I am new to this tax world, my first time making money. Anyway i have a question regarding paying tax at the end of the year. I am currently making money with a lot of afflilate networks. But how do i file all my income at the end of the year? Since I work with so many affliate networks, how do i report all my income? Any help would be appreciated. Thanks Edit: I live in the US
no one can assist you if you don't tell your country , as tax patterns vary by locations you can check the details on offical website of your government like this is very helpful to me http://www.incometaxindia.gov.in/
I'll tell you what I do. It is my understanding that regular people are on the "cash method" of accounting, not the "accrual method." This means that whenever I get the right to money, it counts on my income tax that year. For me, that means if i get an amazon gift certificate or if I get cash in an account (but I can request the money from that account), then it counts. My example for that is cafepress. I have a $250 limit there, so as not to deal with little checks every month. SO, if i earn money in december, but I don't request the money, then it counts as income for that year. that's a side issue. the real thing you're asking about - all the sites should send you a 1099 form at the end of the year. that's why they ask you for your SSN/Tax ID number. They send the same 1099 to the IRS. I add up all my 1099's - I also am an independent contractor on the side, so I add that one into the mix, too. I count it as self-employment income. I have to fill in the boxes to make sure I pay social security from that, too. If you want to get more sophisticated about it, you can create a LLC or something similar, depending on what your state allows. I haven't done that yet. If you do that, then it's my understanding that corporations can pay taxes separately, and some corporations are even organized so that they pay out expenses and don't report much of a profit. However, If you want to get into that, you really need to see a lawyer or a cpa or something like that.
This is where it's a good idea to see a local accountant / cpa.. You may have Federal, State, County, even City tax liabilities and if you have not set aside the money, or been paying it all along this year, you may see yourself not only with a tax liability, but penalties and fines to go with it.. Welcome to the real world
How come theres like a schedule C and 1044 and all that. I thought i only need to send in my W-9 and get the 1099...
He doesn't have to know ANYTHING about the internet.. Where the money comes from is not even a little bit important.. Where you live when you make the money is..
Feydakin is absolutely right! I've been a tax accountant for 20 years. (And I do know about the internet!) But I don't need to know everything about a client's business to be able to do a great job for them on their taxes. And you need to either spend the money on an accountant, or spend a whole bunch of time on the IRS website and learn everything that you can about self-employment and taxes. You can visit http://www.irs.gov/businesses/small/article/0,,id=97726,00.html where the IRS has online classes for small businesses. What you don't want to do is try and wing it. The IRS can make your life miserable if you don't know what you are doing.
you can also write off a LOT of things as business expense, like google adwords, hosting, even some of your internet service
I don't do google adwords, i don't pay for hosting. Only thing i paid for was my domain and currently i only made about $800
http://www.irs.gov/individuals/article/0,,id=96623,00.html Read and follow the directions on that page..