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  1. #1
    More Cheesier Than Ever Cheesehead's Avatar
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    This has probably been addressed but I could not find it in a search.

    I have income at LinkShare that is under the threshold so was not paid out. I assume that I do not report this until it is paid out, meaning I will potentially report this income earned in 03 in next years taxes. Am I right on this?

    I am going with a tax accountant. This has become more than a hobby now and the word "audit" is about as scary as Jack Nicholson staring through a hatcheted out section of my wall yelling "Here's Johnny". http://www.labelfreak.com/Movies-Act...%20shining.htm

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  2. #2
    Web Ho - Design B!tch ~Michelle's Avatar
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    If you have not received the actual payment you do not report it.

    ~Michelle
    "All I ask is a chance to prove that money can't make me happy."
    "Work to become, not to acquire." -- Confucius

  3. #3
    ABW Ambassador phillyburbs's Avatar
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    Hmmmm ... I'm not so sure about that, ~Michelle. If you run your books on an accrual basis, the income is reportable. If you run your books on cash basis, it's not. There are variants in between, but I think that's the core of the decision. CheeseHead - your accountant should be able to figure that out in a matter of minutes.

    Karl Smith >>> phillyBurbs - Your Internet Starts Here
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  4. #4
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    Most individuals do their accounting on a cash basis. In affiliate marketing you can't guarantee that you'll ever see that income, so why do it on an accrual basis.

    Therefore, you don't report that income until the date the check is cut.

  5. #5
    ABW Ambassador phillyburbs's Avatar
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    REM:
    Agreed. Most. And if you keep books on a cash basis, you don't report it until you have the cold, hard cash (or check) in your hot little hands!

    Karl Smith >>> phillyBurbs - Your Internet Starts Here
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  6. #6
    Web Ho - Design B!tch ~Michelle's Avatar
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    Karl, you are correct.

    I assumed most everyone in the affiliate marketing business worked on a cash basis since you never know for sure if you will receive the money in the end.

    ~Michelle
    "All I ask is a chance to prove that money can't make me happy."
    "Work to become, not to acquire." -- Confucius

  7. #7
    ABW Ambassador Sam Bay's Avatar
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    All wrong.

    Even if you do your accounting on accrual basis, you do not report it. You cannot, yet, assume that you earned that income, because you may never reach the threshold, and you may never get paid. And, the merchant is not required make any payment to you at this point.

    So, don't report it.

  8. #8
    ABW Ambassador phillyburbs's Avatar
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    SamBay:

    You may believe it to be wrong, but I know it to be correct. So it goes.

    Karl Smith >>> phillyBurbs - Your Internet Starts Here
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  9. #9
    Moderator MichaelColey's Avatar
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    Karl is right. In accrual basis accounting, you report your income and expenses in the period in which they are incurred. There is an allowance for doubtful accounts if you don't expect to collect 100%, or you can write it off if you have reason to believe you'll never collect it, but it's still reported when incurred in accural basis accounting.

    In any case, I can't imagine a situation where cash basis accounting wouldn't be the best way for the average affiliate site so it's pretty much a moot point.

    Michael Coley
    Amazing-Bargains.com

  10. #10
    ABW Ambassador phillyburbs's Avatar
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    Michael:

    Thanks ... and agreed on the last point.

    Karl Smith >>> phillyBurbs - Your Internet Starts Here
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