If you are in the United States any income you derive from your blog has to be reported to the IRS. If you don't report it you can be charged with tax evasion. So how can you offset some of the income? Well you can deduct expenses that you incur due to blogging. Did you register a domain name? That's a deduction. It may even be possible to deduct your expenses for your internet connection.
This also brings up the fact that if you are going to make purchases that are business related and you have substantial income this year then you should do it now. If you made little income, but expect to make more next year, you should hold off on purchases until the beginning of the year so that the deduction will offset next years income.
Bill of BaseBlogging interviews accountant Brian Borawski of TigerBlog who answers some questions on setting up your business, deductions and income.
BaseBlogging: What income do bloggers have to report?
Brian: Technically, anything they receive should be considered income for tax purposes, no matter how small. Whether it’s $10 or $10,000, the Internal Revenue Service (IRS) considers it income and it should be reported on your tax return.
BaseBlogging: What are the business structures that bloggers should consider?
Tipped by: ProBlogger