Hi, I have just been reinstated to Google Adsense, and this time I am going to take it seriously. I am underage, but I have a website making over $600 a year. Even though I am under 18 years old, do I still have to pay taxes to the IRS? My parents are well aware of my website(s) and set up banking accounts, SSN, and all that stuff. I have full permission from my parents to participate in the Google Adsense program, buy domains, buy hosting, etc.. The checks from Google are currently being sent in my name, and my info (reminder: I'm not 18 yet). The bank has no trouble successfully adding the funds to my account. Anyways, I've read that if you make over $600 a year, you must pay income tax. I have loads of question about this... What will their reactions be when they recieve taxes from a 14/15/16 year old? Is it against the law for a minor to have a "business?" Will they do anything about it? Does Google send 1099 forms? Anything important I should know? AHH! My head is about to explode. Please, fill me up on the necessary info. Thanks.
I've been paying taxes since I was a little kid. I was a child actor. If you make above a certain amount you definitely need to report it, no matter your age. It should be a pretty simple tax return, but I suggest talking to a professional. A CPA will make sure it's done right so the IRS won't ask questions years later.
Chances are you will not make enough overall income to pay taxes. It is pretty simple and it does not matter how old you are, if you meet a certain requirment, you have to pay taxes. I worked since I was 13 and was required to file some years, but most of the time I never made enough to pay in.
Google will send a 1099 if your earnings are over $600. They are required by law to do so. The tax laws have changed a good bit since my youngest was under 18 so do not take all of this as absolute facts. The IRS won't mind a return from any age group. Because of 1986 reforms many minors have been forced to file a return. My son actually started filing when he was 15. For as long as you are a full time student you get some special breaks on income taxes. You can claim yourself and your parents may also claim you as a dependent. You may need to file if you get income. The 1099 is proof that you did. Just because you have gross earnings of a $1000 does not mean you have net earnings of the same amount. You only pay taxes on net income. Start right now keeping good records. Your web hosting and advertising fees are deductible business expenses for the sites that produced the income. Anything you spend "in the pursuit of income" can usually be deducted. Don't get cute and try to claim a "home office" or any of the other "red flag" items. These numbers may be much different now but a few years ago you would need a "net income" of about $2000 before you paid any taxes. The bite in the butt is that if you have net self employement income over $400 you will have to start paying into the great Ponzi scheme know as Social Security at the rate of about 15.5% of net income. My advice to you is to park in the bank about 25% of each check you get and keep it there until you file your taxes. That way you will have plenty of money to pay them and something left over at the end of the year. Now if you are a long term thinker, and want to discuss retiremnt plans, just ask.
Thanks everyone! @allout - I am confident that I will make enough this year to meet the requirements. I am aiming for $1,000-$2,000 in income this year. BTW, what exactly is the 1099? Is it like a paper form with info to fill out?
http://en.wikipedia.org/wiki/Form_1099#1099 ^^^ And a quick question. Do you have to pay taxes if all your money is on hold with google? And how long will google let you go without entering tax info?
It is just a form that you are sent from anyone you earned interest or other types of earnings except paid wages. It tells you and the IRS how much you earned and how much they collected for taxes if any. This is the information you include on your tax forms. As for the income, I am not an expert on minor income tax but I don't think you will pay any because $1000-2000 will not be your net income. It's very easy to get a general idea at www.IRS.gov Good luck and I hope you make a lot. Extra tip: Just remember the sooner you start saving for retirement the more you will have time to earn on that money. You are never too young; my biggest regret was putting it off.
You won't get a check until you enter the tax info. So take all the time you like. Let Google earn the interest on your money. Income is not taxable until received for cash based accounting which most individuals are. Sometimes right at the end of the year this may vary a bit. Say a check is written on 12/28 and you don't get it until 1/5. It still may appear as income on a 1099 for the year ending 12/31.
google will submit the form for you concerning your adsense income. any additional information will have to be mailed to the irs just like your parents have done every year.
when your parents fill out income taxes they have to ad your earnings just like you having a partime job is almost the same, but allways consult a CPA the same that do their paper work.
1099 will show your gross earnings that the company paid you... they report the 1099 to you and the IRS... good job being your age and making money keep up the good work!
Thanks a lot for the help! So, what you mean is that you don't have to enter it in the Tax form or whatever if you still haven't given google your tax info?