Say you have a website with ads you sell (let’s say Google AdSense). When do you start to report the income for taxes? How do you declare them? The website is not in any way registered or under an incorporated company or anything of the sort, just a personal website.
You are not my lawyer, entertainment purposes only, void in Nebraska, must be 18 or older to reply and all that, of course.
Income is income, and it gets reported. Full stop.
You’ve got an OTHER INCOME line on any tax return you file.
Anything you get besides a gift needs to go on that line or some other, or you’re ripping off Uncle Sam.
Well, not anything. There’s a lower limit for things considered hobbies, I think it’s something like $600 a year.
Definitely more than $600 a year.
Is other income the line for it? No more questions asked? It won’t be millions, but I wonder if Uncle Sam won’t be bothered about little Sapo making thousands of dollars without a job. Is there any documentation I will need to show I am not laundering money or some such?
The hobby thing works the other way; below that $400 or $600 or whatever, you can’t DEDUCT BUSINESS EXPENSES, but you still have to pay the man for your income.
Oh, and the feds aren’t really worried about you claiming income you didn’t have.
They won’t bat an eye at you declaring $300 of misc income.
Now, here’s another question:
Do you owe FICA on this?
How about social security?
I got no clue…
All income needs to be counted. If it’s a hobby, you can’t deduct expenses.
You owe FICA/social security/medicare (all bundled and called Self-employment tax on the forms) if you earn more than $500. Form 1040 SE lets you figure it out.
When I first answered, I was thinking you had a $150 annual off of this.
Given that you’re into 4 digits here, you really want to get a tax professional’s advice, even if it’s just on which tax forms to file.
Another gotcha:
State income tax if you’ve got it
Municipal income tax if you’ve got it
Declare $150? That’s about the amount I find doing my wife’s laundry (no, really, and it is not pay enough for pulling dissolved tissue from the wet load every time). We file jointly and she is not expensing it, so it is not really income, though. 
I am in PR, which further complicates matters, btw. I used to have a tax man, except that he sucked and I dumped him. Now I do my taxes myself. I might have to do HR Block for one year to see how they do it. I was hoping someone around here would be in this situation and would know how to file it.
Anyone? Nobody making a penny off the internet in this board?!
Parts of Uncle Sam might be bothered (like the FBI, Drug Interdiction agencies, Treasury police force, etc.).
But not the IRS – they just want the taxes on that income.
Check this out: http://www.adsensetaxes.com/
A web site about taxes on adsense - and other ad places too.
Thanks, that’s an excellent read.
If you are not a corporation,and Google or whomever pays you more than IIRC $600, then they have to have a W-9 from you giving them your EIN/TIN/SSN, and they will provide you a 1099 for the money they sent you. And they’ll provide a copy to the Feds.
If you are a corporation, the limit before they’re required to W-9/1099 is (or at least was) higher.
Once you have both income & expenses, what you now have is called a “sole proprietorship”, no different than a handyman with a truck. That means licenses, tax returns, record keeping, separate checking accounts and all the rest. Or just hide out until somebody notices.
Fair enough. I guess I now have to figure whether to register in the US or PR.