I'm making some money online through affiliate marketing, how do you figure what you owe on what you make online? Some people say to pay your "self-employment" taxes quarterly, so you don't owe a huge sum at the end of the year? I'm not sure who I should go to, to take care of this stuff. I don't want to spend more than I have to on a tax accountant. I've tried Craigslist, not getting a good response. I don't make too much, and I've heard that I'll end up owing 30% in taxes. That doesn't leave me with anything after taxes. I'm trying to get a full time job and do AM on the site instead, since the taxes seem to be way too much.
It all depends upon the rules of where you live. The best advice is to talk with the government offices for where you live and possibly with an accountant.
I am going to assume you are in the US. First off, you pay taxes on the net profit (income-expenses=) and not on the gross income received. The social security (fica) rate is 15.3%. The real Federal tax rates vary from 10-28%. Unless you are making over 100K combined more than likey you are in the 15% Fed tax bracket. So 30-35% of income is a safe "set aside" amount for most people. This does not include any state or local taxes based on income. The failure to pay quarterly taxes can result in a penalty if you fail to have withheld or pay in an amount that is not at least equal to what you owed last year. If you pay or have withheld an amount that is equal to what you owed last year and file by 4/15 there is no penalty or interest regarless of how much you owe. The amount you owed last year is on line 63 of form 1040. The pittence you will earn in a MM or bank account will not equal the penalty and interest. Always make sure you pay in as much as the year before. If you have messed up you still have time to make the final installment payment for December. It must be paid by Jan 15.
Thanks for the information, but I dont' know what you're talking about as far as last year is concerened. I just started AM about 6 months ago. Do they not mail you any notices to let you know when the quarterly is due? Do they have set dates of when the amount is due? I'll look into getting an accountant. Thanks.
I am referring to the total amount of taxes that owed. The IRS does not care where the income comes from.
Not sending estimated tax payments to the government does not result in THAT big of penalty. Unless you are making a significant amount of money online, it is likely to chump change. You can save some money on a tax accountant if you are willing to spend some time doing research - otherwise I would recommend to find yourself a good one and pay him well. This is the guy could become a long-time friend and ally.
Make sure you record ALL the income you have made online on your tax return .. tax evasion can be too costly..