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This 57 message thread spans 2 pages: 57 ( [1] 2 > >     
What is the tax situation regarding adsense income
aish1108

5+ Year Member



 
Msg#: 3268077 posted 6:28 pm on Mar 1, 2007 (gmt 0)

I made a $2000.00 this month from Adsense and I plan on getting even more next month . I WANT TO KEEP IT ALL! and not give 40% to taxes.

If my Website is being hosted on a website outside the US and I do all my work in my spare time do I have to pay United States taxes? SHOUL I FIND A HOST OUTSIDE THE USA?

I also use CasaleMedia which is located in Ontario Canada, Do I need to pay taxes on this income.

How do I get out of paying taxes?

Should I move to another country, it may be worth it if I can keep all my income instead of paying 40% to the US goverment!

 

BigDave

WebmasterWorld Senior Member bigdave us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3268077 posted 6:43 pm on Mar 1, 2007 (gmt 0)

You have to move to another country, gain citizenship there, and renounce your US citizenship. Until that time, you owe taxes on everything you make, including income from a server overseas or from a company located in another country.

LifeinAsia

WebmasterWorld Administrator lifeinasia us a WebmasterWorld Top Contributor of All Time 5+ Year Member



 
Msg#: 3268077 posted 6:48 pm on Mar 1, 2007 (gmt 0)

If you are a U.S. citizen, moving to another country will not absolve you of your obligation to pay U.S. taxes on your income. You may want to search through the numerous prior discussions on this topic.

If you're paying 40% in taxes, you need to find an accountant who knows what he/she is doing- only $2K/month is nowhere near that high of a tax bracket. And that doesn't even factor in the business deductions.

ConfusedButCommitted

5+ Year Member



 
Msg#: 3268077 posted 7:00 pm on Mar 1, 2007 (gmt 0)

Spend the money on business expenses to expand, buy another website, hire people etc...

arubicus

10+ Year Member



 
Msg#: 3268077 posted 7:34 pm on Mar 1, 2007 (gmt 0)

"How do I get out of paying taxes?"

Welcome to life.

40% is quite high for a $2000 a month unless you have another job.

maximillianos

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3268077 posted 8:12 pm on Mar 1, 2007 (gmt 0)

move out of the US...

elsewhen

5+ Year Member



 
Msg#: 3268077 posted 8:21 pm on Mar 1, 2007 (gmt 0)

there are several states in the U.S. that do not have state taxes: washington, texas, florida, alaska, south dakota, nevada ... and there are a few more. states such as california levy up to 9.x percent on income.

FromBelgium

10+ Year Member



 
Msg#: 3268077 posted 8:21 pm on Mar 1, 2007 (gmt 0)

... and come to Belgium.

surftrack

10+ Year Member



 
Msg#: 3268077 posted 8:30 pm on Mar 1, 2007 (gmt 0)

you don't have to pay your taxes.

you might have to go to jail over it.

but you don't have to pay your taxes.

dauction

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3268077 posted 9:13 pm on Mar 1, 2007 (gmt 0)

Please move out of the United States if you want to avoid taxes..

as a Tax Payer I dont want to pay for your health care , the roads you drive on , the police that serve you , the clean water brought to your home and the sewage leaving your house.

I dont want to pay for your kids to go to schools , or risk our firefighters lives to put out a fire at your home..

You dont want to pay your share of taxes..fine.. then move out of the United States so the rest of us dont need to pay for you and yours

jonaspersson75



 
Msg#: 3268077 posted 9:17 pm on Mar 1, 2007 (gmt 0)

lol. paying taxes. :)

i say like Al Bundy: "over my dead body!"

greatstart

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3268077 posted 9:29 pm on Mar 1, 2007 (gmt 0)

Oh yes, even with earning $2,000 a month you would be in a 40% tax bracket if:

15.3% - goes for self-employment tax (you might get some of it back when you reach 62 yrs. old)

15% federal tax - this pays for your government.

