Could I get a tax write off for all my groceries if I started a "Youtube cooking channel"?

Factual Questions
1

Let’s say I was the tax accountant for a professional TV cooking show like Rachel Ray. All of the ingredients that she uses on camera to prepare the dish of the day are unambiguously considered work related expenses and could uncontroversially be written off as tax exempt, right?

Now, say I’m Joe and I created a YouTube cooking channel that saw the same kind of success, it doesn’t matter if it’s on TV or the internet, I form an LLC and I can apply the same tax rules, right?

Now say Joe already owns a one man plumbing business that is generating $100K a year in taxable income that is reported to the IRS. The next year, Joe decides to expand the business into Joe’s Plumbing and Instructional Cooking. Every night, he produces a video where he shows people how to cook whatever he’s eating that night and so Joe claims that the ingredients were bought as a necessary expense to create the video.

That year, he declares taxes where he generates $300K of revenue and $200K of business expenses from the plumbing side of his business and 15c of revenue and 10K of expenses from the instructional cooking side of his business (of course, to the IRS, things aren’t labeled so cleanly and everything is jumbled together), meaning he now has $90,000.15 of taxable income.

What is the IRS going to have to say about this? Joe claims influencer life is hard and any new business venture is going to require an initial investment before generating returns. Sure, all of his videos are sloppily put together and he spends no effort trying to market them but it’s not a crime to be incompetent at business, right?

What if Joe, instead of being a plumber, was already an existing profitable YouTube creator making Let’s Play videos and starts adding a section at the end of their 8 hour long Let’s Play videos that goes over how they made their dinner that day. Now, how is the IRS going to argue that these are not legitimate business expenses?

What other lines of content creation business could Joe expand into and still be OK with the IRS? As I understand it, you can’t review durable goods like televisions and expense the entire thing just because you reviewed it once, you can only claim the proportion of wear and tear done as a part of the review. But could he create a restaurant review channel and claim that the only reason he’s eating at a restaurant is for the purposes of content creation? Could he start reviewing airplane seats so the cost of a plane ticket would count as an expense?

The reason I ask is because I follow a few amateur YouTube cooking channels that seem to cook an excessive amount of food on camera, eg: They’ll teach people how to make a steak by cooking 4 giant 3 inch T-bones and then just take a dainty little bite out of one of them for the camera. All of the channels seem to be receiving legitimate income from their food content creation so they’re on the right side of the law on this but I wonder if the reason they are cooking that much food is because as soon as the food is shown on camera, it can be written off as a business expense? It made me wonder just how far you could push it and still be on the right side of the IRS?

2

I watched a series by the RV Odd Couple. They apparently didn’t realize that if they were using their RV to make videos for money the insurance company required different (commercial?) insurance, not the standard stuff people get. Had they wiped out their pricey 5th wheel, it wouldn’t have been covered. So if you have a kitchen fire…?

I personally know a woman who cuts hair in her home, here in Texas. She said she’s required to keep the place at 70F 24/7.

I’d be looking for those kinds of things. Yes, you may gain a write off here but there’s a complication that comes along with it.

3

From what I know if it, which is not much, you have to be able to justify that it’s a business, as opposed to a hobby.

4

If you expenses for groceries don’t at least match your income from Youtube the IRS will probably take notice.

5

Yes, see:

6

I asked a lawyer I happen to know about this (as YouTube is my main income now) - of course I live in the UK, where the rules may be subtly different, but I suspect many of the principles are the same…

His advice to me was: If you purchase something exclusively for use in your business, then you’re well in the clear for claiming it against tax - so a new camera; a new microphone; a licence for a video editing program; consumables for cleaning the camera lens - anything like that where there is no benefit outside of the business is fairly cut and dried.

Where I might run into trouble, is when something is not exclusively for business use; so sure, I opened a weird can of food on a video - that’s work, but I ate it for my lunch (some of which was off-camera) - and I would be eating lunch of some sort anyway, which I would pay for out of my own pocket under normal circumstances. I bought a pair of walking boots for some of my outdoor video stuff - but I wear them when I walk the dog, off camera too. I was advised not to try to offset these sorts of things.

