Can I deduct Facebook ads for a website that earns affiliate income?

Yes—in general, Facebook ad spend used to promote an affiliate website can be deductible as a business expense if the site is operated as a real business with a profit motive.

For U.S. tax purposes, ad costs are usually treated as an ordinary and necessary business expense when they are spent to earn business income. If the activity is really just a hobby, the deduction rules are much more limited and you generally can’t use hobby expenses the same way.

What to make sure of:

• Business purpose: The ads should be tied to an affiliate-marketing business, not personal use.
• Profit motive: Keep records showing you are trying to make money and operate like a business.
• Good documentation: Save Facebook Ads receipts, billing statements, and records showing how the ads relate to the affiliate site and income.
• Proper allocation: If an ad campaign promotes both business and non-business activity, only the business portion should be deducted.

How it is commonly reported:

• If you’re a U.S. sole proprietor or single-member LLC taxed as a sole proprietor, this is commonly reported on Schedule C as an advertising or similar business expense.
• The specific line on Schedule C can vary by form version and instructions, so check the current IRS instructions or a tax professional for the exact reporting location.

Bottom line: usually yes, if it’s a bona fide affiliate business. If you’re unsure whether your activity rises to the level of a business, or how to report it correctly, a CPA or tax professional can help you apply the rules to your situation.