Thread: Paying Taxes on Adsense, etc

I know I'm not supposed to ask if any of you pay taxes, but I do want to know more information about how webmasters pay taxes, what do you deduct as business, etc. I have no idea how to manage self employed money, but if I do make a lot this year I will need to.

Any advice is most appreciated.

Largely these answers depend upon:

• What country to reside in
• What countries you hold citizenship from
• What type of tax entity you are receiving income as

If you are living in the U.S. and you hold only U.S. citizenship, the big issue is what type of tax entity you are operating:

• S Corp
• C Corp
• LLC
• Individual

I almost always recommend forming an S Corporation. If you live in an unfriendly state like New York, Illinois, or California I recommend incorporating in a state such as Delaware or Nevada.

You should be able to deduct anything you use in the operation of your business. Large purchases may need to be deducted over the course of several years. You can even deduct part of the cost of your house or apartment if you use it as your office.

Sweet. Now, is that beneficial? To deduct things?

Also, my girlfriend and I are currently operating our "business" as "individuals" but we want to create something more official.

Also, you know we live in the US. And in the economic shithole that is New Mexico.

Thanks Will!

Originally Posted by gavenecko

Sweet. Now, is that beneficial? To deduct things?

I'm not sure how it is in America, but in Belgium you'll have to pay an extra fee (34%) on the amount of money you made (Earnings - Costs), so the more costs you have, the better..

Even if we go to a restaurant, we ask for the ticket and tell it was a 'business meal'. The more costs you have the better (in Belgium), although that doesn't mean you should buy things just to have costs

Originally Posted by gavenecko

Also, you know we live in the US. And in the economic shithole that is New Mexico.

Off topic, but where in NM? I used to live in Santa Fe.

Originally Posted by m42

Off topic, but where in NM? I used to live in Santa Fe.

Southwestern area. Around that cluster of absolutely NOTHING. I'm 4 hours from Albuquerque, which is actually quite the city....

Originally Posted by Aquarezz

I'm not sure how it is in America, but in Belgium you'll have to pay an extra fee (34%) on the amount of money you made (Earnings - Costs), so the more costs you have, the better..

Even if we go to a restaurant, we ask for the ticket and tell it was a 'business meal'. The more costs you have the better (in Belgium), although that doesn't mean you should buy things just to have costs

Nice! Those are high taxes.

And actually......maybe I should leave the country and live somewhere else.

Originally Posted by gavenecko

Sweet. Now, is that beneficial? To deduct things?

Oh yes!

If you make $100k and you are in the 34% tax bracket, you will pay $34k in taxes.

But...

If you make $100k and have $20k in business deductions, your "net" income can be $80k. 34% of $80k is a lot less -- and you may even end up in a lower tax bracket! You could end up paying only 30% of $80k.

Disclaimer: All numbers are made up; I did not consult the ever-changing tax charts before making this post.

Originally Posted by Will.Spencer

Oh yes!

If you make $100k and you are in the 34% tax bracket, you will pay $34k in taxes.

But...

If you make $100k and have $20k in business deductions, your "net" income can be $80k. 34% of $80k is a lot less -- and you may even end up in a lower tax bracket! You could end up paying only 30% of $80k.

Disclaimer: All numbers are made up; I did not consult the ever-changing tax charts before making this post.

LOL. That's interesting. See, I've never dealt with taxes before. So I'm learning everything now. I wish I made 100k a year. Soon enough!