9.x% state tax - this pays for your state services.

It does add up to close to 40%, but you are entitled to offset this by showing some legitimate business expenses which could lower your tax burden substantially.

sailorjwd

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3268077 posted 10:00 pm on Mar 1, 2007 (gmt 0)

Bahamas would be a good place to move.

I believe Mrs. Smith's house is up for sale.

If all else fails then grow up and feel happy that you can contribute to your society and country and not live like a sneaky cheating b*st*rd.

internetheaven

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3268077 posted 10:21 pm on Mar 1, 2007 (gmt 0)

I dont want to pay for your kids to go to schools , or risk our firefighters lives to put out a fire at your home..

Okay, I agree that you need to pay taxes, but I really annoys me that the harder I work, the harder I have to work! 40% is a disgusting amount to have to pay once you cross over thirty-forty grand (in the UK). The average house price in the UK is 200,000 (a hell of a lot more in London). You have to be on 55,000 a year just to get a mortgage for an average house in the UK and then they tax you 40% of your earnings! Does that make sense to anyone?

farmboy

WebmasterWorld Senior Member farmboy us a WebmasterWorld Top Contributor of All Time 5+ Year Member Top Contributors Of The Month



 
Msg#: 3268077 posted 10:27 pm on Mar 1, 2007 (gmt 0)

I made a $2000.00 this month from Adsense and I plan on getting even more next month . I WANT TO KEEP IT ALL! and not give 40% to taxes.

Be sure to remember this on election day.

FarmBoy

incrediBILL

WebmasterWorld Administrator incredibill us a WebmasterWorld Top Contributor of All Time 5+ Year Member Top Contributors Of The Month



 
Msg#: 3268077 posted 10:29 pm on Mar 1, 2007 (gmt 0)

How do I get out of paying taxes?

Death.

LifeinAsia

WebmasterWorld Administrator lifeinasia us a WebmasterWorld Top Contributor of All Time 5+ Year Member



 
Msg#: 3268077 posted 10:32 pm on Mar 1, 2007 (gmt 0)

Please- that level of income does not push you into those tax brackets. (If there is other income involved, that's a different story. But blame your other income not AdSense.)

$2K/month = $24,000/year. That's pretty much poverty level.

Self-employment (S/E) tax is based on profit, not gross. If you can't come up with any legitimate business expenses to bring that down, then you deserve to be taxed on the full amount.

Half the S/E tax comes off on the front page- your AGI's down to $22K now. (And if you are self-employed, you also get to deduct your health insurance premiums on the front pages as well- a sweet deal.) After the standard deduction & self exemption, you're down to about $14K for your taxable income (even less than that if you're married). You're paying 10% tax on the first $7.5K and 15% on the next $6.5K, averaging somewhere around 12%. State tax will be less than 9% for that level of income.

There ARE some things you can do to LOWER your taxes (but not avoid them):
1) Move to a state with lower (or no) income taxes. Yeah, your property or sales taxes may be higher. But hey, your stated goal is to avoid income taxes. (For the people who continue to advocate moving to a different country, that does NOT work, unless you also renouce your U.S. citizenship. And even then, you'll probably still be subject to taxes on U.S.-based income.)
2) Setup a corp or LLC and avoid the S/E taxes. Sort of. Plus it greases the way to some other business-related deductions.
3) Generate more business-related expenses to keep your profit down.
4) Put money into an IRA or setup a SEP/SIMPLE retirement account.
5) Spend some money and talk to a qualified tax advisor about your specific situation.

sonny

10+ Year Member



 
Msg#: 3268077 posted 11:03 pm on Mar 1, 2007 (gmt 0)

Do what Wesley Snipes did; Find a "loophole' in the tax code. He believed the IRS was illegally colllecting taxes anyway.

Wait.....He got caught! scratch that!

