What percent of affiliate earnings do you report?

[rawTOP]

I'm working on year end accounting stuff and just wondering what percentage of their affiliate income people report... There seems to be a number of ways to get around reporting income - everything from getting paid via ePassporte account and pulling it out with their credit card to only reporting the income that comes in on 1099s.

Personally I'm always worried that if I don't report income it will come back to haunt me. 2008 is the first year with much of any affiliate income, so I'm trying to figure out exactly how I'm going to handle it...

[abostonboy]

You should report it all. But, if it hit your bank, then make damn sure you report it.

[MrMax]

I've always reported all of it. I didnt know there was any other option

[rawTOP]

In the past (before affiliate income) I'd report things that filed a 1099 or W2. Somehow I thought if it was less than $600/year it didn't have to be reported, but I now think that was probably wrong. Not that it was a big issue 'cause the vast majority of what I earned came from just a few sources. But affiliate income is very different - there are many small sources and many programs don't report via 1099s.

[abostonboy]

In the past (before affiliate income) I'd report things that filed a 1099 or W2. Somehow I thought if it was less than $600/year it didn't have to be reported, but I now think that was probably wrong. Not that it was a big issue 'cause the vast majority of what I earned came from just a few sources. But affiliate income is very different - there are many small sources and many programs don't report via 1099s.

Here is the law as it relates to employers:

1. Any income a contractor makes that is over $600 has to be reported to the IRS
2. The penalty for not doing so that the employer pays is $50 per 1099 (if the employer is audited).

However, as an affiliate you are suppose to claim all income that you make in a calendar year. You will also pay self employment tax on it as well. So, if you made a decent amount, you should have made quarterly payments.

As far as the IRS is concerned, they don't care if the employer filed a 1099 or not. If you got paid, they want you to claim it. Even if you only made $80 from one sponsor in a year.

[abostonboy]

Who the hell picked 0-20%?

[gaydemon]

I report every single $. I'm sure a lot of people dont account for all income. But I just know that it can come back and bite you in the ass if you dont.

Plus of course its actually a criminal offence to avoid paying tax, one that at least here in the UK is enforced much more and harder than any other offence. Saying that, a lot of people in the UK get away with not paying or "milking" the system.

[abostonboy]

I report every single $. I'm sure a lot of people dont account for all income. But I just know that it can come back and bite you in the ass if you dont.

Plus of course its actually a criminal offence to avoid paying tax, one that at least here in the UK is enforced much more and harder than any other offence. Saying that, a lot of people in the UK get away with not paying or "milking" the system.

Tax evasion is about the only way we put the mafia in jail in the US.

[Adam Mason]

I declare every single bit of income. I don't want to spend my life looking over my shoulder for some hideous fine or prison sentence to be slapped on me!

[gaydemon]

Thats exactly my feeling, you put it so much better!


I declare every single bit of income. I don't want to spend my life looking over my shoulder for some hideous fine or prison sentence to be slapped on me!


But you got to be creative with your accounting. Get a good accountant they can often save you a lot more money than they cost. And declare everything you can as expenses.

[basschick]

we report every cent. not sure why people think using epassporte is the way to avoid reporting income, but that may come home to roost at some point - and all the programs who pay me by epassporte send tax papers each year.

[MrMax]

I got audited by the IRS once. It was in 2005 and they questioned my 2002 earnings.
They raked me over the coals. Wanted every little receipt for every little purchase I claimed and they did not put up with any bullshit reasoning at all. Either you have the receipt and can justify it or you dont get the deduction.
It was like being questioned by a robot.

I wouldnt play games with numbers when it comes to the IRS. I've heard stories of people having their accounts frozen for months, with no way to access their money even to pay rent or buy food, just because the IRS was questioning their earnings.

[MrMax]

But you got to be creative with your accounting. Get a good accountant they can often save you a lot more money than they cost. And declare everything you can as expenses.

my "wonderful" accountant and his creative accounting is exactly why I got audited. He was even giving me deductions for miles on my car and cell phone use, and I work online. I dont need to drive anywhere.

