Moderators plesae move this thread if you think it's more appropriate to post elsewhere. I'm new to affiliate marketing and PPC stuff. Now while developing my content, I've also been reading about taxes from Internet-derived income. It seems to me that with Google AdSense, they will withhold taxes off each check unless we specify otherwise. Then at year's end they send us a document that we'll use to report AdSense income in our income tax return. If there was too much withheld we get a refund and if there's a fine (heavens forbid) we pay it. Is this correct? And if so how does it apply with Amazon Associates? Do they withhold taxes off each check as well or do we need to pay estimated taxes or what? I've read that our total gross income has to be at least $400 if we're self-employed. What if you earn less than that by the end of the calendar year? How do you get back what was withheld from your payments? Do I file income tax return anyway so I can get the refund?
I have done both AdSense and Amazon. They will generate a 1099-MISC form. No taxes were withheld for me on either one. 1099-MISC - is a self employment income, you will be responsible for self employment taxes, medicare, federal and state. Google and Amazon are only required to send the form to you and IRS if you made over $600. However you are supposed to report an income even if it is just $1. You can also have expenses taken off, like domain name registration, server hosting, etc. You are now effectively a Sole Proprietor. In some cases you may also need to pay a business license fee to the city you live in. I am assuming you live in the United States. DISCLAIMER: I am not an accountant, you should really speak to one. I am just sharing personal experience.
A little different as far as the forms are concerned, but I live in the UK and are counted as self-employed. I declare income on my Internet activities including such things as Amazon, Adsense, and other things, and offset this against expenses such as Google Adwords, hosting etc.