Adsense Income Tax- Non US country

specially uk?

[helloall]

hello all,
how do you pay tax for adsense earning, if at all you do? i dont see any reason why should we? i mean the money is going to bank. now specially in uk i know we dont have to metnion about this income anywhere because we already have a main source of income which we are paying tax. now for adsense income if i dont pay, then whats gonna happen? nothing really i think? because the only organization knows about this earning is my bank and they dont share client information as far as i know. please clarify. please dont tell me "you should pay tax" or some other boring stuff... tell me if i dont declare about my adsense earning, how they can find out?.. ;)

[mack]

If its income them its taxable. It goes to the bank just like your wages. With Adsense income its classed almost like self employment. You need to fill out a self assessment and declare it.

If you don't declare it and they later find out (they have ways) it will end up very pricey.

Mack.

[incrediBILL]

In the US the AdSense earnings are reported to the government and it may also be reported to yours.

Would you rather be honest and pay upfront or be dragged thru the mud when the government resolves all reported income vs all of your claimed income when they come after you?

Not to mention, if you get caught cheating on your taxes you get fined, charged interest and penalties which could amount to more than the AdSense income itself.

Roll the dice and let us know how it works, k? ;)

[helloall]

thanks for your reply guys. but unfortunately i already know all these that "if you get aught they will fine and so on" what i wanted to knowis, how they find out? the money directly goes to bank account which doesnt say if its earning or whatever. now how the tax authority will know exactly what i am earning? some one can send me gift also every month isn't it?

[buckworks]

Our advice is to follow the rules and don't try to cheat.

Remember that when you're claiming the income, you can also claim the expenses that you incurred to earn it. As long as your expenses are adequately documented, you can deduct the cost of your hosting, your internet connection, promotion costs, an allowance for office space and related costs, and so on. That could significantly reduce the amount you'd end up getting taxed on.

[helloall]

yes i know "honesty is best policy". but thats not what i asked here. i asked how they will find out? my money goes directly to bank account. now how in da world taxt authority will find out how much i am earning? how they will distinguish if i get gift every month from my family or whatever? i am already paying tax from my full time job so how they can find out about extra earning ( earning or gift or whatever)

[mack]

OK heres a true story staring me.

I was developing a site, it wasn't finished, and wasn't getting any clients. It was however on-line. I eventually finished the site, moved it to its proper domain and set about promoting, however, when the test site was live it was crawled by Google.

About three months later I got a letter asking me to attend an appointment at the Inland revenue (Now HR Revenue and Customs) when I arrived they asked be about any business interests I had, and I was honest. They then placed a piece of paper on the desk in front of me with a print out of the test site homepage. Again I was asked to explain, and I did, but they weren't exactly believing me. I left the meeting slightly shell shocked then things got worse when I received a tax bill for close on 3 grand estimated revenue from this test site.

The moral is that HR revenue and customs see anything that has the slightest change of generating revenue as a business. therefore if you place something on the web its almost like opening your shop door. You need to disclose your income, even if it is zero.

I was able to eventually prove my case and I was refunded the tax bill plus interest but it took close on 6 months,

It made me wonder how did they find out. I suggest they simple pick an industry and carry out a search then extract the whois details for everyone who runs a site that is operating within that industry. Is his person registered as a business? do they declare their income if not lets invite them along for a chat.

how they will find out?

Asking incriminating questions on the Internet might give them some clues.

Just remember, tax doesn't have to be taxing!

Mack.

[edited by: mack at 7:10 pm (utc) on Apr 3, 2010]

[londrum]

you may as well ask if you rob a house when no-one's there, how they going to find out? the problem is they could find out. and if they do you will be in trouble, because you're supposed to report income whether they know about it or not.

i'm in the UK, and i know its possible to register yourself as employed and self-employed at the same time. so you can still have a full time job and adsense on the side. if you don't report your self-employed income within a certain period of earning it (i think it's a year) then you'll get a fine on top (i think it's about 100 quid).

[Swanny007]

What country are you from? I'm sure tax law varies from place to place and I have no idea what your laws are. You ask how will they find out? Well it's my understanding that if you do get audited, the tax authority will assume everything is earned income if you cannot prove otherwise. In other words you must prove it was a gift from family, etc., otherwise they assume it was earned income and you'll be taxed accordingly.

In addition to penalties you could be looking at jail time (unlikely but possible) depending on your specific laws. We're not lawyers here...

[helloall]

i am from UK mate. so you are saying hm reveniw checks every single site that has whois info of uk? is it realistic? and again what about whois info is not real and shows different country? interesting...

[mack]

No but think about it, where is there easy money to me made, just Google those terms. Find some UK sites, pop the url through the whois and check the owner details out.

Also from your previous point...

the money directly goes to bank account which doesn't say if its earning or whatever.

Everything leaves a paper trail, even your EFT payment will carry a reference number. All the HMRC need to do is ask you to produce statements, if you refuse they get them through your bank.

Its a slippery slope, don't slide.

Mack.

[HuskyPup]

In the US the AdSense earnings are reported to the government and it may also be reported to yours.

