As the year draws to a close, it will soon be time to think about the inevetible: Taxes.
Taxes aren’t the most exciting topic, but if you are earning any money from affiliate accounts you will need to understand what you’re getting into.
Disclaimer: I am not a tax attorney, nor do I work for the IRS. I provide the following Q&A for informational purposes only. Do not take anything I state here as legal advice. Always check with the IRS, a tax attorney, or a CPA to ensure that you are properly claiming your affiliate income on your taxes.
Is blogging income taxable?
Most definitely. You have the same responsibility to report income from your online blog activities as you do to pay taxes on your regular work income.
I don’t have to claim income if I make less than $600, right?
Wrong. This is a common misconception that I often hear repeated. The $600 number comes from a company’s responsibility to issue you a 1099 Form if they compensate you for $600 or more. No matter how small, you still must claim your income.
I get paid in Amazon (or other) Gift Cards. Do I have to claim that as income?
Yes. Any compensation you receive, be they Paypal deposits, gift cards, bank deposits, or products all count as income. In other words, “free” products aren’t really free. This gives you something to really consider when you’re contacted to review a $20 product. It is worth it?
I review books for a publishing house and they send me free books to do reviews. How do I claim those?
You are required to claim the suggested list price for any products you receive in exchange for a review. If Amazon sells it for $8.49 but the suggested list price from the publisher is $11.99, you have to claim $11.99 in product income. You claim these and all other blog income as “Other Income”. As of 2016, H & R Block’s tax software allows you to claim ‘hobby income’, which can also work but check with a tax professional to be sure it will be allowable for you.
Does Amazon report my Associate Fees to the IRS?
Amazon states: “If you earn more than $600 in a calendar year, we are legally required to file a 1099 form with the IRS that names you as an independent contractor who has received a taxable amount of income from us.”
Tax laws change every year, so always check with a CPA or tax attorney if you are unsure how to deal with the affiliate-related taxes.
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