Taxable Website Ad Revenue
I'm not a tax advisor, but I've done freelance work, so... If any of your side-business revenue is reported on a 1099, you're now a business owner, which is why Schedule C must be filled out. As a business owner, minimum wage doesn't apply to you. All revenue is income to you, and you owe taxes on the profit, after subtracting legitimate (verifiable) business expenses. You'll want to talk to a real tax advisor if you're going to start expensing mileage, part of your house (if you use a home office), etc. Don't forget that you'll owe self-employment tax (the employer's half of your payroll tax).  You can't save money on business taxes by paying yourself a wage and then counting it as an expense to the business. You'll definitely want to talk to a tax expert if you start playing around with finances as an (the) owner of the business. Income that is not reported on a 1099 should be reported as hobby income. If the $5000 is income, then you need to pay income taxes on it.  That's simply the way it works.  Hourly rate has nothing to do with whether or not you pay taxes. If it helps, try to think of the $5000 as the first $5000 you make for the year.  Now it's covered by your standard deduction and you're not paying taxes on it.
I would put it under advertising. Technically the domain name should be amortized over its useful life... you can't really expense it all in the first year, unless it fits within Section 179. Ok thanks for this. I am curious, how would they know its facebook that is directing these increased sales. If it's TV or radio, you can tell by increased revenues from increased spots. But for a facebook ad or a google ad, unless this is the only form of marketing, how are you sure (unless again you can ask, did you hear from us by google or fb) its from one of these websites. My thinking was for a physical product when i made this comment. "For an example of a company that didn't do that, see Google:  https://www.sec.gov/Archives/edgar/data/1652044/000165204417000014/goog10-qq12017.htm  [emphasis added]  &gt;""Adoption of ASC Topic 606, ""Revenue from Contracts with Customers"" On January 1, 2017, we adopted Topic 606 using the **modified retrospective method** applied to those contracts which were not completed as of January 1, 2017. Results for reporting periods beginning after January 1, 2017 are presented under Topic 606, while **prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605.** We **recorded a net reduction to opening retained earnings of $15 million as of January 1, 2017 due to the cumulative impact of adopting Topic 606**, with the impact primarily related to our non-advertising revenues. The impact to revenues for the quarter ended March 31, 2017 was an increase of $14 million as a result of applying Topic 606.""" Do I report it as income? Is it subject to just the same amount of   taxes (~30%) as regular income? Are there any restrictions on how it   can be used? It is income. You can deduct the costs of maintaining the web page and producing the software from it (have an accountant do that for you, there are strict rules on how to do that, and you can only deduct up to the income if its a hobby and not a for-profit business), but otherwise it's earned income like any other self employment income. It is reported on your schedule C or on line 21 of your 1040 (miscellaneous income), and you're also liable for self-employment taxes on this income. There are no restrictions, it's your money. Technically, who is the donation even being made to? Me, just because   I own the webpage? Yes. This is for the United States, but is there any difference if the   donations come from overseas? No, unless you paid foreign taxes on the money (in which case you should fill form 1116 and ask for credit). If you create an official 501(c) organization to which the donations are given, instead of you getting it directly, the tax treatment will be different. But of course, you have to have a real charitable organization for that. To avoid confusion - I'm not a licensed tax professional and this is not a tax advice. If in doubt - talk to a EA/CPA licensed in your State. "Yeah, I'm actually working on such a web server... And you're right, it's really an entire platform more than it is a web server (though you can certainly use it as ""just a web server"").  Also, I did loads of testing to see what it takes to prevent adblock from working properly. Avoid the obvious stuff like using standard banner sizes and serving images from a directory called ""ads"" (hehe).  I don't want to give away my secrets just yet but if you too make it your goal to work around adblock you'll find nearly impenetrable solutions in no time :)" Depending on what software you use. It has to be reported as a foreign income and you can claim foreign tax paid as a foreign tax credit. "ITR1 or ITR2 needs to be filed. Declare the income through freelancing in the section ""income from other sources""" "If you are in the US, you legally must file taxes on any income whatsoever.  How much you will pay in taxes, if any, will depend on your total taxable income. Now, for small transactions, the payments are often not reported to the IRS so some people do not file or pay.  The threshold at which they payer is required to send a 1099 to the IRS is $600.  Patreon considers each donation a separate transaction and therefore does not send a 1099 to the IRS unless you make more than $20,000 in a calendar year.  If they do not report it, the IRS will not know about it unless they audit you or something.  However, you are technically and legally responsible to report income whether the IRS knows about it or not. -------- EDIT ------- Note that the payer files a 1099, not the recipient. In order to report your patreon income you will either use schedule C or add it to the amount on 1040 line 21 (""other income"") depending on whether you consider this a business or a hobby.  If it's a business and it's a lot of money you should consider sending in quarterly payments using a 1040-ES in order to avoid a penalty for too little withholding." Salaries and etc are a business expense and chargeable against revenue for tax purposes.  