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Tax Question for IM - What is the Business Code for Affiliate Marketing?

by rbf738
7 replies
This is for all of you internet marketers who do their own taxes. I'm doing my Schedule C and can't think of what to put for my principal business code. I looked at the guide but didn't see anything right away that sounds like freelance affiliate marketing. I suppose I can put 999999 (unable to classify), but figured I'd check with you all cos you do this every year.
#affiliate #business #code #marketing #question #tax
  • Profile picture of the author Floyd Fisher
    (contact an tax professional before taking this advice)

    There isn't one. Your business falls under 'passive activity' since it's not your product.

    There is tons of good news in this. Contact your tax professional for details.
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    • Profile picture of the author Kat Bartone
      Interesting question.

      The list of codes can be found here:

      http://www.irs.ustreas.gov/pub/irs-pdf/i1040sc.pdf

      Seems that the IRS hasn't really caught up with the array of internet-based business options.
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      • Profile picture of the author rbf738
        Yeah I couldn't find anything that remotely applies, so I suppose I'll stick with 999999.
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        • Profile picture of the author JohnMcCabe
          I think there's a code for 'independent sales rep' or something similar. That's what I used to use...
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    • Profile picture of the author bodhisattva331
      Originally Posted by Floyd Fisher View Post

      (contact an tax professional before taking this advice)

      There isn't one. Your business falls under 'passive activity' since it's not your product.

      There is tons of good news in this. Contact your tax professional for details.

      Can you elaborate on the "good news" that you are referring to, perhaps even expand on the "passive activity" and why do you say this? Note,
      my tax professional has had me erroneously classified as 541510 (Computer Systems Designs - yes, he's fired) and there is not one tax professional out there who has a clue what affiliate marketing is (none that I've spoken with anyway).
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      • Profile picture of the author Floyd Fisher
        Originally Posted by bodhisattva331 View Post

        Can you elaborate on the "good news" that you are referring to, perhaps even expand on the "passive activity" and why do you say this? Note,
        my tax professional has had me erroneously classified as 541510 (Computer Systems Designs - yes, he's fired) and there is not one tax professional out there who has a clue what affiliate marketing is (none that I've spoken with anyway).
        (disclaimer: always consult with a practicing tax pro before taking my advice)

        Two questions you need to ask:

        1. Are you actively ringing up the sale when a person purchases the product via a merchant account of some kind?

        2. Are you liable for support of the product?

        If someone else is doing these things, and you're getting paid via a comission check, then it's a passive activity. An active business (the other kind of business) does those kind of things and more.

        Now, here's the pros, and why I say this is good news.

        1. For starters, if you lose money this year, you can roll the losses into next year profits (up to 3 years max if necessary). This can keep your tax bills to a minimum year to year.

        2. You don't need to show a profit for 3 out of 5 years (could be wrong on this, so get ahold of a tax rep and make sure). In an active business, you need to or you get hammered real hard.

        Do you understand this now?
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        • Profile picture of the author capemay
          Bumping this old thread - what Business Code do some of you use for your Sched C?

          http://www.irs.gov/pub/irs-pdf/i1040sc.pdf

          I notice that on pg C-9 of the Business Code chart they specifically note # 511000 and 515000 with "except internet". OK, what are we supposed to use?

          Edit: actually 519100 looks fairly relevant, how about that?


          Me, I'm doing CPA lead gens, would that be considered different from those of you doing CPS Comm Junction stuff?
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