My friend Greg runs a blog. Not a business blog. Not a monetized content empire. Just a blog. He writes about woodworking, posts maybe twice a month, and last year he made $4,200 from affiliate links and a handful of sponsored posts.
He also did not file taxes on any of it.
"It is a hobby," he told me over a $6.20 espresso at a place near his workshop that I am fairly certain is a money laundering front. (No one drinks espresso that slowly unless they are thinking about something illegal, or their taxes.)
Turns out, the IRS disagrees.
The Small Web Is Bigger Than Anyone Realizes
A post on Hacker News this week — "The small web is bigger than you might think" — made the front page with over 300 points. The thesis: personal websites, indie blogs, and small community projects collectively represent a massive portion of the internet that we tend to overlook.
But here is the part nobody is talking about: a lot of these small web creators are making money. Not life-changing money. Not quit-your-day-job money. But enough that the IRS has started paying attention.
And if you are one of those creators — running a blog, a newsletter, a niche site with affiliate links — the tax rules changed in ways that could cost you real money if you are not careful.
Disclaimer: This article is for educational purposes only and does not constitute tax advice. Consult a qualified CPA or tax professional for guidance specific to your situation. Tax laws vary by state and individual circumstances. Sources include the IRS, Taxpayer Advocate Service, and AICPA.
Running a small web business and need help with your digital presence? Wardigi helps creators and small businesses build optimized websites that generate real income.
The $600 Rule That Changed Everything
Remember when the 1099-K threshold was $20,000? Those days are gone. Starting in 2025, payment platforms like PayPal, Stripe, and even Ko-fi are required to send a 1099-K — and with increased enforcement against financial fraud, the reporting infrastructure is tighter than ever for transactions exceeding $2,500 — and that drops to $600 in 2026.
That means if you earned more than $600 from any single payment processor, the IRS already knows about it. The days of flying under the radar with your personal blog income are mathematically over.
My colleague Sandra — she does financial planning for creative professionals — told me she has seen a 340% increase in clients who describe themselves as "just a blogger" in the last year alone. "They come in thinking they owe nothing," she said during a 28-minute call that I could tell she wished was an email. "Then I show them the 1099-K their payment processor already filed, and suddenly they are very interested in deductions."
Hobby vs. Business: The IRS Does Not Care What You Call It
This is where most small web creators get tripped up. You think of your blog as a hobby. The IRS thinks of it as a business if you are trying to make a profit.
The distinction matters enormously:
- Hobby income: Reported as "other income" on Schedule 1. You pay taxes on it, but you cannot deduct expenses against it (thanks to the Tax Cuts and Jobs Act, which eliminated the hobby expense deduction through 2025).
- Business income: Reported on Schedule C. You pay taxes AND self-employment tax (15.3%), but you can deduct all ordinary and necessary business expenses — hosting, domain names, equipment, home office, etc.
The IRS uses nine factors to determine if your activity is a business, but the big ones are: Do you depend on the income? Do you put in regular effort? Have you made a profit in at least 3 of the last 5 years?
Greg, with his $4,200 in affiliate income and his twice-monthly posting schedule? The IRS would almost certainly call that a business. And he owes self-employment tax on every dollar.
The Deductions You Are Probably Missing
Here is the good news: if the IRS considers your blog a business (and at $600+, they probably will), you can deduct a lot.
Hosting and Domain Costs
Every dollar you spend on web hosting, domain registration, SSL certificates, CDN services — fully deductible. Greg pays $120/year for his hosting. That is $120 he should be deducting and is not.
Home Office Deduction
If you write from home (who does not?), you can claim the simplified home office deduction: $5 per square foot, up to 300 square feet. That is up to $1,500 off your taxable income. The room needs to be used "regularly and exclusively" for business, but the IRS has softened on this for content creators.
Equipment and Software
Laptop, camera, microphone, editing software, stock photo subscriptions — if you use it to create content that generates income, it is deductible. Under Section 179, you can often deduct the full cost in the year of purchase rather than depreciating it.
Internet and Phone
The business-use percentage of your internet and phone bills. If you use your internet 40% for blog work, 40% of that bill is deductible. Keep a log. The IRS loves logs.
