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  1. #1
    Join Date
    January 17th, 2005
    Accountant not web-savvy. Tax explanations?
    Hi. I'm sorry if I'm posting in the wrong place, but I can't find a related category.

    I receive small amounts of income from lots of different affiliate programs - linkshare, cj, etc.

    I kept track of all the affiliate checks I received in 2004. I never received any 1099 forms or any other tax reporting information from any of my programs/merchants.

    I thought the affilate income would be treated as income from services just like the other income I earn as a web developer/webmaster. ??

    Now my accountant, who has never heard of Affiliate Programs is asking me what kind of income my affiliate payments are.

    I checked linkshare and cj's web sites and searched for hours, but I can't find any information on how to categorize the income.

    What am I missing here? Can you direct me to some information where I can learn more?

    Sure appreciate your help. This web site is so helpful.

    Best regards, April

  2. #2
    Moderator MichaelColey's Avatar
    Join Date
    January 18th, 2005
    Mansfield, TX
    It's just plain business income. If you would have received any 1099's, it would have appeared on a 1099-MISC box 7 (nonemployee compensation). It basically just goes on line 1 of your Schedule C, assuming you're a sole proprietor.
    Michael Coley
     Affiliate Tips | Merchant Best Practices | Affiliate Friendly? | Couponing | CPA Networks? | ABW Tips | Activating Affiliates
    "Education is the most powerful weapon which you can use to change the world." Nelson Mandela

  3. #3
    Join Date
    January 17th, 2005
    Talking Sincere appreciation
    Dear Michael.

    I just wanted to thank you for taking the time to reply to my post.

    I also thought it would be "business income".

    However, I was really getting concerned that I might have hours and hours of time ahead of me trying to reconcile 1099 forms.

    I think I should be fine this year as I didn't earn more than $1,000 from Linkshare and CommissionJunction.

    Anyway, now I can call it a night and get a good night's rest.

    Have a nice evening and thanks again.


  4. #4
    notary sojac Herb ԿԬ's Avatar
    Join Date
    January 18th, 2005
    Central/Western NY State
    your business provides a service, only, unless you maintain an inventory of things you sell.

  5. #5
    Join Date
    January 17th, 2005
    Orlando, FL

    CJ and LInkshare and the like are not required to send you a 1099 unless you earned over $600 in the year. Even then, they have to fill one out with the government, but are not required to send it to you even if you earned over $600. However, if you earned over $600, be assured that the IRS is aware of the money. Under $600 and it will be hit or miss, but make sure you claim it anyway.

    To help your accountant out, tell him that an Affiliate is basically a contract sales person and you are getting sales commissions. That will be in language he is more readily to understand. Make sure you claim all of your expenses too and don't think you are cheating the IRS.

    Here is what you can claim:

    - If you have a room or area of your house dedicated to your work (for me it is a room that is my office). You can deduct, mortgage/rent, water/sewer, and electric as a percentage of the house. For instance a 100 sq ft office in a 1000 sq foot house is 10%. So you can deduct 10% of your electric bill as being an indirect business expense. You can also claim 100% of your phone bill and internet bill as they are direct expenses to running your business.

    - I claim my cell phone bill as well as it is my primary number for all of my work related items. If you use your cell phone as such, you can claim that as well.

    - P.O. Box rent if you get your checks there, your subscription to Revenue magazine, any classes you take in HTML or the like, and so on.

    Try to stay away from things like mileage and food unless you document the heck out of what you were doing at that time. And just because you put your web site domain on your car, when you are driving to the store for a gallon of milk, that is not business mileage. The IRS doesn't like that one at all.

    To learn more, go to Jackson Hewitt or HR Block or one of those and take their tax preparation course. It is a great way to learn the ins and outs of what is legal and what is rumor.

    The $99 I paid for the class saved me about $500 last year and this year probably close to $2,000 in taxes.
    Chris Mayr
    When amassed, even dust can become a mountain.

    There is a finite amount of intelligence but an infinite amount of stupidity in the universe

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