How do you guys file your earnings?

It seems like it would be best to talk with a tax professional or lawyer and just be totally honest and try to obtain any forms that are needed, if they are needed. Listen to the experts.

I have an accountant that tells me what to do. Quarterly is best although if I think I will hit six hundred on any one thing I will alot 25 percent of it to taxes.

Your question actually has a lot of different answers depending upon your particular circumstance.

Clickbank and Adsense ("Google"), will, of course, pay you in full monthly. Anything you receive from them is taxable income. Usually, if you're an individual, you will receive a form at the end of the calendar year (a 1099) that will show you the total amount of income you "earned" from either ClickBank or Google.

Come tax time, you add that amount to your income and do your taxes as normal. If you owe, you owe. If you don't, you don't.

If you're a business, and ClickBank and Adsense are part of your income stream, you're paying taxes quarterly (to the federal government and/or your state government if your state has an income tax) based upon a "projected"' income. You pay taxes based upon your projected income and then sort out the rest come tax time when you have hard numbers to work with.

But long story short, if you're just a regular person, you get the money in full and then you're responsible for reporting/paying the taxes on it come April 15 (or 18th or whenever the next scheduled tax day is).

You do not have to pay quarterly. If you project too low .. you get penalized. If you project too high .. your bad .. you take the loss.

Not projecting and paying a very small penalty for not paying quarterly has always worked the best for me.

Disclaimer: I am not a tax authority or consultant. I just can't figure out that new math :-)

taxes, fts

GMD Thanks for all the helpful information! I appreciate it!

I also have a question. Can you also deduct from your earnings your expenses? For example, your rent, your internet cost, hosting, web design, seo work etc.? So for example, if you earned $2000, but you spent $1900 on seo work etc. , so at the end your reported earnings are only $100 correct?

Ok. One more question. Let's say I have a full time job. They already taking out taxes and at the end of the year I get my W2.
Does IRS lets me deduct 5800 from my total earnings? So, if I made $20000 in my regular job and $2000 online which makes $22000 total so do I deduct $5800 from $22000 or from $2000? If from $22000, how do they count the taxes that I already paid? (The ones that've been taken out from my regular job) OR they just take my total income, see how much I should of paid, then decut what I already paid (in this case will be from my regular job) and then see if I still owe anything? For example, again, let's say I made $20000 on my regular job + $2000 online. My regular job deducted the total $2300 from my taxes, where I had to pay $2600 total if counting my online $2000 income, so that means I'll owe $300?

So, even though I made only $2000 online, can I deduct expenses from that? Example: web hosting, web design, seo etc.? So, basically, can I deduct my expenses from taxable income, in that case from $16k?

Do you guys file your taxes every 3 months or just at the end of the year for IM?

I'm assuming individual is every year

GMD Thank you, I have better understanding now.

It really depends on how your business is setup. Under certain circumstances you can setup payroll for yourself meaning all the required taxes are withheld from your paycheck each time and you pay the IRS each month. This way you take out the taxes as you go and don't get hit with a huge amount possibly at the end of the year.

This is just one option...

Hello, new member leeson here. There is a whole world out there of information & mis-information about entity structure and taxes. There are several types of corporations ( S, C, P, non profit, etc...) all of which require a considerable amount of documentation and paperwork to be legal. I doubt you're looking at non-profit and probably not qualified for a "P", so the 2 most often used are "S" & "C".

Both have shareholders, directors and officers. Shareholders are the owners of the company and elect the board of directors, who in turn oversee and direct corporation affairs and decision-making but are not responsible for day-to-day operations. The directors elect the officers to manage daily business affairs.

S corporations. S corps are pass-through tax entities. They file an informational federal return (Form 1120S), but no income tax is paid at the corporate level. The profits/losses of the business are instead “passed-through” the business and reported on the owners’ personal tax returns. Any tax due is paid at the individual level by the owners.

C corporations. C corps are separately taxable entities. They file a corporate tax return (Form 1120) and pay taxes at the corporate level.

Now, most folks would say...." why be a C corp ? now you pay double taxation, corporate tax and payroll tax .." Those are the un-informed. Let me ask you all this, what is Apple a "C" or an "S" ? And Microsoft ? and Ford ? and GM ? and IBM ? and so on....They are ALL "C" corporations. So, ask yourself this question, if ALL those corporations ( and all you can think of) are "C" corporations, are they all stupid ? Do they not understand ?

