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  1. #1
    Newbie
    Join Date
    January 18th, 2005
    Posts
    13
    Hi,

    I am a student in California. I join CJ.com and I pay a Canadian company to promote my web site. How should I declare my personal income tax?? Another CJ account, I don't even use my name since the check is paid to the Canadian company....

    The problems:
    1. CJ issue checks to me and report my Social Security Number. Assume I get $5,000 from CJ and pay $4,500 to the Canadian company as marketing cost, do I get taxed $5,000 or $4,500?

    2. I open another CJ account using my Social Security Number but the "PAYEE" is the Canadian company. Since I am just a part-time agent for this company, they will pay me 10% of the check every month.

    The reason is simple. I'm just a person and I won't be able to make $10,000/year on my own.
    My so called "tax advisor" suggest that I pay tax on $5,000 income, which is ridiculous! What supporting document is needed to declare the cost? What document I need to request from the Canadian company??

    I know many affiliates have to pay Overture, fastclick etc to get traffic. Some affiliates even pay 90% of the CJ income to pay CPC cost... How do you declare those cost?? Wouldn't IRR going to ask a lot of questions?

    [ 04-11-2002: Message edited by: hope4you ]

  2. #2
    Newbie
    Join Date
    January 18th, 2005
    Posts
    1,336
    Does your tax advisor work for the IRS by any chance? [img]/infopop/emoticons/icon_smile.gif[/img]

    I'm in the UK so theres a limit to how much I can help, but one thing I do know is that you pay tax on your income, not your turnover.

    I think the other Americans here are all asleep at the moment, because they keep strange hours, but no doubt they'll wake up later and give you more info.

    I

  3. #3
    Member
    Join Date
    January 18th, 2005
    Posts
    153
    You situation seems a little more complicated than mine, maybe it isn't but it seems that way.

    The short answer: I claim outright all earnings and then claim any and all expenses which offset the inflated income numbers. Advertising is a good one but also fees expenses etc. Your actual taxable income is not, say the $5000, but is reduced by your expenses, say the $4500. Right off hand I don't think it is dollar for dollar reduction but some warped and twisted equation the IRS uses.

    I use a program to do my taxes and it always looks like I owe the IRS a fortune in taxes until I put in my expenses and then that frightening number falls significantly.

    Like I said, that is the short, less accurate description. Also my interpretation of what the computer program is up to. [img]/infopop/emoticons/icon_smile.gif[/img]

    If you are lucky there is someone in here who actually likes the twisted process called American taxes and can explain it better.

  4. #4
    Member
    Join Date
    January 18th, 2005
    Posts
    153
    As far as documentation goes, receipts, invoices or anything with either your name or the name of one of the companies you are dealing with on it. And the numbers you are claiming.

    If you don't have it by tax deadline time, just make sure you have the paperwork within the time frame when they could possibly audit you.

  5. #5
    Member
    Join Date
    January 18th, 2005
    Posts
    73
    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by hope4you:
    Hi,
    1. CJ issue checks to me and report my Social Security Number. Assume I get $5,000 from CJ and pay $4,500 to the Canadian company as marketing cost, do I get taxed $5,000 or $4,500?

    2. I open another CJ account using my Social Security Number but the "PAYEE" is the Canadian company. Since I am just a part-time agent for this company, they will pay me 10% of the check every month.


    How do you declare those cost?? Wouldn't IRR going to ask a lot of questions?

    [ 04-11-2002: Message edited by: hope4you ]
    <HR></BLOCKQUOTE>

    I'm no tax expert, but in my opinion ...

    in Example #1 your gross taxable income would be the $5000 and your business expense would be the $4500 (a cost of doing business) ... leaving your taxable income at $500

    in Example #2 I would assume your gross taxable income would be the 10% of the income you receive from the Canadian company ... if you aren't receiving the total income, it shouldn't be yours to be taxed on ... but, my next question would be how can the account be in your name using your ss #, yet the Canadian company be the recipient of the total income and you only receive 10% of that as their agent?

    If you have viable proof of your expenses - an invoice paid by check, credit card or cash and the cancelled check, a paid credit card receipt and/or a receipt from anyone to whom you pay cash to -- and can prove during an audit that it is a viable cost of doing business as allowed under the IRS deduction rules - then, you shouldn't have any problems declaring your costs/expenses and the IRS shouldn't question your return ...

    Also, I believe the IRS will give you anywhere from five to seven years before your business starts making a profit ...

    Also, hobbies are not considered businesses too so you may want to keep that in mind when considering the way you handle the business, it's income and expenses...

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