BillyS

WebmasterWorld Senior Member billys us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3268077 posted 11:08 pm on Mar 1, 2007 (gmt 0)

You don't have to pay taxes. The consequences you might have to pay.

sailorjwd

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3268077 posted 11:15 pm on Mar 1, 2007 (gmt 0)

Consider setting up a individual 401K. You can save about 25% of income before taxes and you'll be rich when you are my age.

As for UK whiners.. I pay $12K health insurance and co-pays each year. 3 bedroom house costs $800K (although it does have a boat dock :)

mack

WebmasterWorld Administrator mack us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3268077 posted 12:12 am on Mar 2, 2007 (gmt 0)

We all hate paying taxes, but why shoulden't you :)

It's just one of the those things. If you earn you pay.

Mack

Goobao

5+ Year Member



 
Msg#: 3268077 posted 12:37 am on Mar 2, 2007 (gmt 0)

NO taxes in China :)

carguy84

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3268077 posted 12:47 am on Mar 2, 2007 (gmt 0)

as a Tax Payer I dont want to pay for your health care , the roads you drive on , the police that serve you , the clean water brought to your home and the sewage leaving your house.

I dont want to pay for your kids to go to schools , or risk our firefighters lives to put out a fire at your home..


Health Care? I pay for it every month, $300.
The roads I drive on? Full of potholes and nails.
The police? State tax.
The water? I'm pretty sure I get a water bill every quarter.
The sewage? Every quarter, even though for the last 4 years it seems as tho not a drop of sewage made it to the sewer system(long story, broken pipe)
Kids in school? I don't have any kids.
Firefighters? State tax.

Let's be real honest, the US of A does a HORRIBLE job spending our money...but, you gotta pay to play here.

Zygoot

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3268077 posted 1:04 am on Mar 2, 2007 (gmt 0)

... and come to Belgium.

He wants to pay less taxes.. not more.

cmendla

10+ Year Member



 
Msg#: 3268077 posted 1:58 am on Mar 2, 2007 (gmt 0)

The history of civilization has shown that republics and democracies only exist until the people find they can vote themselves funds from the public treasury. At that point the democracy collapses. The usual timeframe is about 200 years. We started in 1776. The simple fact is that tax revenue is spent to buy votes for the politicians.

That said, there are a couple of things you can try.

1. Incorporate as an LLC (limited liability corp) if your state has that. It might cost you a grand or so to set up. Your accounting fees will be several hundred dollars per year, However, you can keep all of your finances for the websites seperate AND you are reducing your liabilty so as to protect your home and retirement if you do things right. (someone suing you because of your website could result in the loss of your house if you are unincorporated)

2. Take all of the HONEST deductions for the business that you can. That is a bit tricky but you can deduct a lot of the cost of running a website but you need to understand what is valid. My advice is to keep it honest because an audit can be a bloody nightmare. A previous poster made a wise suggestion in reinvestment. Spend money to grow the business and it should be deductable.

3. As others have said, remember the tax issue in the voting booth. Politicians buy votes with money they confiscate from people who are motivated and hard working.

At 24k per year you might want to think about the incorporation or LLC route. Also, in my opinion, it might make it easier to sell the business as a whole at a later date. Another advantage to incorporating is that you give your EIN (Employer identification number) instead of your SSN.

One other thought, As people said, renounce your citizenship if you have it or temporarily leave the country if you are in a visa. Then re-enter the country as an illegal alien. The government is planning to waive 2 out of 5 years of taxes for people in that situation with amnesty. If they really offer that paying 40% less in taxes over a 5 year period than U.S. Citizens or valid visa holders would be attractive.

Disclaimer - I'm neither an accountant nor am I a lawyer (Glad I'm not because the regular skin shedding could be a pain)

cg

cmendla

10+ Year Member



 
Msg#: 3268077 posted 2:15 am on Mar 2, 2007 (gmt 0)

One other thing I forgot is that you have to watch your earnings all during the year and make sure you are paying your quarterly taxes or taking less deductions from your regular job to offset your web income.

The US Tax code really penalizes you if you don't have enough withheld during the year. You are supposed to have 20/20 foresight.

