Can you deduct Google Ads for an affiliate website?

Yes — in general, Google Ads can be deductible if your affiliate website is being run as a real trade or business and the ads are paid to generate business income.

For U.S. tax purposes, advertising is usually an ordinary and necessary business expense when it is used to promote an income-producing activity, such as an affiliate site. The key issue is whether you’re operating with a genuine profit motive and in a businesslike way.

A few important points:

1. Profit motive matters: The IRS looks at the facts and circumstances, including whether you operate like a business and whether you’re trying to make a profit. There is no automatic rule that makes the deduction allowed or disallowed based on one factor alone.
2. Keep records: Save Google Ads invoices, payment records, and documentation showing how the ads relate to your affiliate site.
3. Report it correctly: If you’re a sole proprietor or single-member LLC taxed as a sole proprietor, affiliate income and related ad expenses are often reported on Schedule C.
4. If it’s a hobby, the treatment is different: Under current U.S. tax law, hobby expenses generally are not deductible against hobby income or other income.

Important caution: tax rules and their application depend on your facts and can change over time, so verify the current IRS rules for your filing year before relying on any deduction. If the IRS treats the activity as nonbusiness, the deduction may not be allowed.