Paying Taxes on Adsense earnings?

[TABLE="class: gen-table3, width: 100%"]
[TR]
[TH="width: 30"]Tax rate [/TH]
[TH="width: 100"] Single filers [/TH]
[TH="width: 100"] Married filing jointly or qualifying widow/widower [/TH]
[TH="width: 100"] Married filing separately [/TH]
[TH="width: 100"] Head of household [/TH]
[/TR]
[TR]
[TD]10%[/TD]
[TD]Up to $8,925[/TD]
[TD]Up to $17,850[/TD]
[TD]Up to $8,925[/TD]
[TD]Up to $12,750[/TD]
[/TR]
[TR="class: bkon"]
[TD]15%[/TD]
[TD]$8,926 - $36,250[/TD]
[TD]$17,851 - $72,500[/TD]
[TD]$8,926- $36,250[/TD]
[TD]$12,751 - $48,600[/TD]
[/TR]
[TR]
[TD]25%[/TD]
[TD]$36,251 - $87,850[/TD]
[TD]$72,501 - $146,400[/TD]
[TD]$36,251 - $73,200[/TD]
[TD]$48,601 - $125,450[/TD]
[/TR]
[TR="class: bkon"]
[TD]28%[/TD]
[TD]$87,851 - $183,250[/TD]
[TD]$146,401 - $223,050[/TD]
[TD]$73,201 - $111,525[/TD]
[TD]$125,451 - $203,150[/TD]
[/TR]
[TR]
[TD]33%[/TD]
[TD]$183,251 - $398,350[/TD]
[TD]$223,051 - $398,350[/TD]
[TD]$111,526 - $199,175[/TD]
[TD]$203,151 - $398,350[/TD]
[/TR]
[TR="class: bkon"]
[TD]35%[/TD]
[TD]$398,351 - $400,000[/TD]
[TD]$398,351 - $450,000[/TD]
[TD]$199,176 - $225,000[/TD]
[TD]$398,351 - $425,000[/TD]
[/TR]
[TR]
[TD]39.6%[/TD]
[TD]$400,001 or more[/TD]
[TD]$450,001 or more[/TD]
[TD]$225,001 or more[/TD]
[TD]$425,001 or more[/TD]
[/TR]
[/TABLE]


My income from my job is 61K. My Adsense earnings for this year will probably be ~$3,000, which would keep me in the 25% bracket. I just wanted to clarify how income tax will work. I live in Texas where we don't have a state income tax, so basically I'll just be taxed 25% of the $3,000, correct?

This didn't really cross my mind at first, but I suppose I need to set aside 25% of my earnings, so I'm not screwed come tax time. Am I understanding this correctly, or is it a bit more complicated than simply adding my Adsense earnings on to my regular wages to see what tax bracket I fall into.

A better solution is to have more tax withheld where you work to cover at least part of your tax liability created by Adsense. What you don't want at the end of the year is to own the IRS a significant amount of money. If you owe a significant portion above the withheld amount the IRS will demand estimated tax returns typically filed quarterly. Reduce your deductions to single and 0 and if it's still not enough you can request your employer withhold additional money for tax purposes.

Thanks for the helpful response. Aside from the fact that I want to reduce how much tax I owe, are my assumptions correct and will I indeed owe 25% because of the tax bracket I fall under? Thanks.

I would just call them and ask. number is 1-800-829-1040. I think it is also filed under a 1099-MISC.

Yes, you will have to pay 25% of your Adsense earnings.

It's not necessarily that simple. It depends on how you receive your adsense payment, the existence of any business entity, and whether you reinvested any adsense earnings into your websites.

Since the amount is relatively small you can probably get by with something like Turbotax home and business. Using a CPA or EA would be much better if you intend to expand your adsense business.

allegran73hm said:

It's not necessarily that simple. It depends on how you receive your adsense payment, the existence of any business entity, and whether you reinvested any adsense earnings into your websites.

Since the amount is relatively small you can probably get by with something like Turbotax home and business. Using a CPA or EA would be much better if you intend to expand your adsense business.

Click to expand...

Thanks for the info.

By the way, is it possible to have this income put into something like a retirement account and not get taxed on it? I have no idea how that stuff works, but I'd like to reduce the amount of taxes I have to pay on these earnings if possible. Thanks.