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View Full Version : Do I need to pay tax for online earnings?



Vash
01-18-2014, 11:25 PM
I have had my web site for almost two years now. Just last month, the total revenue (since the launch) I have received so far had finally exceeded the total cost (again, it's since the launch). Currently the web site is only bringing in a puny $60~70 a month in revenue. Most of the revenue are from Amazon Association, Viglink, and BuySellAds.

Both Buysellads and Viglink claim that the 25% they took from my earning has included the tax (I assume it's my income tax).
Amazon had me filled up a tax form with my social security number, but nowhere it mentioned the commission I received from them had already excluded the tax.

So my question is, do I still need to pay tax? And how?

pandandesign
01-19-2014, 12:18 AM
I believe if you live in the United States, you have to file tax when you have made $600 or more even though you have earned it online. If you work for a company online, they will send you a W-9 form when you made exceed $600. You don't have to pay tax of you make less than $600, but you should still have to file that amount to the IRS.

delusional
01-20-2014, 02:27 AM
I believe if you live in the United States, you have to file tax when you have made $600 or more even though you have earned it online. If you work for a company online, they will send you a W-9 form when you made exceed $600. You don't have to pay tax of you make less than $600, but you should still have to file that amount to the IRS.

This is true. Although you can bend that rule a bit. It's not like they are going to come to your door for $700 you didn't report.
If you own a company and file the profit, you should always follow the rules but if this is just something you do in your spare time, nobody will care unless it takes on extreme proportions.

crimsonghost747
01-20-2014, 04:29 AM
Yes for the USA it's $600 a year that needs to be reported. For details on what's the deal with Buysellads and Viglink you should contact their customer support, they should be able to find someone who can figure it out for you. If you live outside of the USA then usually Google is your friend but if in doubt, contact the local tax authorities.

cpefley
01-20-2014, 02:01 PM
You absolutely have to pay tax on all earnings. If you earn over $599 per source, then they should provide you with a 1099, otherwise, you are on your own to claim that income. For me, it works out for the best, because I make less than the EIC maximum credit. I claim 2 of my 5 children, and get the maximum allowed back, so it doesn't bother me to claim income, even if it is a small amount.

If you are worried about being thrown into another tax bracket, or have other questions, you should call a tax professional and see exactly what the laws are. Also, the IRS.gov website has great info phone numbers to call for more information.

ap4aaron
01-20-2014, 02:11 PM
In the United States of America, the company you work for MUST provide tax forms to send to the government. If you disagree with any of these laws, you should talk to a lawyer that would help you get the best amount of money for what you make. Make sure you pay taxes, or else there could be huge fines. If you are worried about tax issues or need some more information on law, you can call the IRS, number being at http://www.irs.gov/uac/How-to-Contact-the-IRS-1.

Vash
01-20-2014, 09:28 PM
Thanks for the replies, guys. :)

I had lived in Michigan for the past decade. I am currently not in the United States and won't be back for another year. The web site was launched after I left the U.S. and it's just something I do with my spare time.

All the earnings are from advertising (Viglink, BSA, Amazon Association, etc.), and all of the earnings were transferred to either my Paypal account or my bank account based in the U.S. with my Michigan address. (not that the address or the bank account matter, since I know even the earning from outside the U.S. would have to be taxed if I am not mistaken).

The total revenue in the past two years had just exceeded $700, but the total cost was also over $600. When you guys mentioned "$600", was it revenue or profit? I am asking this now because since I have finally broke even, the revenue from now on will be mostly profit with potential to grow much bigger.

LindaKay
01-23-2014, 12:51 AM
The $600 figure is based on profit, if I'm not mistaken. If you spent over $600 and only made a little over $700, you might not have to file. You may be safer by filing the money that you made and then claiming the $600 as a tax deduction. You may want to talk to a tax professional about this situation; many of them will answer your question for you for free, and then you'll know that you're in the clear.

Vash
01-23-2014, 04:20 AM
It is good to hear the $600 is profit instead of total revenue.
I almost forgot by next month I will have to renew my yearly hosting plan with Hostgator for my web site... as well as to renew the domain with NameCheap. It will put the total cost close to $800. It will mean negative profit by February, and the total revenue won't exceed the total cost until at least by March if not by April.

Grumpster
01-23-2014, 07:20 AM
Just to add, the tax laws are very different dependant on which country you live in, and in some cases, may even vary based on which state of the US you're in. As somebody already mentioned the US for the most part operates on a $600 profit before tax basis. However, the UK, Canada and other European countries have varying methods of reporting taxable income, so you will need to research these off your own backs. I'd advise checking your countries Government websites, for example, the UK websites http://tax.gov.uk and http://gov.uk/ offer a lot of help with anything to do with your citizenship of the United Kingdom, and I know other countries have similar websites which explain the laws too.

ZekeCabnCrk
01-25-2014, 08:15 PM
Thanks for the information regarding taxes from online earnings. It will come in handy next year. Although I'm not sure If I will have made enough money to have to report it.

Auror
01-26-2014, 11:52 PM
Yes, of course, you should pay tax for your online earnings. Every time you make money from whatever source, it is taxable unless it is expressly stated that no tax would be charged. However, in my country, the government is having a hard time tracking and monitoring online earnings. That's why a lot of people here in my place is not paying tax from the money that they make online.

