AdSense Taxes

Discussion in 'AdSense' started by Twan, Nov 25, 2006.

  1. #1
    From what I'm reading, and I'm in Illinois, United States, I have to pay at least 35% on my AdSense earnings?

    This is insane!
     
    Twan, Nov 25, 2006 IP
  2. mjewel

    mjewel Prominent Member

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    #2
    Of course you have to pay takes. You also have to pay 15.3% SS & medicare. You'll also be required to make quarterly estimated payments next year to avoid penalties. Depending on how much you are making, you should consult with a CPA because you and the IRS will get a 1099 from google.
     
    mjewel, Nov 25, 2006 IP
  3. iBold

    iBold Peon

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    #3
    isn't america great? :)
     
    iBold, Nov 25, 2006 IP
  4. techblog

    techblog Banned

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    #4
    australia ftw
     
    techblog, Nov 25, 2006 IP
  5. Thiagoo

    Thiagoo Peon

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    #5
    On Brazil we have hot girls + good beachs and only $20 taxes for each check, so if i get 100kk i will still pay the same...
     
    Thiagoo, Nov 25, 2006 IP
  6. Not_My_Style

    Not_My_Style Peon

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    #6
    No way man. I'm in Illinois too, I hope Rod Blagojevich didn't make some gay new law about it. :) Is this for everybody in the U.S. or just Illinois people?

    At 35% of your total check, what's really the point?
     
    Not_My_Style, Nov 25, 2006 IP
  7. mhdoc

    mhdoc Tauren

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    #7
    You have to take the time to learn how to play the game. Keep good records of your income and expenses; you pay taxes on what's left :)
     
    mhdoc, Nov 25, 2006 IP
  8. pixads

    pixads Well-Known Member

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    #8
    go to an accountant and learn how to get your total income after expenses as low as you can
    I read here on DP someone bought a truck as an expense for operating the business :)
     
    pixads, Nov 25, 2006 IP
  9. Not_My_Style

    Not_My_Style Peon

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    #9
    Can anybody else back the starter of this thread up that the taxes really are 35%?
     
    Not_My_Style, Nov 26, 2006 IP
  10. Redback

    Redback Peon

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    #10
    If you are paying 35% of your adsense income in taxes then you probably need a better accountant. mhdoc made a great point, you ahve to know how to play the game. You have federal and state taxes to consider. I keep excellent records thru the year and store all my receipts in a folder by month. Last year my total fed/state tax payout for adsense was 12% of my total adsense income. How you do this legally is a discussion on its own. The past two years I have been taking 100% of my adsense profits and rolling it into preconstruction real estate and then renting out the homes. My goal is to sell the new homes when they are about 5 years old before they start to need maintenance and reinvest the funds again. In the meantime you can take out an equity line of credit on the equity of the homes as a tax free income until you sell them.

    Not for everyone, but it works and definetely diversifies your business.
     
    Redback, Nov 26, 2006 IP
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  11. Not_My_Style

    Not_My_Style Peon

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    #11
    Ok well that sounds better than 35%. :) 12% is more like a typical income tax.
     
    Not_My_Style, Nov 26, 2006 IP
  12. mjewel

    mjewel Prominent Member

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    #12
    I think the person who stated 35% was talking about Federal and State combined. It looks like Illinois has a flat rate state tax of 3%.

    There is no single answer on what the total you will wind up paying because Federal Tax depends on your net income - and what state you live in (some do not have a state income tax), whether you are married or head of household, etc.

    Federal income taxes run from 10% to 35%, so if someone is paying a low percentage, it means they have very little net income.

    Self-employed income is also subject to a 15.3% tax for Social Security and Medicare. The only way to avoid paying some of this is to form a corporation and pay part of the profits in the form a dividend - but you must pay yourself a market rate salary (which is subject to the 15.3%).

    If you make enough money, you can wind up paying around 50% of your net profit in taxes. Equipment purchases for the business are deductible as well as other expenses. Anyone who is making significant income should really seek advice from a local CPA to plan in advance. There are pretty hefty penalties for late payments or not making the correct estimated payments in advance of the end of the year (if you had income last year). Adsense income, as well as other forms of income (affiliate payments) get reported to the IRS and you are asking for serious problems if you don't pay what is owed.
     
    mjewel, Nov 26, 2006 IP
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  13. Not_My_Style

    Not_My_Style Peon

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    #13
    Wow, thanks to Redback and mjewel for the helpful posts. I'm not going to be making much on Adsense. I can't see myself making more than a couple grand a year at most. So I should be looking at paying around 20% in income taxes I'm guessing. I have to gain the courage to fill out these income tax forms on Adsense. :(
     
    Not_My_Style, Nov 26, 2006 IP
  14. fsmedia

    fsmedia Prominent Member

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    #14
    Welcome to America :)

    Taxes suck, but get write-offs and stuff to help cushion it. That's what I Did and it's helping a lot.
     
    fsmedia, Nov 26, 2006 IP
  15. Redback

    Redback Peon

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    #15
    mjewel makes some good and accurate points. The 12% i mentioned that i payed was leveraged from high expenses and low net income. Remember that you would rather pay 12% on $1 net income than 0% on no income.

    A large % of my adsense income is paid out in office and maintenance expenses and thru my website and real estate ventures. My actual bring home profit after expenses and taxes is very small. However, I reinvest into the company without taking profits off the table in hopes that it will pay off in a few years.
     
    Redback, Nov 26, 2006 IP
  16. robotic

    robotic Peon

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    #16
    Is it Adsense earnings, or profit from Google?
    Say my check from Adsense is $1k, but I spent $400 on Adwords. Only $600 is taxable, correct?
     
    robotic, Nov 26, 2006 IP
  17. mjewel

    mjewel Prominent Member

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    #17
    It's net income after expenses and deductions. Adwords is certainly an expense, so is your internet connection, business equipment purchases made during the year (computer) etc.
     
    mjewel, Nov 26, 2006 IP
  18. MrX

    MrX Well-Known Member

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    #18
    Is that true? We're not talking trannies, right?? :D
     
    MrX, Nov 26, 2006 IP
  19. robotic

    robotic Peon

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    #19
    Thats what I thought, but I wasn't sure when he stated out of Adsense.
    Thanks!
     
    robotic, Nov 26, 2006 IP