Hey all, just wanted to ask at what point do you start to report the income you earn from your website(s) on your taxes? It seems that some people here make $20/month, while others make thousands. Lets say you make 1K/month, do you just add the total revenue that year to your income, or is there some other method? Another question is at what point do you incorporate? Any insight would be grealy appreciated. Thanks!
Its pretty simple really. IRS allows you to operate your business as a sole proprietorship. At the end of the year you would report all of your business income on your individual income tax 1040 form. Then you would deduct all of your business deductions on a separate form called Schedule "c".
Actually, that's not entirely true. In the US, if you're self-employed, you need to pay what's known as estimated tax payments. There are different rules about when you need to start paying them. Do a search for the phrase on the IRS site. Essentially, you have to estimate how much tax you'll owe, and pay throughout the year, just like people who have taxes withheld from their paychecks. I believe it starts in your second year (can't estimate if you don't have a previous figure), but like I said; check the IRS site. Jenn