These expenses are considered personal unless they directly contribute to your job functions.
For any further inquiries or specific guidance related to your situation, please feel free to contact the Collective team at [email protected].
Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as financial or tax advice. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.