Affiliate marketing can be a great way to bring in an additional income. However, many affiliate marketers have been able to turn their side incomes into full-time income, which makes things a little trickier when tax time comes around.
Here are six things affiliate marketers need to know about filing taxes:
1. File taxes as an independent contractor
If you are an affiliate marketer, you are likely to be considered self-employed by the IRS, which means that you will need to file your taxes as a “1099” employee in April if your income is above $400.
As a self-employed person, you’ll need to file a Schedule C with your Form 1040, showing how much money you earned through affiliate marketing during the previous year.
2. Fill out form W-9 to get a tax ID number
If you are an independent contractor, you will receive a TIN (Tax Identification Number) from the company that hires you to promote their products or services. If for any reason you don’t receive a TIN, request one from the company that hired you immediately so that you can file your taxes properly.
3. Keep track of your income and expenses
If you are an affiliate marketer, it’s essential to keep good records of how much money comes in and goes out on a regular basis. Just like full-time employees, you will need to pay estimated taxes throughout the year on a quarterly basis (every three months) and you’ll also want to keep track of any deductible expenses that might be tax-deductible.
4. Get help with taxes if you’re not good at math or don’t have the time
If you are an affiliate marketer, there are plenty of online tax filing services available to help you file your taxes. Some of them are very affordable and others can be a bit pricey. Be sure to compare prices on different services before deciding which service is right for you. In some cases, it may be better to have a professional look over your returns and give you advice, particularly if your business is very new or not yet profitable.
5. Avoid scams by using legitimate sites
There are plenty of fraudulent companies out there that claim they can help you file your taxes. Many of them charge a fee for their services and then do nothing to actually help you. To avoid being scammed, always use a well-known company for your tax filing needs, such as TaxConnex, but also be sure to compare services before you decide which service is right for you.
6. Stay up to date on changes in the law that might affect how much money you owe or what credits you qualify for
To make sure that you are always filing your taxes correctly, be sure to keep up with changing laws and any new tax deductions. For example, the Affordable Care Act has led to many changes in how self-employed individuals file their taxes and determine if they need to pay additional taxes or receive refunds.
Conclusion
If you are an affiliate marketer, it’s essential to make sure that you file your taxes correctly and understand the tax laws surrounding self-employed individuals. By keeping track of your income and expenses, filing your taxes as a 1099 employee, requesting a TIN if necessary, using legitimate services for help with filing, staying up to date on changes in the law, and avoiding scammers, you can make sure that all of your affiliate marketing income is properly accounted for this tax season.
If you have any questions or comments about filing taxes as an affiliate marketer, please post them below!
