Tax on U.S. Bloggers
March 29th, 2007 by Matthew Jabs
This article is in response to a recent post by Chris from Blog-op.
Chris was stating the UK tax laws and how they apply to bloggers. Most specifically, he was interested in finding out how much he can make without getting taxed (and considered self-employed) on his earnings. Per his post (correct me if I’m wrong Chris), apparently UK residents can make as much as $8,999/year without having to pay any tax! That’s pretty cool, we’re not so lucky here in the US. Wait, isn’t that one of the main reasons the Founders of our great country left England in the first place, because the taxes were too high? Well, I digress…anyway…here is the taxing information I found pertaining to US bloggers.
To avoid paying a tax on our blogs, here in the US we have to make less than $600 from each income source. Once we go over that $600 mark, the company we receive that income from has to 1099 us. I suppose one way to avoid this tax is to diversify our blogging income; then once we’re close to that $600 mark each year, we can pull the plug on that income source. While this is a possibility, seems like to much to keep track of.
When the time comes that I reach that magic number on any of my income sources, I’ll likely keep on trucking and comply with the system, whether I like it or not. I am assuming I will have to pay taxes on my blogging income in this first year. I have been monetizing for only two months and have already made $200. At this rate of income growth I hope to possibly make as much as $5,000 in my first year of blogging. If my blogging income never increased, and I continued to make what I’m making currently, I would be up over $1,000. However, my optimistic attitude doesn’t allow me to believe my income won’t grow, so I’m shooting for the $5,000 mark in my first year.
What are your income goals for your blog? Are you going to have to pay tax in your first year blogging; or did you have to pay tax in your first year?
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Posted in: Finances, Money, Passive Income, Politics, Technology, Wordpress, blogging | 1,304 views |
Hi Matthew, yep that’s right: We have personal tax allowances, which in my case means if I do not exceed £4500 (about $9K as you said) I don’t have to pay.
I do however, have to notify the tax office of ANY earnings, even $1. Failure to notify can get me penalised.
Not sure what the best system is actually….
It’s interesting how different the two systems are. I wonder why your gov’t makes you report everything, even if they don’t intend to tax it. What is their benefit in requiring this?
Uncle Sam doesn’t need to know about it unless we make a certain amount, and even then, a company will usually 1099 you, so you just factor that in when you do your taxes. If you don’t receive a 1099, you don’t have to report it.
Legally, I suppose you do, but there is no record of it.
My short-term goal is to make $1000 a month from blogging, long-term is to make full time income ($5000+).
I formed an LLC to capture the income. The idea is to deduct all related expenses to reduce the tax burden.
I don’t sweat the tax thing too much. If I’m paying a lot of taxes, it means I’m making a lot of money, which is a good thing. Some people get so wrapped up in in not paying taxes, they forget to make money.
Nice goal Brian. Are you close yet, and what do you consider short-term?
I agree about paying the taxes and have a very similar outlook.
Funny you mention the LLC thing. I’m in the process of forming Jabs, LLC. Under it will be housed all of my entrepreneurial ventures.
I’d like to hear more about your goals.
My blog is a month old, so nothing to talk about any monetization.
I believe however that my expectations is cover hosting and make around 200-300$ a month starting in 3-4 months.
What’s your take on that? is it logical?
Come to visit from time to time,
Gili
My goal is similar to Brian’s, only my long term is $10k/month versus $5k. The hardest thing for me is the mindset of a network of sites instead of just one. It’s hard enough producing content for one site, but the big boys have multiple sites humming along nicely and I want to do that as well.