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Netflix and Chill: Learn About the Tax Waivers on Your Netflix Account

By: Author Jeff Campbell

Posted on Last updated:

Categories Guest Posts

Using Netflix for work comes with a lot of benefits along with the fun! And we hope you will love the news we will share. You use your Netflix subscription outside of work, but you get a waiver for business use.

As a result, you’ll need to be able to distinguish the difference between business-related and personal Netflix 1099 usage. For example, if you determine that you use these items about half of the time for business and the other half for personal reasons, deduct only half of the cost of the subscription or item.

When can you deduct the cost of your Netflix subscription?

You can deduct the following subscriptions as a business expense or work for yourself if you own a business.

  • It must be routine and necessary for your business, and it must be used solely for that purpose. You may not use your business account for personal purposes. If the IRS audits your return, you must show that the subscription meets these criteria.
  • Each subscription must be directly related to your business to be deducted. To qualify as a write-off, you must, however, serve a clear purpose in your line of work. For example, if you have a TV in your office waiting room and watch nature documentaries while your client waits, the subscription is an example of an expense.

Where should subscriptions be deducted?

1040 Form Schedule C allows you to deduct your Netflix 1099 subscription as “other expenses.” Schedule C will help you calculate your net profit to include it on your form 1040 as income. Your net profit is equal to your gross income minus any tax credits or deductions that you are entitled to.

Non-tax-deductible subscriptions:

  • Subscriptions could be deducted before 2018, even if they were not purchased for a business. As an example:
  • Investment newsletters and magazines are tax-deductible as a business expense.
  • If you worked as an employee and paid for publications applicable to your job but were not reimbursed, you could deduct the cost as an unreimbursed employee expense.
  • If you were looking for work and paid for job-search publications, you could deduct the cost as a job-search expense.
  • If you have a hobby and subscribed to a publication, the cost was deducted from your earnings from the pursuit.

These expenses are only deductible as miscellaneous itemized deductions, which meant that they were only deductible if and to the extent that they exceeded 2% of your adjusted gross income, along with your other miscellaneous itemized deductions.

Methods to get Netflix 1099 tax deduction

Your accounting method determines the timing of when you can deduct an expense. An accounting method is a set of rules that determines when and how income and expenses are reported. The two primary methods are the cash method and the accrual method. Payment must be visible in whatever method you choose.

  • The cash method. Business expenses are generally deducted in the tax year in which they are incurred under the cash method of accounting.
  • The accumulation method. When using the accrual method, you generally deduct business expenses when both of the following conditions are met.

What can be deducted

A business expense must be both ordinary and required to be deductible. In your industry, a standard fee is typical and accepted. A necessary payment is beneficial and appropriate for your profession or business. A cost does not have to be unavoidable to be considered necessary.

Even if an expense is ordinary and necessary, you may not be able to deduct it in the year it was paid or incurred. In some cases, you may be unable to deduct the cost at all. As a result, it is critical to distinguish between average business expenses and those that include the following.

Personal and partial methods for Netflix 1099 deduction

Consider a hotel scenario. A hotel owner must provide essential internet, television, and streaming services. On the other hand, the average host does not rent out their home all year and most likely uses their streaming accounts in their spare time. Is it still possible for them to have their subscription deducted? The IRS is aware of the problem and has devised two methods for distinguishing between business and personal expenses.

Method I

Subtract the total number of rented days from the total number of days in the year. This method is quite simple. Divide the number of days rented by 365 (50 rental days divided by 365 = 14% business use). Anyone who uses streaming services as part of their job or business may be eligible. For example, suppose a contract babysitter/nanny watches cartoons with the kids on their personal Netflix account. In that case, they could use this method to deduct some of their subscription costs (number of days spent babysitting divided by days in the year).

Method II

The available rental space is divided by the home’s total square footage. If you are familiar with the home office deduction calculation, this method is best suited to write off your Netflix account.

And if you have a guest house or a separate room available for rent, this is the best approach (that is, they do not simply open their home when they go on vacation).

Summary

In today’s world, Netflix 1099 subscriptions are available for almost everything. You can have meals, music, radio, television, magazines, clothing, and other items delivered to your door for a small monthly fee. The charges may appear insignificant initially, but they can quickly add up. You may be wondering, “Can I deduct any of these services on my tax return?” What’s the harm if you work in the creative industry? When you have the option to write off your Netflix account, you can save money on taxes.

 

Jeff Campbell
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