Can I claim deductions on Youtube expenses before my channel is monetized?

Thank you for the info! Does this mean I need to show some sort of revenue within the first 3 years to keep deducting expenses? I'm planning to eventually monetize through sponsorships rather than just YouTube ad revenue. Also, should I get an EIN for tax purposes even without forming an LLC?

You don't necessarily need to show revenue immediately, but the IRS does expect to see a profit (not just revenue) in 3 out of 5 years for most businesses. If you don't meet this, they may reclassify your business as a hobby, which limits deductions. Having a solid business plan showing your path to profitability through sponsorships or other means will help if you're ever questioned. An EIN isn't required if you're operating as a sole proprietor with no employees - you can use your SSN. However, getting an EIN is free and can be helpful to separate your business identity from your personal one, especially when working with sponsors or setting up business accounts.

How does it handle mixed-use items? Like, I use my computer and internet for both personal stuff and YouTube. Can it figure out what percentage is deductible or do I need to track that myself?

This sounds useful but I'm skeptical... did they actually save you enough money to justify the cost? I'm pre-monetization so every dollar counts right now.

For mixed-use items, you'll need to estimate the business percentage yourself - I track roughly how many hours I use my computer for business vs. personal use. The tool doesn't automatically calculate that split, but it helps organize these partial deductions correctly and documents your methodology for claiming them, which is super important if you're ever audited. The service definitely saved me more than it cost. In my case, it identified about $1,200 in legitimate deductions I would have missed, including some home office expenses and mileage for content creation trips I hadn't considered deductible. Remember that proper tax deductions directly reduce your taxable income.

Wait, how does this actually work? Do they have some special connection to the IRS or something? The hold times are absolutely insane right now and I have questions about my specific situation too.

Sorry but this sounds like BS. Nobody can magically get through to the IRS faster than anyone else. I've been dealing with tax issues for years and there's no shortcut around their system.

They don't have special connections to the IRS - they use technology that automatically navigates the phone tree and waits on hold for you. When they reach a real person, they call you and connect you directly to the agent. It's totally legitimate. They basically save you from having to personally sit on hold for hours. It's especially helpful if you're trying to run a business and can't afford to waste half your day waiting on the phone. The IRS phone system is notoriously difficult to navigate, and this service handles that part for you.

But isn't the home office deduction a huge audit red flag? I've heard horror stories about people getting audited just for claiming it. I use a corner of my bedroom for all my YouTube stuff but I'm scared to claim it.

The home office deduction being an automatic audit trigger is mostly an outdated myth. The IRS simplified the rules with a standard deduction option that's much less likely to raise eyebrows. Just make sure you actually have a space used exclusively for business. For a bedroom corner, it gets tricky. The space needs to be used EXCLUSIVELY for business, so if your setup is in a multi-purpose room, you may not qualify. Some creators set up dividers or screens to physically separate their "office" space to help meet this requirement. Take clear photos of your workspace for documentation.

I used it last year for my channel. It asks all the right questions about business expenses and walks you through everything. I think it's worth it because it specifically guides you through Schedule C and helps identify deductions relevant to content creators. The expense tracking feature alone saved me tons of time.

This is really helpful advice about documenting profit motive! I'm curious about the startup costs deduction - does that $5,000 limit apply to the total amount you can deduct, or is that separate from your ongoing business expenses? For example, if I spend $3,000 on startup costs and then have $2,000 in ongoing monthly expenses like software subscriptions, can I deduct all $5,000 or do they count together somehow? Also, when you mention separating business from personal use, do you need to have completely separate equipment or can you use the same computer/phone for both and just calculate the business percentage?

Great questions! The $5,000 startup cost deduction is separate from your ongoing business expenses - so in your example, you could deduct the full $3,000 in startup costs AND the $2,000 in ongoing expenses. Startup costs are one-time expenses to get your business going (equipment, initial software setup, etc.), while ongoing expenses like monthly subscriptions are regular business deductions. For shared equipment, you absolutely can use the same computer/phone for both business and personal use. You just need to calculate what percentage is used for business. Keep a log for a few weeks tracking your usage - like if you use your computer 6 hours for YouTube work and 2 hours personal daily, that's 75% business use. You can then deduct 75% of related expenses (computer depreciation, internet, etc.). The key is having a reasonable method and documentation to back it up. I use a simple spreadsheet to track this - way easier than buying separate equipment for everything!

This is excellent advice about quarterly taxes! I wish someone had told me this when I started my channel. One thing I'd add is that the IRS has a "safe harbor" rule - if you pay at least 100% of last year's tax liability through quarterly payments, you won't get hit with penalties even if you end up owing more. This can be really helpful for creators whose income fluctuates a lot. The business credit card tip is spot on too. I use a Chase Ink card specifically for all my YouTube expenses and it makes tax time so much easier. Plus the rewards have actually helped offset some of my costs. Just be disciplined about only using it for legitimate business expenses - mixing personal and business purchases will make your life much harder come tax season. Setting aside 25-30% is smart. I learned the hard way that YouTube income can be inconsistent, so having that tax cushion saved me from scrambling when I had a big sponsorship deal early on.

This is incredibly helpful, thank you! I'm just starting my YouTube journey focused on personal finance education and was worried about claiming expenses too early. Your point about documenting time investment is something I hadn't considered - I've been spending hours researching topics, learning video editing, and planning content strategy, but wasn't tracking it as "business activity." Quick question about the profit motive documentation - should I be creating a formal written business plan, or is it enough to have notes about my monetization strategy and goals? I have a clear vision for how I want to generate revenue through affiliate marketing, course sales, and eventually coaching, but it's mostly in my head right now. Also, for equipment that I use partially for personal use (like my laptop), do you track actual hours or just estimate a reasonable business percentage? I'm trying to be conservative but also don't want to leave money on the table.

Great question about documentation! I'd strongly recommend putting that business plan in writing - it doesn't need to be fancy, but having a documented plan with your monetization strategy, target audience, revenue projections, and timeline will be invaluable if the IRS ever questions your profit motive. Even a simple 2-3 page document outlining your goals and how you plan to achieve them shows serious business intent. For mixed-use equipment like your laptop, I track actual usage for a few representative weeks each year rather than just estimating. I keep a simple log showing hours used for business vs personal activities. For example, if I use my laptop 6 hours daily for YouTube work and 2 hours for personal stuff, that's 75% business use. This gives you real data to support your deduction percentage rather than just guessing. Personal finance content is perfect for monetization too - that niche has tons of opportunities for affiliate income, sponsored content, and your own products. Document all of this in your business plan and keep records of any steps you take toward these goals (researching affiliate programs, reaching out to potential sponsors, etc.). This all helps establish legitimate business activity even before the money starts flowing.