Taxes! So confused!

[The_Talent]

Well, I'm 19 years old and I have only paid taxes once and that was when I worked at Subway. I just gave my uncle the whatever that paper is they give ya to do your taxes and he did my taxes. I know the taxes from Subway will be MUCH different from making money from online advertising.

I make roughly 12,000 a year from advertising online on my site. I pay for hosting/domain, advertising, and whatever is left after that I split 50/50 with my girlfriend(who is the lead writter for the site). Will I end up oweing a lot back even after writting off expenses? I also live in Ohio, if that makes any differnece.

I live with my mom still so I won't have property tax and I heard thats the highest tax, so that's good! :-p

Anyways, I know noootthhhinngg about taxes, so go easy on me in the posts and pleeeaaassee give me an estimate on how much I'll owe back(just don't scare me :-p). Thanks I appreciate it!

My girlfriend's dad is an account and knows a bit about this stuff, so I want to gather up what information I can before I go and talk to him about it.

Thanks!

[trillianjedi]

If you're going to be talking to an accountant, then all you need to worry about is to ensure that you have every single bit of paper - cheque/invoice/bank statements etc that you can find to hand when you meet with him.

Expenses can be set off against your income tax - the situation might not be quite as bad as you think.

But you need to make sure that you get all of those bits of paper together to take with you.

TJ

[ann]

If you are only claiming half the income then you should have some kind of legal agreement with her so she can be reporting the other half...bear in mind that you will also have to split all the expenses you paid out but it doesn't sound like you will owe but with paying your own SS tax you may owe a little.

[The_Talent]

Thanks for the quick replys.

I have no problem claiming all the money made under me. I really don't feel like getting her confused in her taxes also since she is only 17. I pretty much keep all the money we make, I just give her the debit card whenever she needs it, know what I mean?

I just want an estimate on how much I should leave in the bank when tax season comes around. I don't want to have to pay like 1000 dollars and I got nothing but pennys and nickels in the bank, haha. Know what I mean? Trying to get prepped early.

A lot of my payments(hosting/domain and advertising) are paid for by paypal. Do I need to print that off?

Dumb question(very dumb), when I spend $4 on advertising, is this going to help me or hurt me on my taxes? Like, do they add money when I spend money or do they take away what I owe when I spend money? I'm debating whether or no to start spending real money on advertising or not.

Thanks! =)

[jetteroheller]

Remember always

The company is poor, the company pays everything.

Have You a car, used for business travels?
Can You claim some % of Your appartments operating costs as business related
Did You publish some photos of Your digital camera on Your web site?

[hal12b]

Your best bet is to talk to a Certified Public Accountant. They are up to speed with this information and can offer you the best advice.

[LifeinAsia]

If you paid your girlfriend over $600, you should have issued her a 1099-MISC, which she has to claim as income.

On a side note, you probably just lost a lot of brownie points with your girlfriend's dad for waiting so long to talk to him about taxes. April 1-15 (17 this year) are the absolute busiest days for accountants and tax preparers.

Can You claim some % of Your appartments operating costs as business related

Since the OP is living with his mother, it's unlikely he has much in the way of expenses on that side. Also, the Office in Home deduction is only available if the claimed space is used for the exclusive use of business activities.

[anand84]

Is all this talk based on American laws,or are they pretty much the same for other places as well.

[LifeinAsia]

My comments have been based on U.S. tax law. Tax laws vary tremendously between countries, especially which expenses can be deducted, how salaries are taxed, penalties for late or non-payment, etc.

[The_Talent]

All of the money I have made will be on next years taxes. So I'm just making an early start prepping.

I really don't actually pay my girlfriend, she just takes my debit card and spends away, haha. So I really don't see a point in making her fill out the taxes. When we first started out, she just wanted to do this for a hobby, wasn't really in it for the money. It's pretty much the same now, well I'm sure she enjoys the money(haha).

I still want to know about the advertising question I have, cuz that's what is holding me back from making millions instead of thousands :-p!

Thanks!

[proboscis]

You might want to keep track of what you pay your girlfriend - if she is 17 she might not have to pay taxes and it could go better on you -not sure but you should definately find out right away so you can start keeping track

and if you can make millions you should advertise ;) right now go do it

[LifeinAsia]

I really don't actually pay my girlfriend, she just takes my debit card and spends away, haha. So I really don't see a point in making her fill out the taxes.

In that case, you will be taxed for the full amount of the net profit.

Money you spend on advertising is a deduction. If you spend $100 on advertising, that lowers your taxable profit by $100. Assuming a 15% tax bracket, that saves you $15 in taxes. (In other words, that $100 in advertising actually only costs you $85.) And that doesn't factor in the self-employment taxes.

As you gf's dad will explain to you- you need to maximize your deductions to make the business poor.