Lodismel
02-03-2014, 09:16 AM
I honestly don't think you should take the time to post taxes if you're making that little. I'm pretty sure, after doing some research, that the number is $9500. At least, that's the way it works in the United States. If that isn't where you live then you can probably disregard what I'm saying. Doing taxes for $600 really doesn't sound like it makes sense to me though.

cpefley
02-03-2014, 11:40 AM
It is a misconception that income under $600 doesn't have to be reported. ALL income has to be reported, but if you receive more than $599 from one source, then they are required to provide you with a 1099. This is important, and it is sad to me that so many people believe this misconception!

Edwardjames81
02-10-2014, 12:18 PM
You should pay tax on all of your income, including your online earnings. It is worth noting though that your taxable amount may be reduced by deducting allowable expenses. Allowable expenses are those that relate directly to the online activities and can be apportioned to them. Examples of tax deductible expenses include Paypal fees, internet costs and the like.

If you have already had tax deduced from your online earnings you will get credit for that, i.e. it will not be taxed twice. In order to deal with this you include your total income (less the expenses of course) on your tax return and then include the amount of tax suffered at source.

pandandesign
02-11-2014, 06:06 PM
The $600 figure is based on profit, if I'm not mistaken. If you spent over $600 and only made a little over $700, you might not have to file. You may be safer by filing the money that you made and then claiming the $600 as a tax deduction. You may want to talk to a tax professional about this situation; many of them will answer your question for you for free, and then you'll know that you're in the clear.

You still earn money, which on the safe side it is better to file the tax. I don't think the IRS will take as much money from you because you at least filed it even though you didn't earn that much money. I would say as long as it is over $600, then you're required to file the tax once you have reached that minimum amount.

arupmi
02-18-2014, 10:35 AM
If you earn, you pay tax. That's the rule in practically every country on earth. Now if your earnings are very little, you may debate as to whether it's worth all the accounting effort in tax filing. But the fact still remains that you must report the income and pay tax on it.

crucider
02-19-2014, 07:39 PM
Yes, you have to pay taxes for the money you made online. But you only have to file when you earn $600 or more .

LindaKay
02-20-2014, 12:56 AM
It's true that you should pay your taxes. The good thing is that your earnings can actually help you net a refund in some cases, so it isn't always a bad idea to file. Plus, you can prevent yourself from getting in any trouble.

VivaLa
02-20-2014, 07:36 AM
You should always file the taxes as the last thing you want is it to come up in future when it could have been easily avoided. You can, as others have said claim back for things like hosting and domain name which will reduce the amount you need to pay. I have even claimed back web design work done in the past as long as I got the receipt for it then you should be able to claim that back.

apexa1
02-21-2014, 03:30 AM
I think it's always better safe than sorry in this case. I'd rather file them than face a bill later on when the tax office finds out. It might be a pain but it could save you a good deal of trouble that you could meet in the future, so yes is my answer. If you don't earn hat much then atleast you won't have to actually pay tax on it.

Good luck !

DonnaIReilly
02-22-2014, 06:41 PM
Tax laws are very different in all countries. Here in Ireland if you claim any sort of benefits, like tax credits they check your PayPal earnings as well as your bank, so its better to just declare all your earnings.

cpefley
02-22-2014, 11:51 PM
That $600 figure is inaccurate. People misconstrue the actual tax code. The $600 amount just means that if pay someone for independent contractor work and it exceeds $600, then you have to provide them with a 1099. You have to pay tax on ALL income, no matter how minuscule.

gadgetised
02-22-2014, 11:59 PM
It depends on where you are, how much you earn, and whether or not you are registered as a business. If you are making some serious money, I would recommend checking out the tax laws for your location. You don't want to end up in trouble down the line.

sofieb529
02-24-2014, 08:11 AM
I'm in Canada and there is a certain amount you can make thats tax free. Its only $400! Generally we are taxed higher on everything here in comparison to the States. Not complaining as we see the benefits through our infrastructure and health care system.

samm1973
02-24-2014, 09:36 PM
It's $600 revenue when the payer generates the 1099. I don't think the government cares if it's profit or not. They require filing when you've received $600 from the company paying you.

Allan Madan
02-27-2015, 12:15 PM
Your intentions need to be considered to determine if the earnings are taxable.
If your intentions are to earn a profit and there is nature or adventure of trade, it is considered business and your earnings are required to be reported on the tax return.

Sincerely,
Madan Chartered Accountant

Chris_Tax
03-14-2015, 06:20 PM
You have to pay Income tax and social security tax on your net profit. Any expense that is over $600.00, you may have to 1099 the person or company too.

hannapinto
06-09-2015, 07:06 AM
Most of the affiliate programs has their own taxation rules, depends upon their nature of job, location and other criteria. Google's AdSense, Kontera, Chitika ads programs have their own and unique methods of taxation procedures, which was mentioned in their norms while opening the accounts. You should pay tax on the income earned if it crossed the threshold limit as you are residing in India. However, as per Google's AdSense if you're from U.S. and your income is more than $600/year, then you need to submit the IRS Form 1099 to the income tax department. For Indians, there is no such rule was mentioned by Google; you need to consult your tax officer on this concern.

JoshuaJ
07-27-2015, 04:50 PM
Just to add, the tax laws are very different dependant on which country you live in, and in some cases, may even vary based on which state of the US you're in. As somebody already mentioned the US for the most part operates on a $600 profit before tax basis. However, the UK, Canada and other European countries have varying methods of reporting taxable income, so you will need to research these off your own backs. I'd advise checking your countries Government websites, for example, the UK websites http://tax.gov.uk and http://gov.uk/ offer a lot of help with anything to do with your citizenship of the United Kingdom, and I know other countries have similar websites which explain the laws too.

Yup but it is $600 or above in the States.