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  1. #1
    ABW Ambassador
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    This is my first year being an affiliate and i was wondering if anybody knew how the taxes work out. For example with CJ i will make over $600 so i know i will pay there, but how does it work with merchants that send their own checks and the total doesnt reach $600 for the year, do you have to report that? If i'm affiliated with hundreds of merchants is that like having hundreds of employers?

  2. #2
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by johnniebry:
    This is my first year being an affiliate and i was wondering if anybody knew how the taxes work out. For example with CJ i will make over $600 so i know i will pay there, but how does it work with merchants that send their own checks and the total doesnt reach $600 for the year, do you have to report that? If i'm affiliated with hundreds of merchants is that like having hundreds of employers?<HR></BLOCKQUOTE>

    well, your "supposed to" report all income. but from what i have heard, reporting income that hasnt been reported can be hazardous to your health!

  3. #3
    Full Member
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    You will 1090s from merchants that report. File the 1090 with your tax return. You have the option of paying into the irs on a montly or quartly basis to eas the burden come tax time. I believe it is a matter of the interest rates you are getting versus the rate th irs charges for underpayment.

  4. #4
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    Johnnie - I filed for the first time as an affiliate last year. I received about 5 1099s from various merchants. You can't report the income if you don't have the 1099 but most don't send one if it's under a certain dollar amount.

    Your best bet is to hire an accountant to handle your tax filing. It only cost about $125 and it is well worth it. They can also verify your home business and income later if you were to want to make huge purchases. ie. when I purchased my new house, the mortgage company wanted proof of my business via a letter from my accountant. Which at the time I didn't have one, so I hired one fast quick and in a hurry. They will also assist you in setting up a plan to prepay taxes. Any self-employed person should have an accountant. It just validates your business as far as helping it look legit and assures you will have your taxes filed correctly.

  5. #5
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>but how does it work with merchants that send their own checks and the total doesnt reach $600 for the year, do you have to report that? <HR></BLOCKQUOTE>

    Ahhh if only they sent cash ...

    Every penny you receive by check should
    be recorded as income. When you deposit or
    even cash checks, your bank has a record
    of it that Can be accessed by the IRS.

    One of the worse things you can do is
    under-report income.

    Jada is absolutely right -- In fact you
    should consult a bookkeeper or accountant
    Now -- have them show you how to keep
    monthly records so you can hand the records
    over to them at the end of the year. They
    should also advise you as to What is
    considered business expenses. You'd be
    surprised at the things you can
    right-off.

    Anne [img]/infopop/emoticons/icon_smile.gif[/img]

  6. #6
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    You can probably offset most of your income with the many home business tax deductions that are available to you - thus not having to pay income taxes on that.

    I recommend checking out the free tax tips offered at this site to make sure you maximize your tax deductions -
    www.internettaxhelper.com

  7. #7
    Member
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    January 18th, 2005
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    What steps do you take when you are a Merchant running your own affiliate program, with your own software?

  8. #8
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    "They can also verify your home business and income later if you were to want to make huge purchases. ie. when I purchased my new house, the mortgage company wanted proof of my business via a letter from my accountant.~Jada"

    Good grief! (They think every business has an accountant :rolleyes: )

    At least to get my car I only had to show 3 bank statements. Although they mysteriously "lost/didn't get" the faxed copies they asked for first and then demanded to see the originals...

    Johniebry--I will second that you're supposed to report all income.

  9. #9
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    LookMonster --

    Same advice -- go to an Accountant or
    bookkeeper, now.

    One important thing you need is
    each affiliate's Name, Address, Social Security Number or EIN (if working &
    receiving checks as a business). You
    can request your affiliates to fillout
    a W-9 Form.

    This way you can complete 1099's for
    each affiliate at the end of the year.

    And, if I had an affiliate program and
    paid affiliates, I would create a 1099
    for each and every one of them, even if
    they didn't receive $600 for the year.
    This way you can easily show who received
    affiliate fees and won't have a Big
    Affiliate Fee Expense without names behind
    all of it.

    Anne [img]/infopop/emoticons/icon_smile.gif[/img]

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