At the moment it is not however I have had this feeling for the past couple of years that HMRC one day will ask Google to supply a list of ALL UK AdSensers earning in excess of a specific amount, possibly £100 per month.

It's a push-button excercise for Google to do so don't think it's complicated.

Why do I feel this may happen? Whichever party wins the upcoming election needs to raise as much tax revenue as possible and this could be a very easy hit to make.

[incrediBILL]

what i wanted to knowis, how they find out?

The bigger question is, how WON'T they find out.

[mromero]

HelloAll - have you looked at offshore jurisdictions?

[helloall]

what is offshore jurisdiction?

[purplecape]

If you don't know what an offshore jurisdiction is, you shouldn't even be dreaming about hiding your AdSense income from the tax man! You've just shown you know very little about this whole area, and ignorance is not a good position to be in. Listen to the good advice and that detailed anecdote you've been given and declare the income.

Keep doing research, and maybe in a year or two you'll know enough to be able to move your income offshore....

[helloall]

i know hundreds of people if not thousands including taxi driver, restaurnat owner and many others who doesn't show 50% of their income and its been more than 20 years as of now and everything is going smooth with them and you are saying there is now way to hide silly adsense income? well then keep your idea yourselvs i find out my way..thanks :]

[helloall]

i would rather ask a london taxi driver how to do it rather then asking all intelectual people here...

[HuskyPup]

Excellent...ask for free advice from people who know and then totally ignore it because it doesn't suit your way of thinking!

Do you realise that HMRC is staffed by some very intelligent people who know what the average profits are made by businesses?

[purplecape]

helloall, what is one big difference between the way taxi drivers and restaurant owners are paid and AdSense publishers are paid?

You don't need to ask them, I'll tell you. They get paid in CASH for at least some of their income, while we get paid by cheque or EFT. MUCH easier to hide cash from the tax man. There's no electronic trail or record.

Go ahead and do what you want to do. We're just trying to warn you.

[purplecape]

HP, the only question in my mind is whether he'll get banned by AdSense before he's caught by Inland Revenue...

[HuskyPup]

purplecape - lol...well I know HMRC knows all about AdSense since I declare my earnings and I'm reasonably sure that AdSense does not give HMRC any details at the moment however it is inevitable that this will happen one day and we all know what happens when HMRC finds a lucrative source of untaxed/undeclared income.

[helloall]

so you are saying hmrc is very smart enough to get bank details of every single (60 miillion+) person of uk and then decide whats going on and all? if thas the case no wonder uk is almost bancrupt as a country...

[buckworks]

People who manage to hide income have cash transactions that leave zero paper trail.

But AdSense income is not paid in cash, and it leaves a paper trail in several places.

rather ask a london taxi driver

Go ahead. But remember that a taxi driver who manages to hide income is still just a working stiff. Why choose such an unambitious role model?

Small-time tax evasion is only appealing for people who don't recognize the extent of the legitimate possibilities.

The possibility of getting caught is not the biggest problem here ... a much bigger problem is that learning how to hide nickels and dimes would keep you focused on nickels and dimes, instead of aiming at the thousands that can be made legitimately by a successful website.

However much you might manage to cheat the government, if you only focus on nickels and dimes you'd be cheating yourself a lot more.

The most profitable thing you could do here would be to forget the taxi driver, and instead focus on learning from successful publishers how to grow your site to earn thousands, even tens of thousands.

[londrum]

and also... if you're only earning nickels and dimes then you won't have to pay tax on it anyway. because you only get taxed when you earn above a certain threshold. they'll make you pay your national insurance, but if you've got a full time job then you'll be paying that anyway. so there's no harm in reporting it.

[helloall]

well at the end of the day its my choice what i am gonna do but the simple question i asked no one answered.. rather trying to focus on some moral issues.. i asked : if i simply dont declare adsense income and even if i dont register as a self employed, then how hmrc will fnd out? i am paying tax as paye anyway. now adsense check goes to bank. how will hmrc will know if i am earning extra texable income? i know there is paper tail but do they check all 60 million+ people's bank statment? if not how they will find out if some one is earning any extra money from online or not?

[londrum]

it's not a moral issue, is it. it's a legal issue. if you want to break the law then that's your business.

[buckworks]

but do they check all 60 million+ people's bank statment

In my country they do spot checks of taxpayers to audit, and if you're chosen for that they'll make a very VERY detailed examination of your financial records.

You can also get checked in detail from being mentioned in the records of someone else who gets audited.

[mack]

helloall, you don't need to declare anything and you will never be caught. Why don't you take some other jobs on the side whilst you're at it, get paid cash and hide it under the bed? It seams thats the only answer you want to hear and now you have it!

People have taken time to voice their opinions, and have advised you as best they know how. You can take it or leave it, but don't ask a question then refuse to accept any answers.

Mack.

[helloall]

i never asked " WHAT SHOULD I DO, DO I DECLEARE OR NOT" i simply asked what is the procedure for hmrc to find out extra income that people earn. if some one doesnt register as self employed while they are already having a full time job, ten how hmrc find it out? its not realistic they will check every one's bank statment. i just wanated to their way of finding it out. simple as that.