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Tax related question
How and when google deduct TAX from US publishers

 6:01 am on Aug 12, 2005 (gmt 0)

Hi all,

I have a question.

can anyone tell me please how the TAX from the earnings of the US publishers is deducted?

Does google, bank or tax department deduct the tax and when it is deducted?

I receive the same amount of check as shown in my account (no deduction of tax yet I think so).

Your guidance will be highly appreciated.




 7:33 am on Aug 12, 2005 (gmt 0)

when payment is made a certain % of your money is withheld and sent to a federal reserve bank from which it is paid quarterly into the IRS showing your SS #.

At the end of the year Google will send you a statement showing how much you earned and how much tax "you" have paid in. It all depends on how you filled out the tax forms when you joined up.



 8:50 pm on Aug 12, 2005 (gmt 0)

Most of the time google does not deduct tax. As a "contractor" on 1099 google is not obligated to deduct tax from you. If the IRS had a judgement against you or if you were short last year and did not file the quaterly reports, they might ask google to withhold tax from you before your checks are issues.

Since you can deduct your expenses against your earning, even if google wanted to, they would not know how much to deduct. What if you spent more on adwords to make the money in adsense.


 8:55 pm on Aug 12, 2005 (gmt 0)

what would your site be called dbhatta? What genre or niche I mean?


 9:22 pm on Aug 12, 2005 (gmt 0)

I would say that Google has to or we would not have to fill out the tax forms.

Besides there is a little thingy called the Uniform Privacy Act. IRS cannot tell Google or anyone outside of other Government or State agencies any information about you or your tax liabilities.

If you filled out the tax forms claiming an exempt status then nothing is deducted.

Google does not try to figure out your expenses, etc. they only withhold according to what you tell them on the withholding tax form that you had to fill out.



 9:32 pm on Aug 12, 2005 (gmt 0)

Google is not withholding tax for you. You are liable to pay your taxes. Be careful!

You will get a 1099 at the end of the year. Google will use the tax information you provided in order to prove to the government that they paid you that money, and they can write it off of their taxes as an expense.

However, you can write off all your web hosting, site developement and all related expenses against your Google earnings.

If you do not know how to do this or understand what I am saying...get yourself a tax accountant. Do it now, not next April...


 9:48 pm on Aug 12, 2005 (gmt 0)

I would say that Google has to or we would not have to fill out the tax forms.

Nope. If you're a U.S. resident, you filled out a form so that Google could report your earnings to the IRS and to you on Form 1099-MISC, which is altogether different from the W-2 form you'd receive if you were an employee and Google were withholding taxes.

As an AdSense publisher, you're self-employed (at least as far as Google is concerned). Assuming that you earn enough money from AdSense and/or other sources to justify keeping track of business expenses and the like, you'd normally file a Schedule C (Profit or Loss from Business). You enter your AdSense and other self-employment income on Schedule C, deduct your allowable expenses from the gross amont, and transfer the net (after deductions) to the appropriate line of Form 1040. If you don't understand any of this, you should look up "Schedule C" in Google and read some basic articles on the topic. Using a tax program like TurboTax or TaxCut is also a good idea if you don't use a tax accountant.


 1:46 am on Aug 13, 2005 (gmt 0)

AS far as the US citizen go, here is my stroy.
2004 saw a very revenues from Googlem. Luckly, we banked 50% of it until tax time. Sure enough I had a heffty tax bill due that I paid on April 14th.
Now the rub......
Per my tax man, I now have to make Quarterly Payments based on 2004 paid, but the revenues from Google this year are down by 50%.
So, this year almost all of my revenue is just going to pay tax payments that I won't owe next year.
Also had to pay into Social Security.
Anyway my tax guy said I can make an adjustment in the fourth quarter but the first three are calculated on 2004.

I can see a potential for a lot of guys to get into tax trouble if they are not careful.


 2:30 am on Aug 13, 2005 (gmt 0)

Okay, I stand corrected :-)~

I was baseing it on banks who can withhold taxes from your interest earned if you so desire....My bad.



 1:05 pm on Aug 13, 2005 (gmt 0)

golocal, get a second tax accountant opinion. Those quarterlies are estimates. If you _know_ your tax liability will be less this year, you should be able to lower your payments accordingly.


 4:06 pm on Aug 13, 2005 (gmt 0)

I had the same problem as golocal and had to pay back taxes. IMHO ,put some of your adsense money aside for the tax man.


 1:58 pm on Aug 14, 2005 (gmt 0)

If you go to this url and read the thread this will be all cleared up for everyone. I was right on my first post.

Please read this to put misconceptions to rest.




 3:12 pm on Aug 14, 2005 (gmt 0)

If you read that entire thread, you'll see that the Google was only withholding money from publishers who checked that they were subject to backup withholding from IRS.

I've been happily receiving checks for more than 2 years without anything being withheld.

On the other hand, I file Schedule C and quarterly estimated taxes, so IRS has all their money.


 5:24 pm on Aug 14, 2005 (gmt 0)

If you go to this url and read the thread this will be all cleared up for everyone. I was right on my first post.
Please read this to put misconceptions to rest.


There are even more misconceptions in that thread than this one.

Again, I strongly recommend to everyone who does not understand even the most basic tax laws and implications of running a business (e.g. getting paid for Google Adsense), get an accountant.


 6:09 pm on Aug 14, 2005 (gmt 0)

It still boils down to checking the right box but by all means consult an accountant, they are trained for this sort of thing.:-)



 6:24 pm on Aug 14, 2005 (gmt 0)

I incorporated this year so (being the 1st year) I don't have to pay much of anything on the businesses' income until next april. My business gives me a 'little salary' so the business withholds appropriately on that amount and pays the IRS quarterly.

As someone else mentioned, next year the business will need to pay quarterly based on prior year's income.

Note that if you make more than about $87K it is often worthwhile to incorporate because you will save about 15% on income above the $87K. And, you can save even more because you can often get away with a small salary - like between $25K and $50K. You only pay FICA, etc on your W2 salary figure.

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