It is NOT tax deductible but it is an expense on an income statement in calculating net profit (after tax).  You could say salary &amp; etc are tax effective but not tax deductible. You can invoice your advertisers and use the date of the invoice for tax purposes.  Some advertisers may want to pay monthly, weekly etc so that would require multiple entries as income on the relevant dates. It is best to take advise from / appoint a professional CA. Will I have to pay GST? No GST is applicable. Exports outside of India do not have GST. Do I have to collect TDS when I send money to the PUBLISHERS ? No But another guy said, I have to pay 18% tax when receiving and sending payments, apart from that I have to collect 30.9% TDS when sending payment to the PUBLISHERS(outside India). There is only income tax applicable on profits. So whatever you get from Advertisers less of payments to publishers less of your expenses is your profit. Since you are doing this as individual, you will have to declare this as income from other sources and pay income tax as appropriate. Note there are restrictions on sending payments outside of India plus there are exchange rate fluctuations. It is best you open an Foreign Currency Resident [or Domestic] Account. This will enable you payout someone without much issues. Else you will have to follow FEMA and LRS schemes of RBI. [Reddit $20 million in revenue in 2016](https://www.recode.net/2016/4/28/11586522/reddit-advertising-sales-plans), is valued at $1.8 billion?  I think this has more to do with our near zero interest rates world, and capital chasing returns in the stock market casino, than any rational business valuation.  What goes up ....... In an accounting position, a domain name would fall under an intangible asset. Copyrights and patents are intangible, while tangible assets would be buildings or land (also known as property, plant, and equipment).  Noting above, you can list it as an expense for personal reasons, but that would be poor classification. Tangible and intangible assets come with expenses such as legal fees and design. In these instances, you would expense the cost, or fee, but add back that value to the tangible or intangible as it would be considered maintenance.  Please read here for tax treatment of a domain name.  Please read here for what an intangible asset is. Also read here on page 11 for more clarification by IFRS. Ok go ahead and make a site like this and see how it does. Realistically nobody wants to sacrifice their own internet browsing speeds to remove a couple of skippable &amp; blockable ads. It'd be great if gigabit fiber was available nationwide, but it isn't even close. 30% of households still have DSL. Your tech solution relies on building blocks that don't exist, and compromises that people don't want to make.   Changing stuff over to P2P would require a massive infrastructure investment alongside with a rethinking of common web development principles. Before you go trying to reinvent the wheel, learn what pi is.   The ad-based model works. The subscription-based model also works. Many sites are switching to a combination of the two. Servers allow for centralized updating of your content. The only broken thing is that ads aren't perfectly targeted to individual users, which is changing. If you don't want to see any ads, pay the website a subscription. "Tax is often calculated per item.  Especially in the days of the internet, some items are taxable and some aren't, depending on the item and your nexus.  I would recommend calculating and storing tax with each item, to account for these subtle differences. EDIT: Not sure why this was downvoted, if you don't believe me, you can always check with Amazon: http://www.amazon.com/gp/help/customer/display.html/ref=hp_468512_calculated?nodeId=468512#calculated I think they know what they're talking about. FINAL UPDATE: Now, if someone goes to your site, and buys something from your business (in California) and the shipping address for the product is Nevada, then taxes do not have to be collected.  If they have a billing address in California, and a shipping address in Nevada, and the goods are shipping to Nevada, you do not have to declare tax. If you have a mixture of tangible (computer, mouse, keyboard) and intangible assets (warranty) in a cart, and the shipping address is in California, you charge tax on the tangible assets, but NOT on the intangible assets. Yes, you can charge tax on the whole order.  Yes for most businesses that's ""Good enough"", but I'm not trying to provide the ""good enough"" solution, I'm simply telling you how very large businesses run and operate.  As I've mentioned, I've done several tax integrations using software called Sabrix (Google if you've not heard of it), and have done those integrations for companies like the BBC and Corbis (owned and operated by Bill Gates). Take it or leave it, but the correct way to charge taxes, especially given the complex tax laws of the US and internationally, is to charge per item.  If you just need the ""good enough"" approach, feel free to calculate it by total. Some additional reading: http://en.wikipedia.org/wiki/Taxation_of_Digital_Goods Another possible federal limitation on Internet taxation is the United States Supreme Court case, Quill Corp. v. North Dakota, 504 U.S. 298 (1992),[6] which held that under the dormant commerce clause, goods purchased through mail order cannot be subject to a state’s sales tax unless the vendor has a substantial nexus with the state levying the tax.  In 1997, the federal government decided to limit taxation of Internet activity for a period of time. The Internet Tax Freedom Act (ITFA) prohibits taxes on Internet access, which is defined as a service that allows users access to content, information, email or other services offered over the Internet and may include access to proprietary content, information, and other services as part of a package offered to customers. The Act has exceptions for taxes levied before the statute was written and for sales taxes on online purchases of physical goods."