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  1. #1
    ABW Ambassador Sam Bay's Avatar
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    A tax newbie here.

    I've been getting a lot 1099's this week, and wanted to know what to report.

    Do I report only those amount on 1099 forms, or do also report other small amounts from Indies, advertisement fees?

    Thanks,

    _________________________________________
    "Only dead fish swim with the stream all the time"

  2. #2
    Resident Genius and Staunch Capitalist Leader's Avatar
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    Legally, you're supposed to report *all* of your income, even if you don't get a 1099 for it.

    ~Cheapskate merchants need not apply

  3. #3
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    Report it all and get an accountant.

    I work in lounge pants

  4. #4
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    SamBay,

    If you are not stashing 50% away for your taxes you are in for a rude awakening.

    For those of you viewing, if you did not pay your city tax, property tax and state taxes. It WILL catch up to you!

    Starting an online business is fun and easy, but it does not give you or anyone a FREE card to not report. In fact you will be crying as your house is auctioned or whatever the IRS does now a days for those individuals that do not report.

    On another note, claim your home as part of your business

    Have to move

    And whala, you are really screwed, as you now have to annotate the home as PROFIT and annotate those taxes.

    I must say…

    It appears an easy venture into the world of business on the Internet, what most people forget is that taxes are taxes. And the IRS can care less how you got the money, only that you give them there required pay off. If you do not pay off the government we will se you posting about how you lost your house or whatever.

    WAIT

    Can you post from JAIL?

    SandraR

  5. #5
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    What Trust said, except I will add, get a GOOD accountant.

    Keep your nose clean, claim what you should claim, report all your income and let the IRS leave you alone.

    IamJaloppy

  6. #6
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> On another note, claim your home as part of your business

    Have to move

    And whala, you are really screwed, as you now have to annotate the home as PROFIT and annotate those taxes. <HR></BLOCKQUOTE>

    I thought the IRS changed that so you didn't have to claim all that as cap gains?

  7. #7
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    My preference is a good accountant. What someone says and what is in the pubs are normally 2 different things.

    SandraR

  8. #8
    Action Jackson - King of the World
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    Jesus 50% is quite high. Tha's more than they'd take If I was working

    Jack Mitchell
    http://kattskozykorner.com
    http://clothing-to-go.com
    http://sports-to-go.com

  9. #9
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    I haven't received a single 1099 this year so far. I know exactly how much I made last year, though, so I'm not too worried if I don't receive them.

    Definitely set part of your profits aside for the taxman. Actually, you should pay quarterly so you don't get hit with an IRS penalty at the end of the year. I'm paying all of mine from last year when I file. But I'm increasing the withholding on my day job right now to take care of this year's taxes.

    Michael

  10. #10
    Moderator MichaelColey's Avatar
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by jackson992:
    Jesus 50% is quite high. Tha's more than they'd take If I was working
    <HR></BLOCKQUOTE>It really depends. Being self-employeed, you'll pay BOTH halves of the Medicare and Social Security taxes--15.3% total. Depending on what bracket you're in, your federal rate could be up to 35%. You may have state and city taxes too, depending on where you're located.

    50% really isn't that far off.

    Here's an example: Let's say you and your wife are making $80,000 per year in your day jobs. That puts you in the 25% bracket for any incremental income. Add the 15.3% "self-employment tax", and you're at 40.3%. Add state tax (often 5% or more) and you're over 45%.

    Michael Coley
    Amazing-Bargains.com

  11. #11
    ABW Ambassador erninator's Avatar
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    So many of us find all sorts of ways to find deductions and other ways to legally reduce our taxes. But, the less you pay now means a really disappointing income from social security when you retire. In addition to saving 50% to pay taxes consider contributing to an IRA.

    Ernie

    It may be that my sole purpose in life is simply to serve as a warning to others.

  12. #12
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> Tha's more than they'd take If I was working
    <HR></BLOCKQUOTE>

    Not really. At a j*b, the true expense of taxes is hidden from the w*rking stiffs. But the employer is actually paying 1/2 the Soc. Sec. tax and Medicare tax, as Michael said. You don't see that part deducted from your j*b checks, but it means the employer can't pay you as high of a wage as they could if they weren't stuck with that tax. So translates into a "silent" pressure against wages.

    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> So many of us find all sorts of ways to find deductions and other ways to legally reduce our taxes. <HR></BLOCKQUOTE>

    Yeah, deduct everything you legally can and the tax bill shrinks a lot! Software, books, the computer, printer and paper, bad*ss internet connection, hosting, advertising, graphics work (if you hire it done), etc. are all deductions.

    As for the 50% it depends on what tax bracket you're in, too. The more you make, the bigger the percentage the Feds want (for standard income tax, not soc. sec.).

    ~Cheapskate merchants need not apply

  13. #13
    Moderator MichaelColey's Avatar
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    What do you guys find to spend all the money on? I buy everything I can and I still can't seem to spend it all. Do you think a flatware set is deductible?

    Great advice on the IRA. Check out all the different options (traditional, Roth, SEP, and SIMPLE). With an SEP IRA, you can contribute up to 20% of the first $200,000, which is $40,000. If you're still working and your company has a 401k or 403b plan with matching, make sure you take advantage of that first.

