Making Too Much Money With Adsense = Problem

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This post is just an advisory for those that may be in my situation.

I am retired with a modest retirement and Social Security check. Taxes are taken from my retirement check each month but not from the SS check. At the end of the year I usually end up paying a few hundred dollars to cover the Social Security income.

Four years ago I started a recipe web site just as a hobby. It made little Adsense income until last year when it took off. Like Social Security, Adsense does not deduct taxes during the year. So, I went into shock when I found out I owed $2,400 in tax last April 15.

The point is this...be aware that if you suddenly begin making significant money with Adsense you should get tax advise early in the year. Do not wait until year end to think about any possible tax burden.
#adsense #making #money #problem #tax burden
  • Profile picture of the author yukon
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    I always set aside 25% earnings for tax.
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    • Profile picture of the author BAC
      Originally Posted by yukon View Post

      I always set aside 25% earnings for tax.
      That is perfect Solution!

      VGM
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  • Profile picture of the author kiliki
    Great problem to have! If you start making significant income with adsense, you might consider starting a real business entity as well. You can already write stuff off, but a CPA will tell your there are other advantages to having an business setup properly and avoid paying more taxes than you have too. Consult with a CPA that knows internet marketing to be sure they are advising you right.
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    • Profile picture of the author itzalgud
      Thanks for the reply's. I know now that I should have thought about the taxes long before April 15th. But, my income is very modest so when the Adsense income went crazy I just didn't think it would have such an impact.

      Another factor is that I have no deductions to speak of. Single (widower), no home (I rent), no dependents.....I could not fine even one dollar that I could comfortably deduct from the Adsense income. At least none that would make any appreciable difference.

      So, my answer has been to increase the tax deductions from my peasion check and to reduce the Adsense income by removing a lot of the ads from some pages of my site.

      Sad state of affairs, huh?
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      http://www.olsouthrecipes.com/
      Authentic Southern Recipes
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      • Profile picture of the author yukon
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        Originally Posted by itzalgud View Post

        Thanks for the reply's. I know now that I should have thought about the taxes long before April 15th. But, my income is very modest so when the Adsense income went crazy I just didn't think it would have such an impact.

        Another factor is that I have no deductions to speak of. Single (widower), no home (I rent), no dependents.....I could not fine even one dollar that I could comfortably deduct from the Adsense income. At least none that would make any appreciable difference.

        So, my answer has been to increase the tax deductions from my peasion check and to reduce the Adsense income by removing a lot of the ads from some pages of my site.

        Sad state of affairs, huh?

        I'm no tax man but I see you have a recipe site in your forum sig., you might talk to your tax man & see If it's possible to write off your entire grocery bill off on taxes.

        If you setup a business with a business tax ID from your state of residence (assumes your in the US) you can operate as a true business, then start writing off everything involved in your business.

        Example,

        If you created recipe videos for Youtube (monetize with Adsense) I would imagine you could personally eat for free for 365 days a year. You could also write off anything needed to produce the food videos (camera, cookware, video editing software, props. for the video (dishes, etc...).

        Most recipes feed 4-6 people, produce 3+ videos a week & enjoy the leftovers, lol.

        Make a list of every single thing (be very detailed) it would take to make a food/recipe video for Youtube, then ask your tax person what they think about reducing your tax bill.

        The food video is only 1 idea to reduce your tax money, the important thing is you keep an extremely detailed log of everything you write off on your tax bill.

        One thing that's important is to separate your personal money from the business. Whenever you need something, find a way to work it into the business plan, just make sure it's legal first (talk to your tax person).

        Again, I'm no tax man & everyone has different situations, you just need to find a local tax person to help you figure out the best plan for you.
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        • Profile picture of the author aygabtu
          Love to have that problem...I am still paying more than I'm taking in though.
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      • Profile picture of the author Green Moon
        Originally Posted by itzalgud View Post

        So, my answer has been to increase the tax deductions from my peasion check and to reduce the Adsense income by removing a lot of the ads from some pages of my site.

        Sad state of affairs, huh?
        Why reduce your AdSense income? Even if you were paying at the maximum Federal rate and at an age where other income reduces your SS benefits, you shouldn't lose 100% of your additional income. An extra dollar of income should leave something in your pocket.

        You should talk to your accountant and make sure based on your own real numbers, but it seems to me you should still try to get the maximum AdSense income and simply plan for the tax consequences.
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  • Profile picture of the author boxoun
    Good problem to have but shocked that you owed 2500? That number makes me happy.
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  • Profile picture of the author dadamson
    That's a good problem to have! save a quarter of it to cover tax and spend 3 quarters, don't spend it all and then wonder how you will pay the tax on what you've earned. Everything would be taxed. Good job on making it big through AdSense though!
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  • Profile picture of the author MaryPabelate
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    And this is not applied to all the countries..
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  • Profile picture of the author Trev81
    Its not a nice surprise but speak to an accountant and set up a business name. You will be surprised what you can claim as an expense. Office equipment, stationary, heating, lighting, office furniture etc.
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  • Profile picture of the author TeamTCW
    You mean when we would have business account then we may not have to pay taxes?
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  • Profile picture of the author yukon
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    Originally Posted by TeamTCW View Post

    You mean when we would have business account then we may not have to pay taxes?
    Lol, No.

    Your responsible for taxes regardless what account type you have.
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  • Profile picture of the author faithyunn
    Well tax is our responsibility we are oblige to pay for that because we are concern citizens right?
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