You need to add equal amounts each quarter or something like that. A sudden surge in profit in the last quarter could really kill you taxwise.

You are supposed to pay in quarterly regardless of whether you are incorporated or filing a schedule C

If you are working a job where you get a w-2, you can reduce the number of deductions and pay an additional amount. As I understand it, monies paid in that way do not have to go into a particular quarter. So, if you get a surge in profit oct-dec, you have your employer withhold enough to offset.

Like anything else, the IRS can use the 10,000 pages of contradictory tax code to hang anyone they want. It's a better gig than Bernardo Gui and the inquisition.

cg

dollarshort

5+ Year Member



 
Msg#: 3268077 posted 4:57 am on Mar 2, 2007 (gmt 0)

This is really legal! Buy dual citizenship to another country where there are no taxes for world earnings (several in South America), register your business in that country, make yourself an employee of that company, then you can draw up to $85,000 per year in wages and do not have to pay US taxes, its called the "expat tax". The only catch you have to remain there at least 300 days per year. I think this is the only really legal way.

Another possible way, register your business as non profit business, have the money go into that account, dip into it as needed, call it business expenses, like travel, new car ect. Be creative!

Jane_Doe

WebmasterWorld Senior Member jane_doe us a WebmasterWorld Top Contributor of All Time 10+ Year Member



 
Msg#: 3268077 posted 5:19 am on Mar 2, 2007 (gmt 0)

There are many ways to legally reduce your taxes in the U.S. if you are a small business owner.

A couple of books I found helpful were "Tax Savvy for Small Business" from Nolo Press, "Lower Your Taxes - Big Time!" by Sandy Botkin.

Shiznaught

5+ Year Member



 
Msg#: 3268077 posted 7:13 am on Mar 2, 2007 (gmt 0)

> Please move out of the United States if you want to avoid taxes..
>
>as a Tax Payer I dont want to pay for your health care , the roads you >drive on , the police that serve you , the clean water brought to your >home and the sewage leaving your house.
>
>I dont want to pay for your kids to go to schools , or risk our >firefighters lives to put out a fire at your home..
>
>You dont want to pay your share of taxes..fine.. then move out of the >United States so the rest of us dont need to pay for you and yours

as a Tax Payer I'm not sure you pay for any of these things, as far as the federal income tax is concerned. Most of the above is paid for by local taxes, state taxes, the gas tax and utilities, but I could be wrong .

arubicus

10+ Year Member



 
Msg#: 3268077 posted 7:38 am on Mar 2, 2007 (gmt 0)

1. Incorporate as an LLC (limited liability corp) if your state has that. It might cost you a grand or so to set up. Your accounting fees will be several hundred dollars per year, However, you can keep all of your finances for the websites seperate AND you are reducing your liabilty so as to protect your home and retirement if you do things right. (someone suing you because of your website could result in the loss of your house if you are unincorporated)

Beware there are two typical types of Corporations that you could set up.

A C-Corporation you get taxed from hell. You pay taxes on the business, plus employment taxes, plus taxes on dividends to stockholders. Ouch. However you can sell alot more stock and have many thousands of stockholders.

An S-Corporation is a bit different. You can only have so many stockholders or you could just have one, yourself. An S-corp is a pass through entity where each stock holder accounts for and pays taxes on their share of the profits (regardless of whether the profits were paid or retain by the business) on their personal tax returns (Found on a K2 form given at the end of the year). If you are the only stockholder you can pay yourself a fair wage (if you take part in operating the business you are pretty much required to being the only person) and the rest in distribution significantly reducing tax liability. Employee wages, operating expenses, mileage, accounting, etc. gets taken off the top thus not paying taxes on the income spent to operate the business (certain rules apply). An S-Corp also keeps things seperate as far as liability issues. Someone suing you -- in most instances you as a stockholder cannot be sued personally just the business.

My disclaimer: Don't take my word for it...contact an accountant and lawyer for better information and to explore the best route for your situation.

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