    Michael Coley
    Amazing-Bargains.com

  14. #14
    Resident Genius and Staunch Capitalist Leader's Avatar
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Do you think a flatware set is deductible? <HR></BLOCKQUOTE>

    Product testing...

    ~Cheapskate merchants need not apply

  15. #15
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    Gonna buy a new car later this year and slap my domain on it or wrap it, advertising deduction

    I work in lounge pants

  16. #16
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by Leader:
    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Do you think a flatware set is deductible? <HR></BLOCKQUOTE>

    Product testing... <HR></BLOCKQUOTE>

    NOOOOOO

    If you do product testing, you cannot use that item or sell it ever. Product testing requires you closet that item until you drop dead I think.

    Truly, if you do classify product testing, you can only test the article, label, and then annotate the results for publication. If the IRS decided to stop by your house your product test log needs to be accurate and the item needs to be stashed away in the same shape it was when you packed it into he closet.

    YES I thought of that one also.

    SandraR

  17. #17
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    Two issues here. First, as far as reporting, you have some options. If you don't receive a 1099 from a merchant, then they aren't reporting your income to the IRS. That shifts the recordkeeping responsibility back to you. And, if you just happen to not keep good records, well then you might overlook some income when you file your tax return. The IRS has invested an incredible amount of effort to have us believe they are all-knowing, but they aren't. In fact, they're no better than the typical government agency, and we know how they are, don't we? It's up to you, but my accountant told me not to spend a lot of time on this -- just add up the 1099's you receive and report them.

    And now for the second issue - the fun one. What can you write off, and how can you do it? There are two sub-parts to this issue -- (1) how to claim expenses you would have incurred anyway, and (2), how to take a deduction on a purchase or activity that you really want, but can't afford at the full price. Both of these aren't that hard to figure out. PDA's, printers, computers, office supplies, DSL charges -- they're all part of your ability to conduct your business, and they are legitimate deductions. You can add to this list items like digital cameras ( to take pictures for your website), furniture and artwork for your home office, etc. Like to travel? Then put up a page on your site where you have affiliate travel links and tips and photos from your trips. Your trips are now deductible (this is how travel agents get to write off their vacations). Keep in mind that you have to make money on your overall business, or it's considered to be a hobby by the IRS. But you can lose money on portions of your business (like the trips). Have some fun with this -- no matter how creative you are, you still won't approach the ability of large corporations to find tax loopholes.

  18. #18
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    Better make a statement while people are questioning and reading.

    When I first started my business - way before the Internet. I did my taxes myself. In 1996 I got audited, needless to say it cost me $5000+. All my arguments for not getting an accountant went away fast.

    Since then I will never and I mean never listen to others unless they tell me to go seek professional advice.

    SandraR

  19. #19
    Resident Genius and Staunch Capitalist Leader's Avatar
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    SandraR--Relax, I was only kidding about the product testing!

    Although that is an interesting point you brought up. If I was really going to claim that I would make sure about how it worked.

    The deductions I actually take are those like I mentioned in my other post--straightforward business expenses.

    ~Cheapskate merchants need not apply

  20. #20
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by Leader:
    SandraR--Relax, I was only kidding about the product testing!<HR></BLOCKQUOTE>

    Leader,

    I have tried all kinds of tricks, when you mentioned the product testing *warning* *Warning* went off in my head. Some idiot like me will try it, so I thought it best to stop them before they tried it.



    SandraR

  21. #21
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    Better than deducations after the fact, form a corporation, use the company credit card to make purchases for valid items.

    In essence, everything you buy is 50% off.

    Of course keep receipts and contact your accountant for exact details, but that is the rough idea. Anything your company can buy, it should buy. Just don't get stupid. As others said, your internet connections, printer, paper, pcs etc.

    Chet

  22. #22
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    Almost forgot to add.

    No profit in 2 years and you are no longer a business but a hobby!

    So make sure you do not over deduct!

    SandraR

  23. #23
    ABW Ambassador Sam Bay's Avatar
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    Thanks everyone, and, Tom thank you. I'll talk to an accountant and tax advisor soon. I wanted to see how you guys are going about it.

    I did record all of my affiliate income to the cent - I have other online business income for which I have to go through the whole year to see exact figures because they're not well kept. I received checks as little as 53 cents from companies I'm affiliated with, so wondered how/whether toI report them. I did not form a business, so I'm paying as individual. I didn't make big business related purchases last year, just the usual stuff domain, hosting, etc.

    SandraR, thanks for the warning. I do have enough money to pay to the tax man. I have some other legitimate deductions like tuition payments, so it ain't too bad.

    _________________________________________
    "Only dead fish swim with the stream all the time"

  24. #24
    Moderator MichaelColey's Avatar
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    One other tip on the IRA... It's not too late. You can still make a contribution (at least with a SEP IRA--not 100% sure on the others) up through the date that you file your return and still have it count for 2003.

    Michael Coley
    Amazing-Bargains.com

  25. #25
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> but my accountant told me not to spend a lot of time on this -- just add up the 1099's you receive and report them. <HR></BLOCKQUOTE>

    But if you get audited, you are screwed. Then they will find the missing pieces. Report ALL income.

    ------------------------------
    "It be's dat way sumtimes." ~ Coco B. Ware

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