Site Owners and Leaders

Tax Tips To Maximize Your Tax Return From Website Income

Bearded Man Smiling Laptop Calculator

Tax Tips To Maximize Your Tax Return From Website Income

It is that time of year again. Tax season. The annual time when people across the nation gather their receipts and cobble together their financial records to pay their due to Uncle Sam. If you are a webmaster that: runs advertisements on their website, are an affiliate of a company, or receive direct payments for services rendered into your business bank account (you should have one of those BTW) or Paypal account, you have to submit your profits and losses to the state and federal government.

Employer Identification Number

To submit your income taxes to the state and federal government as a small business (you run a website with ads i.e. a small business), you will need to register for and receive from the Internal Revenue Services (IRS) an Employer Identification Number (EIN). This number is also referred to as a Federal Employer Identification Number (FEIN). An EIN is a “nine-digit numeric code that must accompany all tax forms and information submitted to the government on behalf of a business.”

Most webmasters are classified as sole proprietors. If you as a webmaster wish to pay your taxes as a sole proprietor, you will have to obtain an EIN to do so.

If you do not already have an EIN, you can obtain one here.

Business & Personal Bank Accounts / Credit Cards

Organizing your business records from the fiscal year will make filling your own taxes, having a CPA do it, or visiting a VITA (Volunteer Income Tax Assistance Program) site for free tax preparation far quicker and efficient. The best way is to first separate your personal fiscal records from your business fiscal records.

I have found the easiest way to do this is with two credit cards (one for personal purchases and one for business purchases) and two bank accounts (one for personal income and debt payments and one for business).

Having a business credit card connected to a bank account makes doing your business taxes easy. You don’t have to look though an entire year of credit card deposits and payments to ferret out your business deposits and payments. They’re all in one neat file for you, ordered by date, and can be printed out or download onto your computer as a PDF.

Organizing Your Fiscal Records

The best way to organize your fiscal records before you file them, take them somewhere or to someone to be filed, is via the categories (more or less) found on your tax forms (for Connecticut, that is tax form CT-1040).

Make a .DOC on your computer containing your business records for the fiscal year.

For your website small business, you can separate your taxes like this (if applicable) in your .DOC. For Expenses: Office, Supplies, Home Office Rent (if your office work space is in an apartment that you rent), Home Office Utilities, Contract Labor (if you paid for services i.e. an alteration to your WP theme), Bank Charges, and Other. Total it at the end.

For Income, you can place all of your income into one column then just total it. You can itemize the list (Amazon, Complex, etc.) to make your calculations easier and more transparent if you wish.

When you organize your records like this, you or a tax professional will be able to simply plug in the numbers from your document into the appropriate slots when the tax program asks for them.

Write-offs – Tax Deduction

Discussed here in a cursory way, the purchases that you make for organization as a webmaster, like a new computer, printer, etc. are deductible business expenses on your taxes. They can be written-off (“write-offs reduce the amount of taxable income you have. For example, if you make $100,000 a year and have $10,000 in write-offs, you would be taxed on only $90,000 in income”).

You can be broad and deduct the entire price of the new computer that your purchased (for example – if you are using it 100% of the time for business purposes) the tax year that you bought it or you an capitalize your purchases (“capitalize is an accounting method used to delay the recognition of expenses by recording the expense as a long-term asset. In general, capitalizing expenses is beneficial as companies acquiring new assets with a long-term lifespan can spread out the cost”). A capitalized cost is recognized over a period of time via depreciation or amortization.

When you add in a specific purchase, like a computer, the tax program you or your tax profession is using will prompt you (or them) about depreciation. If you choose to go that route follow the on-screen instructions.

Do you travel to film festivals or conventions and cover them on your website? You can write off your travel expenses: plane ticket, hotel accommodations, food, and taxi costs when you do your taxes. Depending upon the state of your taxes, an expensive trip to a film festival or convention could cost you zero dollars if you calculate everything correctly.

