Forum Moderators: martinibuster
Technically speaking income is earned in December, but since payment is not received (or cut) until January, should it instead be applied to next year's taxes (2004)?
As every country has its own tax laws, I suggest you contact a local accountant.
1- If Google does not issue the check until 2004, then I am certain that they will report it for 2004.
2- While Google reports the amount that they payed in 2003 to the IRS, this might not necessarily mean that you have to report the same amount in your taxes. It might be possible to defer a portion of the revenue and the attached tax liability if for example you received the November check after Dec.31. The important thing to remember are [u]consistency[/u]. If you ever get audited, you can claim that the check did not arrive until after the end of the year and that this is the reason why it was declared in 2004.
When I say consistency, I mean that since you are accounting under the "cash basis" you count revenue when you get paid. Not when Google's internal accounting says that they issued the check. "This means next to nothing to you".
[size=small]The above comments are worth about three times what you pay for them [/size]
[edited by: loanuniverse at 6:28 pm (utc) on Dec. 29, 2003]
Yes, I'm in the U.S. I'll wait for the 1099 before filing. That's probably the easiest way to do it.
Talk to your accountant.
there is some blatant misinformation here.
*looks around*
I think someone is pointing a finger at me! :)
No finger pointing at anyone :)
I agree with the hire an accountant philosophy. The tax accountant employment act, I mean US tax code, is convoluted enough that, if you make sufficient cash, you have to hire one. I imagine other countries are equally wicked in their tax collection.
I suspect that there is very large number of people who are US sole proprietorships that will get a check on 1/1/2004, but fall under the $500.00 level for the 1099. They still have to file.
I am under the $500 reporting level for 2003, but hope to be above it in 2004. That means I may not get a 1099 form for 2003, but will get one for 2004. If i am out of sync with Google reporting, then I will have a discrepency in my documentation.
For the people who really didn't make much with ads, I think this is a worthwhile discussion. I would like to hear more about what other people are doing.
That would be correct, although "either" might be a better word to use than "both" for clarity's sake.
Businesses that stock inventory that is sold to the public are required (by IRS) to use the accrual method, regardless of annual sales.
If you are using cash accounting, then you count your December check when you receive it, in January (or February).
The 1099 from Google will reflect what monies they paid in 2003, and has nothing to do with what accounting method you use. If you use cash accounting, the figures will match, if you use accrual counting, they won't.
There's tons of good information on the net and at the IRS website about tax issues for small businesses. Plus you could just go to H&R Block and have them figure it out.
Btw, the 1099 limit is $600, not $500 and it applies to the payer...if Google has paid you more than $600 during the calendar year, they are required to issue you a 1099. If they paid you less, they are not. You are required to declare and pay taxes on the income regardless of the level of your income or whether or not you receive a 1099.
That would be correct, although "either" might be a better word to use than "both" for clarity's sake.
The 1099 from Google will reflect what monies they paid in 2003, and has nothing to do with what accounting method you use. If you use cash accounting, the figures will match, if you use accrual counting, they won't.
This eliminates issues about them sending a check in December that we receive in January. The 1099 should match the actual year's payments. I was worried about how to account for a check sent in 2003 on a 2003 1099, with receipt in 2004.
I am in the USA, using cash based accounting. I account for money when I receive it.
I do business on the cash basis, so if Google dates the check in December, it counts in December. For my engineering clients I try to avoid having invoices due close to the end of the year to avoid any questions.
Some businesses (usually small) are on cash basis, others are on acrual basis. Your accountant or a good tax book will explain.
If you are not in the U.S. the same advice applies: see a tax professional.
In the US Google should send a 1099 to you with a copy to the IRS if your total income is above some minimum. Take that with you to your tax preparer.
Remember, we webmasters know about as much about accounting and law as accountants and lawyers know about building web sites. Not quite enough!
Though I have already sought professional consel on these issues I feel I am not competent (since I am not a tax professional) to communicate information to you that could potentially affect you financially and legally.
I would highly recommend that you take everything you read here under consideration but then go talk to a tax professional.
If the IRS audits you, showing them a copy of this thread ain't gonna save you.
Quite a lot of folks seem to have gotten it already and there's still two more days in the month, so it seems like that most US folks will receive the check in December.
If your web site has been a hobby, but you now receive income and make a profit (or cover many of your costs) you may really be a business and have the ability to take some deductions.
However, that can be tricky. The IRS (in the US) does not look too kindly on deductions for hobbies and similar expenses. (Like the family of a waiter in a French named resturant deducting their European travel expenses as part of the expense of being a waiter -- that stuff really does get tried!) Only tax a professional (accountant or lawyer) can advise you on whether or not something should be listed as a deduction.
Another factor I have repeatedly heard from self employeed friends (many are sales people and consultants) is that having a paid preparer sign the form is a good indication that you really are a business (even if the business part is a part of your personal tax return). After all, real businesses hire acountants and lawyers.
Also, for a simple personal return with some business income and expense the experienced preparers do not charge a large amount and can often save you as much as their fee.
Just received an email from Google. They will be cutting a check for any unpaid earnings (regardless of amount) through December 31, 2003 - unless you choose to have Google withold your earnings until next month - in which case you should contact adsense support by January 10.
I guess that answers the question :)
