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Do i have to pay taxes?

Discussion in 'Business & Tax Advice' started by Villanio, Aug 4, 2010.

  1. Villanio

    Villanio Newbie

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    I currently run a membership type website where the members pay a monthly fee to remain a member and have access to my content. my website is starting to grow and with the current number of members that i have i make about $500 a month. I get paid via paypal, and I was wondering if i have to taxes on the money that i make, and if it makes any difference i am 17 and live in NJ. Thanks in advance for any help
     
  2. momopo

    momopo Junior Member

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    Yeah... You have to pay taxes on all the profit you make. So take that 500 minus whatever you pay to run your site and that'll give you your taxable income.
     
  3. Villanio

    Villanio Newbie

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    how exactly do i pay taxes. its the first time i've gone through this and wouldnt know where to begin.
     
  4. terryv48

    terryv48 Newbie

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    either hire a bookkeeper or go to an online site like turbotax. either one will put you on the right track
     
  5. Nugget16

    Nugget16 Registered Member

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    I would take the risk and not pay taxes if I were 17 making $500 a month. Your income probably isn't high enough to require tax filing. Plus if you do file, your age is going to let you reduce so many things you won't pay anything anyway.

    Now if you know ahead of time you won't have to pay anything, I think you're supposed to declare anyway. Reduce your site expenses. Reduce any paypal fees you're paying. Get receipts for pencils, pens, and office supplies. If you don't need that, what do you need? Need a new laptop. You need it for business. Go reduce that.

    Really, if you're making $500 a month you can reduce everything with frivolous expenses. I guess you're still buying things you might otherwise not purchase, but it's better than getting nothing. Don't buy an ice cream maker or something ridiculous, but basic business expenses won't raise any red flags, and it's not unlikely for someone making a $500 business income to have even a $0 profit.

    There are likely billions of dollars lost by taxpayers because they don't reduce eligible expenses. Save receipts for everything now and figure out what to do later if you want.
     
  6. lawton

    lawton Jr. VIP Jr. VIP Premium Member

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    Great advice! But when your site starts growing i would make sure to keep good "books" and pay on time, don't want the IRS hunting you down!
     
  7. cjw10

    cjw10 Junior Member

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    As has been mentioned, you can use turbo tax online or go to places such as H&R block or Costco usually has some tax guys in there stores during tax season (at least the one by my place does). I'd strongly recommend turbo tax online, its extremely easy and they walk you through step by step.

    Since you're self employed, the government trusts you to report your own earnings. With 500$/month your making less than I did at your age working fast food, so i know if you do report your income, you'll pay very little taxes on it. Plus your chances of an audit are basically nil, the IRS have bigger fish to fry.

    You'll probably end up owing like a $100-200 for Social Secruity/Medicare per year, thats about it.

    Congrats on a makin that much money a month through the internet. Sure beats the hell out of fast food, my friend.
     
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  8. xl_The_Jackal_lx

    xl_The_Jackal_lx Newbie

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    $500 a month is $6,000 a year which I believe is below the filing threshold, assuming you are in the US.
     
  9. CashInHand

    CashInHand Regular Member

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    do you still go to school? if you do you dont have to pay taxes on your income.
     
  10. Villanio

    Villanio Newbie

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    yeah im going to be a senior this following september, but i have a few friends one who is a caddy who doesnt pay taxes on what he makes and another who works at taco bell who does pay taxes, but that is most likely because it taken out of their check already. the jackal if im not making enough to claim taxes what is the threshold, because at this point $500 is the minimum i can make, but if more members join that will obviously increase. I guess i'll buy turbotax or something just to be sure. I'll probably file taxes just so it looks like i have been paying.
     
  11. xl_The_Jackal_lx

    xl_The_Jackal_lx Newbie

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    I think the threshold is $8,000 but you should ask someone qualified to be sure. It's probably on the IRS's website actually.
     
  12. themliteguy

    themliteguy Registered Member

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    The best thing to do is file your tax return even if your legitimate expenses brings your income down to a point you don't owe any income tax. BUT MAKE SURE you also complete and file a 1040SSE form.

    Many people that are self-employed may not owe income tax but still owe self employment tax.

    Go to a tax accountant and spend fifty bucks or so to discuss what you need to do to keep legal.
     
  13. sangbiru

    sangbiru Newbie

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    to make you get more famous and look more legitimate from your niche, you should pay taxes, press sometimes pay internal person from tax dept to know, how is the rich guy of the month??? :D
     
  14. showbizvet

    showbizvet Power Member

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    Starting young and running a site that is small, but is growing, is a perfect to set things up correctly. Doing it later when the money is rolling in HOPE.. HOPE.. might cause you problems and then you will be of legal age. Check out turbo tax, do some reading, talk to HR Block, they'd probably give you free advice, thinking you might be long term.

    Most people are willing to help budding entrepreneurs, take advantage of it. Also, check with the SBA, just be upfront and ask them whom you might speak with locally, lots of oldies ready and willing to give advice.
     
  15. Griffin

    Griffin Regular Member

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    Yes, you are over 14, so you must file your own taxes if you make more than about $1k/year. I'm familiar with NJ taxes and yeah, you've gotta file there too, but it won't be for nearly as much as federal. Keep your paypal/email receipts and invoices for all of the info products, services, etc that you use in your business. :) You won't pay much dude.

    I use TaxAct, which costs $10 for business efile for federal, and $15 for NJ (you can fill out the paper one easy).
     
  16. Griffin

    Griffin Regular Member

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    That is absolutely not true. Even grade-schoolers have to pay taxes on income (via their parents' tax returns).
     
  17. alight17

    alight17 Newbie

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    That is not true. Anyone over 16 has to pay taxes on income.
     
  18. cjw10

    cjw10 Junior Member

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    I would check this out:

    Code:
    http://turbotax.intuit.com/small-business-taxes/
    Includes federal & state for the same price + efiling
     
  19. alight17

    alight17 Newbie

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    Great minds think the same. Over 16 you file your own tax return.
     
  20. chano420

    chano420 Jr. VIP Jr. VIP Premium Member

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    technically, grade schoolers (assuming you mean 1-5) arent allowed to work since they are under 16 and we have child labor laws in the US, but yea your right "technically" your suppose to pay them.

    I would enjoy the fact that you will likely be over looked for another few years and just do what you have to in order to save your money for your next business adventure. Next year read up on the tax laws a little bit and see where your sitting then. Until you get to 10k plus per year I wouldnt sweat it. Worst that will happen is you get a letter in the mail saying "Hey paypal said you made $x.XX and we want our share" then all you need to do is say you bought your new pc and laptop plus your monthly internet and the fuel you burned driving around researching local competition, etc. You will easily write off that $6,000 pretty quickly.

    Good luck man, and it sounds like you are very thorough with your business. Continue on that path and you will be well off at a young age.