Forum Moderators: martinibuster
I was recently talking to a fellow Adsenser in my area and he was complaining about having to pay out about 3500 in taxes this year even though he didn't earn very much, maybe 18k total for the year. It was his first full year with Adsense, he started late the year prior with a good site he already had going. Anyway, I asked him what all he wrote off for his taxes and he said, to my astonishment, nothing! You didn't write anything off? Not even your cost for Internet? I didn't know I could, he said.
He's not a dumb person, I've always thought he was fairly intelligent so now I am wondering how many other seemingly intelligent people don't realize they can write things off from the money they owe for taxes on Adsense earnings.
Nearly every US based Adsenser should be able to write the following things off, the first few should be applicable to everyone here. Feel free to add to the list.
1) Internet connection. On your desktop and for your notebook.
2) Hosting fees for your website, registering and renewing domain names, etc.
3) Bank fees. Anything your bank charges you for handling your Adsense income.
4) Tax prep fees or costs for software to do your own.
5) Computer, computer parts, repair services, digital camera(if used for site), etc.
6) Membership to WebmasterWorld. You can write this off.
7) Conference costs, including hotel and meals. 100% of this.
8) Business lunches. Meeting with programmers, etc. Lunch with a fellow Adsenser to talk shop, etc. 50% of this can be written off.
9) Office supplies.
10) Office furniture, your desk, chair, etc.
11) Promos and advertising for your website.
12) Entertainment. 100% of this. Rent a beach house and invite a few of your site members to join you, things like this.
13) Services. Anyone that you pay to help with your site, editing services, to write articles, painting your office, etc.
14) Figure out what portion of your house that you use to run your site(s). Since my sites are hands on, we shoot videos from the house and everything, I am able to write off 1/3 of my household expenses. A large office and another large room are used strictly for business. This is about 1/3 of the entire square footage of the house. Household expenses would include rent or mortgage payment, land taxes, new insulation or windows(you can get a bonus tax deduction for anything that makes your house more energy efficient), removal of a dead tree limb that could harm the house, etc.
Then why are we bothering with this thread?
Trust me- during Tax Season, your preparer is working on hundreds of clients and does not have the time to go over every possible deduction available with every single client, especially business owners. You have to help him/her.
I always prepare my taxes on my own each year, and save lots of money and headaches.
It's also a great learning experience for me, as I can help others out too.
Because I'm always concerned about blanket statements made in online forums when most of us know neither the person nor their level of expertise or authority to speak definitively on such matters.
- The fee I pay to my accountant is tax deductible.
- For years my husband and I have had a very complex tax return. We'd prefer to pay a pro rather than mess with it ourselves. And we can afford his fee.
- Our life and tax returns are not as complex as they used to be, so we can probably do our annual returns ourselves. But I have a daughter who, when my husband and I die, will have a professional to turn to for help. We really do trust the fellow and trust him to provide our daughter the very best of financial guidance when the time is needed. And I ain't talking just about annual tax returns. We've already discussed this with our daughter and accountant.
Some of you may be too young to even think of the latter point but, if you have family, there will come a day when you may want to think about it.
Everyone's situation is different, so do what's best for you.
[edited by: shallow at 4:42 pm (utc) on April 9, 2008]
Why waste money with a tax preparer when there's a wealth of free information to be found on the net?
I always prepare my taxes on my own each year, and save lots of money and headaches.
Of the other 20-40%, in at least half the cases, they had been doing things wrong and while their tax bills were higher, we saved them hundreds, if not thousands, in potential penalties and interest.
The size of the deduction for many webmasters could easily reach into the tens of thousands of dollars, every year.
I'm going to research it more over the coming months, but, like I said, I've been using it for 8 years running and the IRS is fine with it. Next January I'm hoping you'll all gladly pay me $500 a pop for info that will save you thousands.
BTW: I still haven't even started my taxes yet. Maybe this weekend. I live by an old belief that if you send your return on the last day, with millions of other procrastinators, your chances of being audited are reduced significantly. So far, I'm 100% right on that score.
I live by an old belief that if you send your return on the last day with millions of other procrastinators, your chances of being audited are reduced significantly.
That might be true, but this year was the exception for me. I sent it in early, just so they can process my tax rebate as soon as possible. I'm looking forward to that $600 check.
Hey, that will be just enough to make the next quarterly estimate by June 15th.
I live by an old belief that if you send your return on the last day, with millions of other procrastinators, your chances of being audited are reduced significantly.
And if you think about it logically, most procrastinators are rushing to get things done at the last minute, so are more likely to be the ones making mistakes. So if anything, last minute filers are probably more likely to get a mini red flag in the scheme of things.
Normally the IRS won't let you run a business at a loss for more than a few years. They will then reclassify it as a hobby and you may be subject to different tax code.
1) My business had its own business space in a commercial building where I paid rent.
2) I had a unique phone number for the business.
3) I kept detailed records of all clients.
4) I had a separate bank account for the business.
There are more. If you dig around the IRS site for hours, you might find where they hide that information.
