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Can I benefit from my websites?

 
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Hello All,
Not sure if its relevant to even post here about my Tax issue. Anybody familiar with Taxes in USA?

I am single and work full time. I manage couple personal websites ".com" and ".net" (blogs). I want to reduce my taxes.

Can I write off my blogs? Basically I run ads on these blogs, the revenue is very negligible. You can say I have no revenue.

I want to make use of these blogs to bring down my fed taxes (its rediculous when you have to pay more at the end of the year ).

Does it help, if I incorporate ?

I can claim the ".com" blog is for charity, because I write about technology solutions (giving away valuable knowledge/expertise). If I were to consult instead of writing, I would make more real money. I don't have time to consult (since I already work full time).

Thanks

Srinivas
 
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You're kidding, right?

You owe taxes on the advertising income, although you can deduct any expenses of operating the blogs themselves (hosting, domain names, etc.)

If you have to pay at the end of the year, it's because you haven't figured your withholding properly; file a new W-2 form with your employer.
 
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Ernest Friedman-Hill wrote:
You owe taxes on the advertising income, although you can deduct any expenses of operating the blogs themselves (hosting, domain names, etc.)


You can just tell, how much I don't know about taxes...

Under what category can I deduct these operating expenses?
I don't own any property. Apartment life.

Ernest Friedman-Hill wrote:
If you have to pay at the end of the year, it's because you haven't figured your withholding properly; file a new W-2 form with your employer.


Can you please be more specific. What does "filing a new W-2 with my employer" have to do anything with me deducting the "operating expenses" on my personal blogs.

Thanks for the reply!

Srinivas
 
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Blogs. Web2.0. W-2. Get it?
 
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Ernest Friedman-Hill wrote:
You owe taxes on the advertising income, although you can deduct any expenses of operating the blogs themselves (hosting, domain names, etc.)


You can just tell, how much I don't know about taxes...

Under what category can I deduct these operating expenses?
I don't own any property. Apartment life.

Ernest Friedman-Hill wrote:
If you have to pay at the end of the year, it's because you haven't figured your withholding properly; file a new W-2 form with your employer.


Can you please be more specific. What does "filing a new W-2 with my employer" have to do anything with me deducting the "operating expenses" on my personal blogs.

Thanks for the reply!

Srinivas
 
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srinivas chary wrote:Can you please be more specific. What does "filing a new W-2 with my employer" have to do anything with me deducting the "operating expenses" on my personal blogs.



In the US, you can't deduct personal expenses from your salary. And as you already mentioned, what does the blog operating expenses have to do with your job? You can however, treat your blog as a business, and try to deduct the operating expenses from revenue, which as you also mentioned, there is none.


What Ernest is assuming is that you owe taxes, and should file W2 to get withholding correct -- basically to use your job to give more taxes to balance out the revenue from the blog. If you are trying to get a bigger refund (or simply to pay less), then it is moot.

Henry

 
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srinivas chary wrote:

Ernest Friedman-Hill wrote:
You owe taxes on the advertising income, although you can deduct any expenses of operating the blogs themselves (hosting, domain names, etc.)


You can just tell, how much I don't know about taxes...

Under what category can I deduct these operating expenses?
I don't own any property. Apartment life.


If the tax code in the US is like what it is in India, then owning property does not reduce your taxes anyway. Its the loan EMI payments(mortgage payments in US) that will reduce your taxes.

Having a retirement plan and also maybe a savings plan for your children will also allow you save taxes a lot.
 
Ernest Friedman-Hill
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You would deduct expenses on Schedule A, the "Itemized Deductions" form. If you don't itemize (and if you're renting an apartment, maybe you don't) and take the standard deduction instead, then you don't get to deduct the expenses -- but you still need to report the income.

I'm sorry, I typed "W-2" but I meant "W-4". This is the form you fill out to tell your employer how much money to take out of your check for taxes. You can fill out a new one at any time -- contact your HR department. There's a box that lets you add an extra amount to deduct. Take the amount you paid at the end of the year last year, divide it by the number of pay periods (i.e., 26 if you're paid every other week) and write it in that box. People who get a refund every year are just giving the government an annual interest-free loan: they should really file a new W-4 and have less taken out.

 
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Henry Wong wrote:
In the US, you can't deduct personal expenses from your salary. And as you already mentioned, what does the blog operating expenses have to do with your job? You can however, treat your blog as a business, and try to deduct the operating expenses from revenue, which as you also mentioned, there is none.


