Tax Season!

[sn0rt]

So tax season is here and everyone is trying to decide whether or not to claim their funds..





So this past year I've made $8,289 in commissions. I currently live in the U.S but NOT in the state where the company I'm an affiliate for and my Tax ID/SSN is on file with the company.

I plan on giving them a call tomorrow and asking them if they're actually claiming taxes on my funds or if I'm being payed "under-the-table". I think they'll claim because it's probably better for them to do so and I receive physical checks as payment.

On my profile, I have an option of selecting either Individual/Sole or Corporation. I currently have Individual/Sole selected.


Note: I know that it's best for me to speak with an accountant. I will do so, but I don't want to go in blind and I'm sure we have some well-versed members on this forum on this matter. I want to do things right because I'm in it for the long haul, but what's the best and cost-effective way to get this done.


Thanks in advance.

 

[LBrown]

You have to claim the income and pay self employment tax on it. They are reporting the income you've made. You can deduct all expenses so you may have made far less in profit: domains, hosting, VPS, software, services, freelancers. You only pay taxes on the profit.

 

[Lithin]

The most cost effective way is properly to talk to an accountant. I have no idea how it works in the US but I'm imaging you can put some of your tools and expenses on your report to get them deducted.

Pro-tip: find a student accountant. Usually they are more willing to get a low paid job on the side and it will be favorable for you both in the long run.

 

[cledin]

Definitely claim your income man lol do not want to get catch... jail time.

Anyway just write off everything you prob made 0 profit

good luck

 

[CPADominate]

you mean not in the same state or you mean country? anyway if it's a USA company they will report that and you have no way to get out of it..

 

[sirgold]

AS someone said: Al Capone got away with a lot of shit and got framed in the tax department. A lot of ppl might think they're smarter but many more chances are they're probably not. I'd keep this in mind, having the IRS on your back for the rest of your life ain't fun even if you don't end up in the slammer

 

[burnett4congress]

Pro-tip: find a student accountant. Usually they are more willing to get a low paid job on the side and it will be favorable for you both in the long run.

This is throwing away dollars to save pennies.

In any case, to OP, yes you will be reporting this income on your tax returns. Most likely on a Schedule C. If you have anything like a normal life, your net profit on $8k will be slim to none, and it won't impact your AGI in a big way. If you are making over $40k or so total, you'll probably benefit from incorporation. Something to think about for 2013.

 

[sn0rt]

You have to claim the income and pay self employment tax on it. They are reporting the income you've made. You can deduct all expenses so you may have made far less in profit: domains, hosting, VPS, software, services, freelancers. You only pay taxes on the profit.

Thanks for the prompt response. Reps given.

If I understand correctly, the task here is to "rack-up" as many expenses as I can to lower my "profit" and since the profit margin is lower, the tax will also be lower?

What's a good way to go about figuring out what my expense margins are?

 

[ok888]

Claim your income


Stay legit or be sorry

 

[sn0rt]

Definitely claim your income man lol do not want to get catch... jail time.

Anyway just write off everything you prob made 0 profit

good luck

Thanks for the prompt response. Reps given.

My intent is to claim my earnings.

Now I just have to find out how to find these expenses. Any ideas on the list of things that can be written off?

 

[sn0rt]

AS someone said: Al Capone got away with a lot of shit and got framed in the tax department. A lot of ppl might think they're smarter but many more chances are they're probably not. I'd keep this in mind, having the IRS on your back for the rest of your life ain't fun even if you don't end up in the slammer

Thanks for the prompt response. Reps given.

I hear ya. That's why I want to do things the right way, but smartly.

 

[sn0rt]

This is throwing away dollars to save pennies.

In any case, to OP, yes you will be reporting this income on your tax returns. Most likely on a Schedule C. If you have anything like a normal life, your net profit on $8k will be slim to none, and it won't impact your AGI in a big way. If you are making over $40k or so total, you'll probably benefit from incorporation. Something to think about for 2013.

Thanks for the prompt response. Reps given.

Can you elaborate a little bit on "If you have anything like a normal life, your net profit on $8k will be slim to none, and it won't impact your AGI in a big way."

 

[burnett4congress]

Thanks for the prompt response. Reps given.

Can you elaborate a little bit on "If you have anything like a normal life, your net profit on $8k will be slim to none, and it won't impact your AGI in a big way."

If you are running a business, even as a side business, there are a lot of expenses. Phones, phone plans, internet service, computers, software, online services, car expenses to and from meetings with partners/clients/etc, meals with those same people, etc etc.

You AGI is you adjusted gross income. This is the final "income" number that your taxes are based on. So if you have a day job and made $8k on the side, after the expenses your AGI won't be that different from just your day job. In some cases, your side business will actually lower your AGI.

 

[sn0rt]

If you are running a business, even as a side business, there are a lot of expenses. Phones, phone plans, internet service, computers, software, online services, car expenses to and from meetings with partners/clients/etc, meals with those same people, etc etc.

You AGI is you adjusted gross income. This is the final "income" number that your taxes are based on. So if you have a day job and made $8k on the side, after the expenses your AGI won't be that different from just your day job. In some cases, your side business will actually lower your AGI.

Thanks again. Couldn't rep you anymore as I reached the rep limit for you.

When you say business, are you just generally using the term or does it mean I would need to be registered as a business to be able to get these write-offs?

 

[SEO_Alchemy]

IRS audit is not cool. Talk to an accountant and get your figures straight. As pointed out earlier, you can deduct a lot for server upkeep, catcha costs, and all that other fun stuuf that makes IM what it is.

 

[Moneyman94]

So tax season is here and everyone is trying to decide whether or not to claim their funds..





So this past year I've made $8,289 in commissions. I currently live in the U.S but NOT in the state where the company I'm an affiliate for and my Tax ID/SSN is on file with the company.

I plan on giving them a call tomorrow and asking them if they're actually claiming taxes on my funds or if I'm being payed "under-the-table". I think they'll claim because it's probably better for them to do so and I receive physical checks as payment.

On my profile, I have an option of selecting either Individual/Sole or Corporation. I currently have Individual/Sole selected.


Note: I know that it's best for me to speak with an accountant. I will do so, but I don't want to go in blind and I'm sure we have some well-versed members on this forum on this matter. I want to do things right because I'm in it for the long haul, but what's the best and cost-effective way to get this done.


Thanks in advance.

As far as what you can deduct it can be any and all expenses that are ordinary and necessary. That can be as simple as a pen, a computer, a product or servise you bought here to help you do a better job. You can have a medical reimbursement program, a tuitition reimbursement program, auto deduction, all mileage related to your business. The skys the limit. You can write off hundreds of things in your business.