Education and Training
That SEO course you bought? The writing workshop? Conference tickets? All deductible if they directly relate to your content business. Sandra told me one of her clients deducted a $340 photography course and a $89 WordPress security plugin. Both legitimate.
Estimated Quarterly Taxes: The Trap Nobody Warns You About
Here is where it gets ugly. If you owe more than $1,000 in taxes for the year, the IRS expects you to pay estimated quarterly taxes. Not at filing time. During the year. The deadlines are April 15, June 15, September 15, and January 15.
Miss them, and you get hit with an underpayment penalty. It is not devastating — currently around 7% — but it adds up. Greg owed about $890 in taxes on his $4,200 blog income. Because he did not pay quarterly, he also owed a $47 penalty. "Forty-seven dollars," he said, staring at his coffee like it had personally betrayed him.
For 2026, the IRS estimates quarterly payments using Form 1040-ES. If your blog income is unpredictable (and whose is not?), use the annualized installment method to avoid overpaying early in the year.
State Taxes: The Layer Nobody Remembers
Federal is just the beginning. Depending on where you live, your state wants a piece too. And some states are more aggressive about it than others:
- California: Minimum franchise tax of $800 if you form an LLC. Even if you made nothing.
- New York: State + city tax can add 12%+ on top of federal.
- Texas, Florida, Washington: No state income tax. But Texas has a gross receipts tax that can hit businesses over $2.47M (not likely for your blog, but worth knowing).
Check your state's Department of Revenue website. Or better yet, ask a CPA who knows your state. I spent 45 minutes on the California FTB website last Tuesday trying to figure out if newsletter income counted as "sourced in California" if your subscribers are nationwide. I still do not have a definitive answer.
The Simple System That Actually Works
After watching Greg's tax meltdown unfold in real time — there was a moment at 9:30 PM on a Thursday where he texted me a photo of a TurboTax error screen with just the word "why" — I put together a system for small web creators that takes about 20 minutes a month:
- Separate bank account. Open a free business checking account. All blog income goes in, all blog expenses come out. This alone solves 80% of tax headaches.
- Monthly expense log. Spend 10 minutes on the last day of each month categorizing expenses. Google Sheets works fine. You do not need QuickBooks unless you want to.
- Quarterly estimate. Set aside 25-30% of net profit each quarter. Transfer it to a savings account you do not touch. Pay the IRS on time.
- Annual filing. With a clean bank account and expense log, Schedule C takes 20 minutes. Seriously. I timed it.
When to Actually Hire a CPA
If your blog income is under $5,000 and you have no complicated deductions (and you are not dealing with prediction market winnings or other exotic income streams), you can probably handle this with TurboTax Self-Employed ($119) or FreeTaxUSA ($0 federal, $14.99 state).
If you are making $10,000+ or you have multiple income streams, a CPA is worth every penny. Expect to pay $300-500 for a straightforward Schedule C filing. My CPA charges $380 and she found $1,200 in deductions I missed last year. That is a 3x return on investment, which is better than any affiliate commission I have ever earned.
The IRS provides a directory of credentialed tax preparers. Use it. Do not hire your cousin who "did a tax course online."
The Bottom Line
The small web is not so small anymore. And neither is the tax liability that comes with it. If you are making any amount of money from your personal website — affiliate links, sponsored posts, digital products, Ko-fi tips, Patreon subs — you owe taxes on it. Full stop.
Greg finally filed an amended return last week. He owed $890 plus the penalty, but he also claimed $620 in deductions he did not know about. Net damage: about $317. "I could have avoided all of this," he said, "if someone had told me a woodworking blog counted as a business."
Consider yourself told. And if your small web project is growing beyond a hobby, understanding how economic data shapes tax policy can help you plan smarter.
This article is for informational purposes only. For personalized tax advice, consult a licensed CPA or enrolled agent. Key sources: IRS.gov, Taxpayer Advocate Service, AICPA.
Running a small web business and need help with your digital presence? Wardigi helps creators and small businesses build optimized websites that generate real income.
