With over 130 million users, Netflix is the world’s most beloved streaming site (you never forget your first). But with great use, come great tax questions: can you write-off your Netflix subscription?
In order for something to count as a write-off, it has to serve a clear purpose in your line of work. For instance, if you have a TV in your office waiting room and stream nature documentaries while your clients wait (big shout-out to Sir David Attenborough here), the subscription is a totally legitimate write-off.
Things become a bit more complicated when you also use your Netflix subscription outside of work.
Consider an Airbnb host. If a host wants to be competitive on the market, they need to provide basic amenities like internet, a tv, and streaming services (and showers and stuff too, obviously). But your average host doesn’t rent out their home year-round, and they probably use their streaming accounts on their personal time. Can they still deduct their subscription? The IRS understands this challenge and has consequently outlined two methods of parsing out the business portion from the personal expense.
Method 1 - the total number of days rented divided by the number of days in the year. This method is fairly straightforward. If your Airbnb listing was rented for 50 days, divide that by 365 (50 rental days ÷ 365 days = 14% business use). Use the business percentage to figure out how much of your streaming subscription is a write off.
This option is not limited to Airbnb hosts either. Anyone who uses streaming services in their trade or business might be eligible. If a contract babysitter/nanny uses their personal Netflix to let the kids watch cartoons, they could use this method to write-off some of their subscription expense (number of days spent babysitting divided by days in the year).
Method 2 - square footage of space available for rent divided by total square footage of home. For those of you who are familiar with how the home-office deduction is calculated, you can basically skim-read from here (ya cool kids 😎!)
This option is best-suited for people who have a guest house or separate room available for rent (in other words, they don’t just open their home when they leave on vacation). Let’s assume the spare bedroom is 200 sq ft, and the home is 2,000 sqft. The business portion would be 10%.
IMPORTANT NOTE: in order to use this method, the space must be reserved EXCLUSIVELY for your business (see IRS Publication 535). If your spare bedroom doubles as a guest room for visiting relatives, use the first method instead.
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