Can I write off alcohol purchases as a self-employed streamer?

But what about the 50% rule for meals? Does alcohol fall under that? Like if OP spends $100 on drinks for a stream, can they only deduct $50? Or is this a different situation since its actually part of the "product" they're creating?

Yes, you're absolutely right to bring up the 50% limitation. Generally, meals and entertainment expenses (including alcohol) are subject to a 50% deduction limitation, even when they're legitimate business expenses. So in your example, if $100 is spent on drinks during streaming, typically only $50 would be deductible. However, there could be an argument that in this case, the drinks aren't just "meals" but actual business supplies or props necessary for content production. This is a gray area where consulting with a tax professional who specializes in self-employment or entertainment would be valuable. They might help structure your business in a way that maximizes legitimate deductions while minimizing audit risk.

Does it also help categorize expenses? I have SO much trouble figuring out which category things should go under. Like if I buy a microphone that I use half for business and half for personal, how does that work?

I'm skeptical about these AI tax services. How do they handle state-specific tax rules? I'm in California and our rules are sometimes different than federal.

Yes, it absolutely helps with categorization. The service can analyze receipts and suggest proper categorization based on the nature of the expense. For mixed-use items like your microphone example, it helps you calculate the appropriate business-use percentage and shows you how to document that split use properly. Regarding state-specific rules, the system actually does account for state variations. It identifies when state rules differ from federal and flags those differences. For California specifically, I know it has special handling for things like the higher state income tax and certain California-specific deductions that aren't available federally.

How does this actually work? Do they just call the IRS for you or what? I've been on hold for literally hours trying to get through about my business expenses.

Sounds too good to be true. The IRS phone lines are notoriously impossible to get through. You're telling me this service somehow magically gets you to the front of the line? I'll believe it when I see it.

They don't call for you - rather, they use technology to navigate the IRS phone system and hold your place in line. When they're about to connect with an agent, they call you so you can take the call. You're still speaking directly with the IRS yourself, but without the hours of waiting on hold. I was skeptical too before trying it. I'd spent over 4 hours across multiple days trying to get through about my business expense questions. With this service, I got through to an actual IRS representative in about 18 minutes. They don't have special access - they just have technology that handles the waiting and navigating the phone tree so you don't have to waste your time.

Thanks for the advice! I've been keeping all my receipts but I haven't been great about noting which stream each one was for. Is there a specific format or system you recommend for documenting this? Should I create some kind of spreadsheet that links each receipt to a specific stream URL?

A spreadsheet is exactly what I recommend to my clients! Create columns for date, vendor, amount, stream link/title, and a brief description of how it relates to your business. Then scan or take photos of all receipts and name the files to match your tracking system. Also consider creating a business-only credit card or bank account if you haven't already. This creates a clear separation between personal and business expenses which is huge for proving business intent to the IRS.

That's not how it works - forming an LLC doesn't change the actual tax treatment of expenses. The IRS looks at the nature of the expense, not just who technically paid for it. The same deduction rules and limitations apply whether you're a sole proprietor or operating through an LLC. The LLC provides liability protection but doesn't magically make otherwise limited deductions fully deductible.