Hello, This is a tax question for those in the U.S I been unemployed and make money from my websites and 09 will be my first year ill file taxes because 08 will be the first year I made enough to file taxes. I started registering domains last year and this year too. I have them all paid up to 10 years, some I paid up to 10 years this year, some a combo of both years i renewed them additional years. I bought hosting for the websites last year. My question is, can I write off the domain registrations for last year or only this year? And am I only allowed to write it off for the initial year or for all 10 years? If I can only write it off for one year, can I write off the rest for the next 10 years? Also since I paid for hosting late last year, can I write that off? I'm completely new to taxes etc so any guess, tips, or info would be appreciated.
It sounds like you need to talk to a tax expert, because it really depends on the details of your business. The best place to start is the IRS web site: http://www.irs.gov/businesses/small/article/0,,id=109807,00.html The domains might be considered Capital Expenses, and, as such would not be deductible. On the other hand, they might be considered business start-up costs, and possibly could be deducted.
Thanks. I'm a individual/sole proprietor. I read one website where it was unclear whether or not according to tax law how to determine domains. I think Its best to call them business expenses.
I would have to check with my CPA, but I believe he classifies domains business expenses, and my hosting under utilities. But I would have to double check. I basically have it all in spreadsheets, with receipts, hand it off to him. He does the rest.
Well, I don't know whether it's the same in the US but over here any expenses that are used to operate the business can be deducted. Obviously you'll need to have a domain name in order to run a website so that falls under expenses. As far as I know you can only deduct any expenses incurred for that specific financial year so you'll have to deduct that during the year you actually registered/renewed the domains. Your best option would be to see a tax professional or contact your local tax office for help. That way you'll be 100% that you are doing it right.
Thanks. Too bad I couldn't write stuff off from the previous year since i bought some domain registrations an renewals right before this year started.
Well, you need to file a tax return for 2007, even if you did not earn enough money to require a filing, because that is the only way you will get the tax rebate check. So go ahead and file.
That's what I am saying. Even if you did not make enough that you would normally file, you still need to file anyway. That is how they will know who to send check to.
If you were to follow the GAAP you can only deduct as expenses the portion of your domain registration fees for the first year. The rest will stay on your balance sheet as prepaid expenses.