Forum Moderators: martinibuster
But I'm wondering if there is a forum or a source of information (tips) for webmasters with income from (only) AdSense... which is why I posted here. My expenses are very simple: webhosting, printer paper and ink; maybe I'll buy another PC; and can I deduct some of the expenses for my home/office?
I suspect there are many webmasters out there in my situation. Nothing too complicated as we're not buying or selling anything. Just making some revenue from AdSense.
Thanks, Peter
In case anyone is about to tell me ProgramSoandSo is really good, let's just agree they are not *perfect*:
I have the two most popular tax programs give me the same "advice" regarding an inventory accounting method, only to learn later (from a very expensive lawyer accountant) it was not only wrong and very costly for me, but could not (legally) be corrected! Of course the software has so-called "guarantees" but if you read the fine print, they always advise you to contact an accountant before following the advice - their guarantee really applies only to the simplest uses, if at all.
In the meantime, what you should do is make sure you are keeping good records or expenses and revenues. If your site until recently was only a hobby, I'm guessing you do not have a seperate bank account. If not, you should definately file for a DBA and setup business checking.
Another thing you might want to consider is getting a business liscense from your local city. Depending on where you live this can be cheap and simple or fairly expensive and a hassle. A business liscense is almost always technically required.
Again, I don't really have a business as such. Just discovered AdSense and my hobby (which has about no expenses) became one.
After I do my leaning I think I'll post back here. I think there must be a lot of people like me -- not really business people so much as hobbyists that fell into AdSense. I think it might be useful for us to share about some of the deductions we learn are appropriate to take.
Not just the obvious, like webhosting costs. But others like the computer books we purchase. Not that we can give "tax advice" to others, but that we can lists possible items which others can investigate to see for themselves if they might be appropriate deductions.
Thanks again, Peter
Yikes! I've already learned something new... didn't realize I'd have to pay into Social Security as well as paying taxes.
It's called "Self-Employment Tax" if it's from business income (as opposed to salary or wages), and you pay a higher percentage than you would on employment income. But that's something a program like TurboTax or TaxCut will figure out for you automatically.
I'd have to pay into Social Security
Which is why it so important to take all of the legitimate deductions off the top that you are eligible for.
Home office deductions are non-trivial, especially if you rent.
Writing-off broadband internet connection can buy a couple of nice dinners.
Something else I learned not too long ago. Medical insurance premiums are tax-deductible but out-of-pocket medical expenses are not. So, if you cover yourself it makes more sense to get an expensive policy with lower co-pays and higher discounts on prescriptions than to try and save on premiums.
Even a mediocre CPA should pay for herself. A good one is indispensable.
Dad's were getting past due tax bills (with significant penalties) for their technogeek sons website revenue. The kids had been earning affiliate dollars into the tens of thousands from their hobby sites, and cashing the checks for spending money (video game consoles and the like).
Those kids are probably entering the official work force right around now...
Be aware that the office space has to be used 100% of the time for business - not 95% - often hard to accomplish for a part time occupation.
Also, the insurance co-pays, etc are deductable after you reach 7.5% of your income - not hard to do if you don't make a lot of money. It is worthwhile to be able to deduct office business expenses even if you don't deduct your home office space. Rapid depreciation of new computer equipment, deduction of subscriptions, supplies etc really help - don't forget the large oak desk and CEO-style office chairs :)
Also note that if you decide to increase traffic by using G. Adwords then that is deductable too.
I have found that deduction of office space and related 'house' expenses is marginally worthwhile
This is true if you are paying a mortagage. Since you already get deduction for interest expense, deducting for a home office is not that big a deal. However, if you rent, home office deduction is huge.
As far as medical, yeah it is hard to deduct the out-of-pockets such as co-pays. Insurance premiums are a different matter. That's why I changed to a more expensive policy.
I don't make a lot of money either, but time saved for a couple of hundred bucks is worth it to me. Then you get to write that money off on taxes and you get the professional advice of an accountant.
A side benefit is you can support a local business and add one more person to your network of businesspeople. My accountant has done wonders for my networking.