7

In cases like that I’ve claimed percentages of the cost of those items (USA). I have a small side business as a photographer, so the equipment, software, repair, and consumables expenses you mention are very similar. As far as my computer however, I only use it for photography a small amount of time, but I still got a more powerful computer than I otherwise would have. So I think I claimed 20% of the purchase price as an expense to the business in the year I got it. That doesn’t sound like much, but it was still enough to wipe out any profit for that year, and doing it as a one-time claim was simpler and less risky than trying to depreciate small fractions of it over a period of several years.

All that said, yes, the main thing is that this venture has to show a profit from time to time, otherwise it’s not gonna fly. Maybe it will need to be considered a hobby for the first few years, unless you really hit the ground running and can show even a small profit. Becoming a full-time YouTuber takes time, and for most of the people I follow, they gradually transitioned it from a little side gig to their jobby job. So the amount of expenses that could possibly be written off to start with would be paltry and not worth the effort. After all, once your net profit is zero, it doesn’t benefit you to keep losing money beyond that.

I suspect someone like Adam Ragusea who cooks in his own kitchen and feeds his family some (but certainly not all) of the food he prepares for YouTube can compare his pre-YouTube food budget with his current one and claim the difference. Yes you have to factor in that the kids are growing up and maybe the family’s eating habits change for dietary or other reasons that may increase or decrease costs, but that’s much simpler than trying to account for every possible crossover between show food and family food.

8

No personal experience with this myself, but I had a freind in the real estate appraisal business. He had to keep detailed logs of when he drove to jobs in order to deduct his car expenses.

So he couldn’t just “write off” his personal car.

9

I think Adam Ragusea has explained that a great deal of the food he cooks goes directly to waste - it literally exists for the purpose of the video and little else (because he has to cook the same thing over and over until he figures out the method that works, and because he has to fit his cooking around the household, so often he’s cooking pork chops at breakfast time, etc).
He’s a decent guy, so obviously he’s not tremendously happy with all that waste, but I suspect he’s got a fairly good handle on what proportion of his cooking ingredients are exclusively for video.

10

Don’t ask the revenue service is logical. In Finland the taxmen have said that winnings in poker tournaments are taxable earnings, which implies that playing poker is a professional job. But trying to arrange a poker tournament in Finland is illegal because it falls under lotterytaxation as a game of chance and those are regulated. So is poker a game of chance where winnings are taxable as lottery wins which are not taxable in Finland if the tax has been already paid in the origin country or are they earnings that if you bring them to Finland you have to pay income taxes.

Go figure. Anyway the situation is that it is illegal to arrange a poker tournament in Finland unless you apply for lottery licence which is almost impossible to get and if you win in overland poker tournament and bring the money to Finland you must pay income tax.

Taxmen are not logical and will never be.

11

IANAA, but I once asked an accountant if I could deduct the cost of buying suits as a business expense: I bought them for work, since I’m required to wear one when I go to court as a lawyer.

The accountant said that didn’t qualify, since I could also wear the suits outside of work. It would be different if I bought a costume that could only be worn on the job.

I imagine that food ingredients would be the same way. If you can also use the stuff for personal use, I doubt that it qualifies as a business deduction. It’s one thing to have to buy industrial grade machinery for your restaurant kitchen, or bulk food items to supply your customers, but I’m guessing that the IRS wouldn’t accept a claim that a typical run to the grocery store - where you are buying the food that you are going to eat for the week - is deductible even if you are trying to monetize your eating habits.

12

But like I said previously, if there’s a significant difference between the normal pre-YouTube grocery bill and the full-time YouTuber grocery bill, then that difference would certainly be deductible when most of that food is being cooked and thrown out to test the recipes. Also, the time it takes to film can render it cold and useless, and it might not even be mealtime. That’s why in my personal example I only claimed 20% of my computer’s purchase price towards my photo business, because most of the use is not for business, but some most definitely is.

Apparently business attire/uniforms are specifically addressed in the US tax code, so they’re a bit of an odd case. Those expenses are only deductible if the clothes are “required by the employer, and it is unsuitable for ‘everyday wear.’” I assume that was implemented because otherwise people would claim nearly their entire wardrobe as a business expense. It does seem unfair if you need to buy multiple high-end tailored suits that you wouldn’t otherwise, but fairness isn’t the objective anyhow.

13

When I was working freelance in Japan, we had similar restrictions about what could be deducted, although they tent to now be as strict as the IRS.

You can always claim things, but surviving as audit would be different. Trying to pass off normal groceries would certainly not work because the list would be wrong. If you had a list of your shows and the ingredients used for each and the dates bought, then it would be ok, as long as you passed the nit a hobby test.

