A question about US Tax. How do we go about reporting our earnings from Adsense? How much do they usually take away from us? Any advice on how I should do my tax? Once I have received all of my w-2s, I will then talk to an accountant to help me out. If I earned about 8K, how much should I expect to pay for taxes? Does it takes into account your yearly earnings? My yearly earning is really low....tax bracket?
I don't know much about the tax system but I would assume that Adsense earnings are no different than earnings from your job. Add up all your income for the year including adsense and that is the tax bracket you will be in.
Assuming you live in the US, this income is going to be reported on Sch C as business income. The good news is that you can deduct all reasonable and necessary expense that you paid to produce that income. Expenses may include: Web hosting for the sites that produced the income. Advetising expense for the sites that produced the income. With good records your 8K may turn into 6K and then you pay taxes on that amount as ordinary income PLUS FICA. So if you are in the 15% bracket you will pay 15% of of the net profit plus an additional 15% to FICA for a total of about 30% of the net profit. The FICA contribution is fixed and the tax rate varies by income level to a max of 35 or 38%.