I want to rather keep my personal stuff away from work.
My blog is not a business yet (not incorporated). And even if I make it a business, I don't have profit.

Here are my 2 concerns:

1. Is there any itemized deduction under which I can claim the operating expenses for my blog (which is not a business)? considering this as a charity
2. Even if I incorporate, since there is no profit, will I be able to reduce the fed tax for Tax year 2010? (Assuming that incorporating now, doesn't have any effect for Tax year 2009)

Thanks

Srinivas
 
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srinivas chary wrote:
1. Is there any itemized deduction under which I can claim the operating expenses for my blog (which is not a business)? considering this as a charity



Your blog is not a charity. A charity has a very specific legal definition (along with paperwork), in order to have their donors be able to deduct donations.

srinivas chary wrote:
2. Even if I incorporate, since there is no profit, will I be able to reduce the fed tax for Tax year 2010? (Assuming that incorporating now, doesn't have any effect for Tax year 2009)



If you have no profit, then you have no taxes -- and hence, nothing to reduce taxes from.

Henry
 
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Henry Wong wrote:
If you have no profit, then you have no taxes -- and hence, nothing to reduce taxes from.

Henry



Though if he had no profit and managed to have a loss that would give him a deduction with which he could offset some of his personal income. He could possibly also depreciate his equipment Like his PC and get some losses from that. This is all assuming this a real business
 
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Arvind Mahendra wrote:
Though if he had no profit and managed to have a loss that would give him a deduction with which he could offset some of his personal income. He could possibly also depreciate his equipment Like his PC and get some losses from that. This is all assuming this a real business




In the US... no, you can't.

The only way that this is possible is for you to be hired by your own business. It means that you are getting a W2 or 1099 from yourself (business), and the company (that currently pays your personal income) is not your employer, but has contracted your business for the work. And this can get really realy complicated -- make sure you hire a good accountant.

Henry
 
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Henry Wong wrote:

Arvind Mahendra wrote:
Though if he had no profit and managed to have a loss that would give him a deduction with which he could offset some of his personal income. He could possibly also depreciate his equipment Like his PC and get some losses from that. This is all assuming this a real business




In the US... no, you can't.

The only way that this is possible is for you to be hired by your own business. It means that you are getting a W2 or 1099 from yourself (business), and the company (that currently pays your personal income) is not your employer, but has contracted your business for the work. And this can get really realy complicated -- make sure you hire a good accountant.

Henry



Thanks for your valuable insights.

Unfortunately, me being on work permit, I don't wanna take any risks on my immigration status. To add to that, am not rich enough to hire a lawyer/accountant to create my company. Even if I did, the relation with my employer will be jeopardized at which point I will have no job/clients. It would be an enormous effort to replace me @ my company as I manage and am responsible for few things. Can I take advantage of my situation and contract off of my own company? The thought was to share knowledge as I gained knowledge from sites like Javaranch

Maybe I should put a pay pal link, just in case some generous people feel to donate on my site

Maybe I should attack this issue in a different angle. marry first, and then buy property, and invest in IRA (traditional), etc...

P.S. Anybody knows how much it costs on average to register a company (all the legal and otherwise costs).
 
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srinivas chary wrote:
P.S. Anybody knows how much it costs on average to register a company (all the legal and otherwise costs).




This is not an average, as one datum point doesn't make an average ...

For me, many many many years ago, I believe I paid about $600 to incorporate (S-corp). And about half of that, a few years later, to dissolve it. I also paid around $400 annually for the accountant.

Henry
 
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A blog is not a business as mentioned. However, you can create an advertising company and use the blog website as the main advertising vehicle. Whether you get any customers to advertise on the website is a totally different story. You basicaly have about 4 or 5 years to establish the business. If you dont' make any profits by then, then it is best to disolve the corporation.

Either way, the cost of the accountant, even though it is a deduction will still offset any tax benefits you get from claiming business expenses, IF, you don't have any income or profits from the business.

Incorporating is not hard and can be executed for a couple of hundred dollars. Delaware has the best tax laws compared to any other state in the U.S.A. and lowest fees. Also, ownership is private and the business can be operated from anywhere in the world. All you need is to have a registered agent in Delaware to represent the business. There is a small annual fee paid to registered agent.

Check out http://www.thedelawarecompany.com/

Also buy the book Incorporate and Grow Rich at your local Amazon.com near you.

http://www.amazon.com/Incorporate-Grow-Rich-Cheri-Hill/dp/0967187109

Good luck!
 
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