Taxes

[tarynh]

In starting up the website, if customers are getting paid from transactions made on my website, would they be taxed on the money they have earned from us during a year? If we were to make money off of the website then how would our income be taxed? Also, would the customers from our website be considered as employees since they will be getting paid from the use of our services, not all people will get money only some. This is a big problem that I am also having because not too many people know the answer to such a question. I would also like to know since we would be getting paid from this website, would we have to fill out tax forms, since this would be a source of income? And if so, would it have to be recorded as individual taxes or business and individual taxes?


Taryn

[Chris]

Please explain in more detail what type of website you run. Also, where do you live?

[tarynh]

I can't really tell too much about the website without giving away what i will be doing, which I can't now since it is not up yet. I live in Louisiana. The transactions that will be going on between subscribers/members, a percentage will be going to me/and another person who will be running the website. Would we have to claim the income made off these percentages and the monthly fees (like it cost 3.99 to stay a member for example), would that be taxed or would that be nontaxable income? The people who will be receiving the money on the opposite end, subscribers/members, would they be taxed also or would it be tax free since these are things they would be selling themselves via our website? Wish i could go into more detail, if you can't answer the questions now then when I have it up and running I will be able to tell you in more detail. But if you have any information that could be useful or helpful to me then I thank you.

Taryn

[Chris]

In the future reply to posts with replies, don't start a new thread.

There is no such thing as untaxable income, unless you are a charity. Income is taxable. You can write off your expenses to lower your taxable income, but thats about it.

Anything you bring in is income, you declare all of it. Anything you pay out to run the business can be deducted, and you will pay tax on the difference.

The best thing for you to do though is talk to an accountant. Consultations are usually cheap or free, and then pay them to do your taxes at the end of the year.

[AndyH]

Depending on how much income you are making a viable solution may be to have a trust setup.

Tax is something you really don't want to take advice on from anyone other than a lawyer or an accountant.

Like Chris said, a consultation is normally cheap and worthwhile.

[pas]

Tax is something you really don't want to take advice on from anyone other than a lawyer or an accountant.

Absolutely. And there are such things as untaxable income - tax-free bonds, tax-free gains from selling a house, tax-free gains from a Roth IRA, ...

[Chris]

Those types of things aren't really what I was thinking of when I said no such things, the poster was talking about ongoing income from a business activity. Plus, all those things are reported at one time or another, and he was wondering if he had to file. So forgive me if I was being overly general.