Affiliate Newb Question

[dagus]

Hi guys, this is my first post. Hopefully one of you can help. I'm not a "full time" affiliate, per se (I've still got a day job) and I've only recently been a member of a few offshore affiliate programs. My question is, when and if I start earning a significant commission, what is the appropriate way to file income tax for US based affiliates?

[elgoog]

Welcome Dagus,

anyone from the US can answer this?

[bb1web]

prob wise to always report to the tax man.

that said..... get a good accountant as there are many decutions which you may not be aware.

[matted]

Yeah - what bb1 said...

I consider myself pretty knowledgeable with numbers and such... Yet, I pretty much just need to take the accountants word for some things. As you'd expect, it isn't a straightforward 28% or some such number. You have to pay self employment taxes and get all that money to the right places at the right times. Truthfully, I couldn't imagine doing it myself and getting it right... nevermind figuring it out with my corporate structure (which saved me several thousand in taxes last year)

[dagus]

Thanks for the replies, I got a couple PM's on this, as well. I figured I'd end going through a tax professional, anyway. I've noticed that some of the affiliate programs I am a member of don't make available detailed reports or have any kind of useful information on check stubs. In this case, what kind of documentation would I need to report/present to the tax professional?

[matted]

All my accountant has asked about is my profit... revenue - expenses = profit. Predicted profit and actual profit.

However, should the IRS decide to audit, you'll need to minimally have receipts for expenses charged to your business. I'm not sure how they would account for income when the employer doesn't submit the info to the gov't, but they may be able to track it through your banking records.

[MichaelCorfman]

You won't need proof of income for your accountant. You'll just need reliable records of what you received. In the case of an audit you would need to be able to demonstrate that all of the funds you received were accounted for in the income reported.

The equally (or perhaps more) important item to keep track of us your expenses. And some understanding of what expenses are reasonable from the perspective of the IRS is helpful here.

If you are running a simple business in your own name (or without setting up some sort of legal entity) in the US, then you will be running a sole proprietorship, and it is worth reading a little bit about this from a tax perspective. You can get a copy of Schedule C (the schedule used to report income and expenses for a sole proprietorship) and the instructions for that schedule from the IRS website as a basic introduction that will just take a few hours of your time.

Michael

[scottl31]

Along the lines of what Michael said, report everything on schedule C, business income.

Just make sure you keep track of and report every single payment you get, no matter how small. Don't rely on the affiliate companies to do it, and indeed many may not even report it.

Don't mess around with the IRS, just report everything you get. And of course report everything you spent to get it.

Scott