14

A lot if this depends on what you and your accountant think you can justify. For my job I need to stay on top of the craft beer, wine and spirits market so when I went to the liquor store last weekend I had to split my purchase. I bought two cases of beer and 6 bottles of wine for personal use and the separately I had them ring up a $500 bottle of whiskey I’d been hunting for. The whiskey was a business expense. I’ve shared that bottle of whiskey with an employee (and his family) as well as two documentary producers that I’m working on developing a TV show with so it’s been used for business purposes but it’s also been my primary drinking whiskey for the last two weeks.

I don’t have any problem justifying that liquor purchase slotting in to my R&D budget and more than likely I’ll buy two more bottles that will be split between market budget and professional development. The professional development bottle will get mailed to an employee so that he can understand what’s going on with that type of liquor and the market bottle will be shared with more people as we’re trying to get the TV show off the ground. I will drink probably half of the whiskey in two of those bottles but they are clearly a business expense.

To go to the original question. I’d probably write off the food from the cooking show and it wouldn’t matter to me if I was throwing it in the garbage, giving it to the crew or feeding myself with the wastage. The trick is you’ll need to be a real business instead of a hobby so at a minimum you’d want a business plan to show how you’ll get to profitability. My business is looking at starting a YouTube channel but the thought of producing 3 videos per day to justify my food purchases seems like the pain is much higher than the reward 1 video per week is honestly overwhelming.

15

I get that it probably wouldn’t work if you started if off as its own independent business as you would have to show income before you could have any taxes to write off. That’s why I established in my hypothetical that the person already has an extant profitable business.

Back when people had to get onto tv to have instructional cooking shows, it was much easier to clearly separate out what were businesses and hobbies but now that any rando can just start uploading videos to YouTube, it’s much harder to tell. And quality of videos has no real linear correlation to success anymore. I could very easily claim I’m just trying to copy ReviewOfTheWeek in my video style, he started off reviewing fast food in his car on a crappy cellphone camera and now has 2.5M subscribers, whos to say my sloppily uploaded videos of me cooking dinner couldn’t have the same?

16

I think Canada has pretty much the same tax rules - the materials have to be used for the business; the business has to show “reasonable expectation of turning a profit” (I.e. convince the taxman you will); must eventually turn a profit (I’ve heard “within 5 years” kicked around); and the deductions can only be applied against the revenue from that business - you can’t write off food against you plumbing profits.

I mean, food can be a business expense - when I traveled on business way back when, the company reimbursed me for my meals (and other expenses, within reason) and that was a legit business expense for them. Same with overtime meals ordered for employees under the union contract. IIRC there were arcane rules about the GST (VAT) refund claimable on meals.

If they think you are playing games, just using a fake business to put food on your table, then they may deny your claim and you have to convince a tax court that you meet the criteria. Should you fail, you could owe double as a penalty and back interest.

If you can think of a dodge, so can the taxman. They aren’t stupid, they’ve dealt with people smarter than you and I and they refine the tax rules to make sure the obvious loopholes are covered.

(Best tax dodge I’ve seen today is that Tony Blair(?) apparently bought a house in Britain by instead buying the offshore company that owned it, thus avoiding a tax on real estate transfers. But then, sooner or later the tax people will figure out a way to stop that one…)

17

Why? Is she required to keep pet reptiles, too?

18

Lockdown in the UK has created some interesting tax problems for people who have been working from home.

It has always been the case that a home worker can offset some of the household costs against tax. If you convert the dining room to an office, it’s not hard to calculate what percentage of the house it is and apply that to all the regular charges (Rates, energy, insurance, maintenance etc).

The problem comes when your home office is the kitchen table that gets cleared off at mealtimes. HMRC are not too worried about modest claims as they don’t have the staff to investigate all claims, but if you attempt to offset 30% of your bills then an interview may ensue.

19

I think it’s just that audiovisual entertainment has become an open trade, like, say, carpentry - any fool with a hammer and saw can claim to be a carpenter, and can bash together some bits of wood for you, and treat it as a self-employed business - it’s been like that pretty much forever, now it’s like that for video too.

20

We haven’t hung out in years but I messaged her on Facebook to find out. She said it was probably mandated because salon equipment generates a lot of heat. She thinks they dropped the requirement but she still does it.