Earned Income Tax Credit for Self-Employed

Earned Income Credit (EIC) or Earned Income Tax Credit (EITC) is a tax benefit for self-employed individuals (sole proprietors). As a webmaster, you are self-employed. As a webmaster, you should ask for or apply for EITC when doing your taxes. EITC “is a refundable tax credit for low-to-moderate-income working individuals.” EITC is available for state (type in your state + Earned Income Tax Credit into Google) and federal income taxes.

If you qualify for EITC, you may only receive a few hundred dollars more in your refund, but why leave money on the table? Apply for it.

Concluding Thoughts

By taking a few extra steps before and after tax season begins, webmasters can maximize their returns each year.

About the author

Rollo Tomasi

A Political Science and MBA grad who started ProMovieBlogger to educate others on what he had learned through trial and error. Cinema and TV addict. Former writer at Empire Movies, Blogcritics, and Alternative Film Guide. In addition to writing for FilmBook (http://film-book.com), he also edits the copy published on the website, manages its writing staff, manages the back-end operations, site finances, its social network accounts, and works with publicists, actors, and companies on press coverage and promotions. He also created and runs Trending Awards.com.

Video

Uniquely strategize progressive markets rather than frictionless manufactured products. Collaboratively engineer reliable.

Advertisement

Advertisement Small

Follow Me

Collaboratively harness market-driven processes whereas resource-leveling internal or "organic" sources. Competently formulate.

Calendar

September 2017
M T W T F S S
« May    
 123
45678910
11121314151617
18192021222324
252627282930  

RSS Meks Blog

  • Free fall wallpapers download September 21, 2017
    These free fall wallpapers are just waiting to be picked up, just in time for re-freshening your work space! The post Free fall wallpapers download appeared first on Meks.
    Ivana Cirkovic
  • The latest Facebook algorithm change and it’s affect on your website September 19, 2017
    You just can’t win with it! See how the latest Facebook algorithm change is affecting your website content presence and why you need to come up with an even better plan. The post The latest Facebook algorithm change and it’s affect on your website appeared first on Meks.
    Ivana Cirkovic
  • How to fix Facebook Thumbnail in WordPress September 14, 2017
    Ever wondered how to fix Facebook Thumbnail in WordPress or any other website platform? Here are some quickest and most common ways to do it. The post How to fix Facebook Thumbnail in WordPress appeared first on Meks.
    Ivana Cirkovic
  • Embed YouTube video in WordPress September 12, 2017
    For all of you who wondered how to embed YouTube video in WordPress, here are 3 tips to master it in no time! The post Embed YouTube video in WordPress appeared first on Meks.
    Ivana Cirkovic
  • What is image alt text and what it does for SEO? September 7, 2017
    Take a look at our guide to image alt text and how to use it properly. The post What is image alt text and what it does for SEO? appeared first on Meks.
    Ivana Cirkovic
  • 7 text editor tools that will improve your writing September 5, 2017
    No matter how good you’re writing, these text editor tools are designed to help you stand out and give 110% of your content marketing effort. The post 7 text editor tools that will improve your writing appeared first on Meks.
    Ivana Cirkovic
  • 15 top free photo websites for your online projects August 31, 2017
    Are you on the lookout for free photo websites for your next article, blog post or project? The post 15 top free photo websites for your online projects appeared first on Meks.
    Ivana Cirkovic
  • What are photo licenses and what do they mean? August 29, 2017
    For all of you who ever wondered about photo licenses, their meaning, and permissions, we’ve gathered all the useful information that can help you understand them better. The post What are photo licenses and what do they mean? appeared first on Meks.
    Ivana Cirkovic
  • Using WordPress for e-learning – 4 reasons not to overlook August 24, 2017
    If it can guide missiles, you can surely use WordPress for elearning, don’t you think? The post Using WordPress for e-learning – 4 reasons not to overlook appeared first on Meks.
    Ivana Cirkovic
  • What are Twitter chats and how can they help your business? August 22, 2017
    Did you know that something that simple as Twitter chats can help you in your business and overall personal growth? The post What are Twitter chats and how can they help your business? appeared first on Meks.
    Ivana Cirkovic

Text

Distinctively utilize long-term high-impact total linkage whereas high-payoff experiences. Appropriately communicate 24/365.

Send this to a friend