Ok taxes taxes taxes. I want to start claiming income tax so down the road the IRS shows up at my door and wants like 50,000$. So right now The only tax type income sites i've been getting paid through are adsense, CJ, clickbank. The totals that come up from these sites isn't very much only about 1,200$ total or around there maybe more. about 450$ from adsense. 575$ for my first click bank check. about 100$ from CJ. But most of my income is through paypal. Does paypal report taxes? I don't think so right its just like an online bank and what makes goes and comes through it isn't there business since they don't pay you. So can i fly under the radar for paypal for now? Also do you have to pay taxes if your "income tax" shows less than 10,000$ a year? I thought you din't have to file for taxes if you made under 10,000$ or something. Anyway i am pretty sure i haven't passed the 10,000$ mark with adsenes, cj, and click bank combined but as my business is growing I know that won't last long. Sooooo what are my options here? If paypal does track money and reports it then i've had at least 10,000$ pass through so what are my options there?
You need to call an accountant. I wouldn't take any kind of tax advice from anyone that isn't a CPA. They'll help you take your 1099 Forms and figure out your end of year tax damage. And they'll educate you on the wonders of estimated tax.
If he calls a CPA and asks "if it will fly", odds are they will show him the door. You can't ask a CPA about evading taxes. Reducing taxes is another story. Here's a quick breakdown. I am not a CPA, so this advice is just that, advice. First, even if you use an accountant, you should have an idea what is going on with the tax system and how you keep records etc. Just to keep an eye on them. Answering the specific questions. Paypal will not send you 1099s for payments received from freelance work. That doesn't mean you don't have to claim it. What you have to watch for is who will issue you 1099s that you did work for during the year. If any single person or company paid you over $600, they are required to issue you a 1099 unless you are incorporated in which case they don't have to file it. There is a deadline to mail these by Jan 31. There really isn't a penalty involved and some will wait till the end of Feb to mail them since that is when the red copies are due at the IRS. As to how much income is required to file income tax, any amount over $400 is the cut off point. Google tax topic 351 to verify. So what that means in English is you should report the income over $400 dollars. The IRS will get 1099s from any company who has paid you over $600. So if your numbers don't match the 1099s they have, its time for the audit. Not good. And I'll add a real warning to anyone who hasn't dealt with self employment or independent contractor status. The income taxes are bad but the Self Employment tax will kill you. It hits you for just over 15% of your net income for the year. File Schedule SE after you do Schedule C. Schedule C is where you can claim expenses (webhosting, ISP, PCs etc). Important to note reducing your Gross Income here really reduces the total tax bill since it doesn't get nailed by the SE tax. Only half of the 15% can be counted as an expense. This parallels what regular employed people have deducted for SS and FICA. The other half is what the employer pays so it is the business expense. HTH
You think that's bad, Europe is the Tax capital of the world. How much do you pay on your Adsense earnings?