The tax code ( deductions) for personal taxes ( "S" corporations) is the size of a comic book ( rightfully so). The tax code book(s) for "C" corporations are the size of several New York area code phone books.

But really, what I use, and recommend, is a LLC. Same "C" corp deductions ( if you choose the "C: corp tax option), better liability protection ( if you know what state to form in) and less paperwork.

Any questions ?

GMB always has some solid advice!

So, can I just file as Individual? Or Self-Employed?

Im not an expert but after reading things here I think you can just do Individual and as additional income?

Like everyone's said above, your situation may be different!

This was my second year filing completely as an IC or independent contractor. If you don't have a registered business, you can just say you're the sole proprietor (that's what I choose).

I don't take the money out right away, your taxes (if you're in the US) actually won't be THAT bad. I was really scared the first year, but this year was a breeze. This is what you CAN deduct, as far as I know:

PART of your rent; know the square footage of your apartment or home, and know how much of that sqft'age is dedicated to your home office. Know how much you're paying every month in rent, average out your utilities (they're deductible, woo!), any home owners insurance/apartment insurance you may have. You'll get partial deductions for these and they really help.

Buy new computers and equipment this year (2011) that you're using PRIMARILY for business? Get any software or memberships for your business? Gather up your receipts; if you don't know the exact amount try to round it. You can't take off the entire amount, but it will help ease your tax suffering. Always keep receipts!

Internet? Cell phone? You can deduct these too, yay!

Paypal and merchants fees? You can deduct these too, but make sure you know the exact amounts you're paying. I paid an insane amount of Paypal fees this year; you can deduct these as "other business expenses", make sure you know the exact amounts!

Many of the places that had you fill out a 1099 form when you started working with them, if you did they should send you a form back within the first week of February. You have until April to pay your tax bill if it's large, and you can always file for an extension.

Don't let taxes scare you away You may have other deductions you can take, if you're confused you should head to a tax preparer and have them help you out. Better safe than sorry right?

Go to live in UAE -- there are no taxes on personal income.

GMD You have some awesome information! Thanks. And as for living in the UAE sfdomain, I think I have to pass on that! haha

Thanks GMA for the great advice, im from Phil, we dont have that kind to taxes but if ever it will come like that aslong as our goverment increase there performance and improve our country it is ok to me..

It works best for me, to pay my taxes quarterly. I don't have anything withheld from anyone...

I am so confused after reading about US business structure set ups and tax implications. I am a non-US citizen, based outside of the USA, but I am considering setting up an LLC or Corp in the US - as my country's tax rates and social contributions are a major disincentive PLUS I prefer to be paid straight into a USD bank account.

Many of the incorporation sites on the Internet make it sound so easy to not be paying any income taxes, but even if someone is actually physically based in say NV, they surely will still be liable to pay income taxes on a federal level, right? If not, does that mean a one-person shareholder of a NV C-Corp will actually NOT lodge a tax return to the IRS? But if they do, would that only show a salary they draw each month as an employee from this (their own) Corp, so that federal income tax is due plus FICA (15.3%)? So the remaining revenue stays inside the Corp, not taxed since there is no corp. income tax in NV? And do the IRS rules of non-distributed profits apply to NV (or DE or WY) based Corps, where it says if the profits are not distributed, they will be taxed at an extra tax rate (close to 40%)?

Perhaps as a non-US person it's difficult to get to grips with the concept of state based tax jurisdictions that are so vastly different from Federal tax enforcement.

So, why would people choose a "pass-through" taxation (under an S-Corp or LLC) if all profits are taxed at personal income tax rates PLUS they are subject to self-employment tax (or FICA contributions)?

On the other hand, under a C-Corp the profits "taxed at corporate tax rates" ... --> what does that mean exactly in NV? As they don't actually charge this? But if YOU as the sole shareholder of your own C-Corp live in another state that does tax corporate profits...as far as I understand, you are required to register your "foreign" NV based Corp in your "home state" and then the very Corp profits ARE taxable. SO WHAT's the point of having a business set up in any of those "tax havens"?

I understand in Corp, you have the additional advantage of being able to deduct your own salary as a business expense, but with regard to the remaining profits that are retained in the Corp ... even in a "no income" state, will they not be taxed at a Federal level? And if you live in another state, eventually you will need to distribute them to yourself, in the form of dividends...and again, taxed at your personal income tax rate.

What am I missing?

I'd like to understand this from both a pure US resident perspective, but I'm also interested in learning what US tax obligations/implications there are for a non-US citizen living outside of the USA but with an LLC or Corp in the US!