I want to know if anyone is in my position. I quit a while back when adwords raised the bid to 10cents. I was still profiting even with this but I live in America and the deduction I get for the money is only 32% deductible then I have the rest as income tax. So sometimes I go in the hole even if i profited. Anyone else in this same boat?
That's strange. Why is it so? Does US have a separate law for online advertising? Expenses are expenses. How can there be limit on them being deductible from income?
As far I know, you only pay tax on net profit..Income-expense = net profit x tax ratio = your tax payment. Where is 32% coming from?
We can relate. After we didn't do very well with typical affiliate programs, we decided to try out private label exchange hosting with www.intermedia.net, to increase our web revenue, and have been doing very well with it.
I think what he's saying it: When you write something off on your taxes, you are not getting all 100% of that money back to you. You only get about 32% back because the deduction comes out of the revenue that you are taxed on, not the actual tax itself.
but that is how it is all over the world. revenues (or sales or total income) - expenses (or costs) = net profit. and then you have to pay an income tax on the net profit.
That's a new one on me, as you should be able to deduct all expenses on your cost to do business with very few exceptions like travel or power lunches etc not for google ppc.
I see a serious need of a few guys talking to a tax accountant here. Don't make decisions based on assumptions or what somebody else thinks is right. Do yourself a favor and get a tax accountant who tells you in detail what you can write off and what is not tax deductible. Christoph
See http://www.savewealth.com/taxforms/irs/forms/1040sc/ - that's most likely what you'll be using. As nsusa said, you'll definitely want to talk to an accountant.