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Domain name purchase = tax deduction?

Discussion in 'Business & Tax Advice' started by Roja89, Oct 9, 2015.

  1. Roja89

    Roja89 Registered Member

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    Ive read that buying a domain name is tax deductible if you show that you did it for your business even if it comes from personal funds since its a setup cost.
    Does anyone have any experience with this? If I can take it off my personal taxes then setting up a cheap business is no problem and it will make a big difference on if I want to spend a bigger amount on a domain.
    Is there a limit? right now I use cheap domains of like $10 max but it could make a big difference if i can go up to say $1000
     
  2. Capo Dei Capi

    Capo Dei Capi BANNED BANNED

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    Yes its a tax deduction, but you spend more getting a domain than what you save in taxes. Deductions just lower your income, not the tax amount directly. If you were in a high tax bracket such as 40%, the domain you would still lose $6 over the tax savings of $4 on a $10 domain. So just don't go and try to aim for deductions unless its actually going to benefit you.
     
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    Last edited: Oct 9, 2015
  3. davids355

    davids355 Jr. VIP Jr. VIP

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    Yes it's deductible. It just reduces the amount of tax you will pay at the end of the year. If you get near to higher tax bracket then you should hire an accountant anyway, to ensure that everything is done in the most efficient way possible.
     
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  4. hekke

    hekke Senior Member

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    This. You will most likely make more from having an accountant than it actually costs! :)
     
  5. ookami007

    ookami007 Regular Member

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    NEARLY anything you spend money on for your business is a tax deduction... domain name, hosting, proxies, ads, seo services, etc. As long as you can prove you spent money on it and have a receipt in case you are audited, you should be able to write it off.

    But when it doubt, ask your accountant.
     
  6. maxxwilliams

    maxxwilliams Junior Member

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    Yep, some great answers here. Just a pointer, if you end up making good money online, make sure to create an LLC, (S or C-corp) so you deduct more income, such as self employment tax, that you wouldn't be able to avoid if you were self employed.
     
  7. Sythix

    Sythix Senior Member

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    Correct me if I'm wrong but wouldn't you have to actually open a business license (which costs money) so you wouldn't be saving much, actually you would end up losing money as opposed to buying a domain and not caring about a few pennies in tax reduction. The only time I could see this useful is if you buy a ridiculously high priced premium domain.
     
  8. Roja89

    Roja89 Registered Member

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    thanks for all the answers. i had it mixed up about how its "deducted"
    I guess I just need to decide how far I want to go and how much I think I will do well. From what I can see i dont have to open up a business to get the tax deduction yet. I can open one up later and use what i spend so at least for the bigger purchase im going to do it in the new year. if i start making money then I can always open up the company later in the year and use the tax break since its same year.

    thanks a lot
     
  9. BassTrackerBoats

    BassTrackerBoats Super Moderator Staff Member Moderator

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    Roja89, what country are you in?