He even told me to tell the IRS to get a 2 month extension on my audit and when I asked the IRS that they were pissed. They said why do you need that? They didnt like that at all and wanted me in their office with only a week to prepare.

Since then I go to H&R Block and Im happy with them.

[gaydemon]

Ah right.. yes got to be careful with who you go with. Mine is a Chartered Accountant and a registered auditer so they don't allow me to do just anything, they are liable as well as me if anything is wrong (I think is how it works here).


my "wonderful" accountant and his creative accounting is exactly why I got audited. He was even giving me deductions for miles on my car and cell phone use, and I work online. I dont need to drive anywhere.

He even told me to tell the IRS to get a 2 month extension on my audit and when I asked the IRS that they were pissed. They said why do you need that? They didnt like that at all and wanted me in their office with only a week to prepare.

Since then I go to H&R Block and Im happy with them.

[basschick]

both the tax men we used give us mileage for going to our mail and going to buy things in person that we actually need. it seems reasonable to me.


my "wonderful" accountant and his creative accounting is exactly why I got audited. He was even giving me deductions for miles on my car and cell phone use, and I work online. I dont need to drive anywhere.

He even told me to tell the IRS to get a 2 month extension on my audit and when I asked the IRS that they were pissed. They said why do you need that? They didnt like that at all and wanted me in their office with only a week to prepare.

Since then I go to H&R Block and Im happy with them.

[dzinerbear]

I'm sure with all the people in the U.S., someone who uses ePassporte has been audited before. I'm sure the IRS is well aware of ePassporte and what kinds of businesses use them.

Michael

[samebb]

For me claiming milage on the car and cell phone usage is fine, because it honestly is work. Living in the city i only drive to airports for shows, and work phone is work phone :D I don't think anyone should be scared of claiming on genuine costs lol.

I also have a chartered accountant and hes really good. I am sure there are some big differences in the tax system in the US and the UK.

All i can say is we pay way to much tax in the UK. Income tax and PAYE is a huge bit in the ass every month :( The sight of that yellow book makes me cry!

At the end of the day just pay all your taxes. Be a good citizen :) As said befre in this thread, if you do get a tax inspection, do u really want to be shitting yourself knowing you have done wrong?

Merry Xmas :)

[Teddy]

I know of someone in the adult sector who didn't report everything they owned and it came and bit them in the ass big time. He got away with it for a few years, so by the time he had to pay it back it was in the hundreds of thousands of dollars. The "little bit" of unreported income adds up quickly!

[abostonboy]

I'm working on year end accounting stuff and just wondering what percentage of their affiliate income people report... There seems to be a number of ways to get around reporting income - everything from getting paid via ePassporte account and pulling it out with their credit card to only reporting the income that comes in on 1099s.

Personally I'm always worried that if I don't report income it will come back to haunt me. 2008 is the first year with much of any affiliate income, so I'm trying to figure out exactly how I'm going to handle it...

Next year you may seriously want to think about getting a business checking account. It makes life much easier.

[rawTOP]

Next year you may seriously want to think about getting a business checking account. It makes life much easier.

Funny you should say that, you hit the nail on the head... I've been having a horrible time figuring out what I've deposited this year. And I'm planning on incorporating first thing in the new year, so business checking will come really soon. It's just this year it sorta got more serious than I had planned, so I'm scrambling to get figured out and done right.

[gaydemon]

One big benefit of reporting everything is that you will have so much better overview of your earnings. What you are owed, what sites pays etc. It actually can make a huge difference.


quote=rawTOP;31792]Funny you should say that, you hit the nail on the head... I've been having a horrible time figuring out what I've deposited this year. And I'm planning on incorporating first thing in the new year, so business checking will come really soon. It's just this year it sorta got more serious than I had planned, so I'm scrambling to get figured out and done right.[/quote]

[Squirt]

I declare every single bit of income. I don't want to spend my life looking over my shoulder for some hideous fine or prison sentence to be slapped on me!


Ditto!

I claim %100 of all income and my accountant deducts all processing fees, bank fees, visa/mastercard fees, charge backs, membership credits, wire fees, and money transfer fees, amongst other things :D