US Tax Advice For A New Full Timer

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blackhorse

blackhorse

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Mar 24, 2007
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This has been my first year online full time, and its tax time. I've given the finger to the IRS most of the time (when I worked for the man), but now that I'm on my own, I don't know if I should chance that.

My dumb lazy ass hasn't yet setup a corporation. (On my ToDo list). And the majority of my profits started last June. So technically I'm just some joe who makes good bank online. I guess this would make me a sole proprietor by default? Anyone aware how this works?

I guess I can just get all my receipts, forms, etc and take them to someone, but without a corporation, can I still take write offs? For example, my PPC costs?

I need some tax advice quick. I'm gonna call someone local, but most tax offices know nothing about how people who earn a living online might be taxed. My business isn't technically in "California" since its virtual, so of course I want to avoid Cali state taxes at all costs. I'm guessing though that a California tax adviser isn't going to give me any loopholes and advise not paying California taxes. Besides, I lived overseas most of this year, so that complicates it more.

So anyway, you can see that I really dont know what to do here. I'm hoping some of the veteran's who've been online for a couple years might have some suggestions.

Thanks.
 


You're just an individual with a business under your name so you'll file a self-employed Schedule C for taxes. You can still take all the write-offs.

You do your job in CA so you'll need to pay the state taxes. No way around that.

Setup an LLC or SCorp for liability protection. Keep good records and if you make enough then get a CPA to do everything for you. Earning a living "online" isnt much different in the IRS's eyes. Same as any other business.
 
thanks for the info. Ive been back in California for just a few months. Technically I was only here for the month of December in 2007. Before that, I was overseas. So for most of 2007, i didnt live in California. I wonder how this comes into play.
 
You might try going into the darker side of things and getting things done offshore. Meaning create and Offshore company in the BVI etc. I'm not giving out the rest of the details because i am sure there will be a lot of questions rolling around.

You can also pay for a premium swiss bank acc with total privacy and protect your earnings from the guys that don't need them.
 
nashtu3000 said:
You might try going into the darker side of things and getting things done offshore. Meaning create and Offshore company in the BVI etc. I'm not giving out the rest of the details because i am sure there will be a lot of questions rolling around.

You can also pay for a premium swiss bank acc with total privacy and protect your earnings from the guys that don't need them.
Click to expand...
Take his advice only set up all of your accounts in Lichtenstein.:D

Seriously, I believe there are a few threads that occurred in the past on WF that talked about going offshore for your accounting.
 
How is offshore "the darker side?"

Talk to an accountant and a lawyer, and get yourself taken care of before you end up fucked. Offshore strictly for tax purposes is frowned upon and has been for years, something which people advocating offshore don't seem to have noticed. You can't even temporarily emigrate (if you have any money) without getting a rectal scan from the IRS, thanks to Clinton. Obama introduced legislation last year that changes the presumption on offshore funds to the position that all funds moved out of the country are presumed to be undeclared income until proven otherwise.

I did the offshore route for years, and used to work in the business, and there just isn't much of a point to it. If you have a legit trans-national operation then there's real benefit in offshoring. If you have monstrous assloads of money coming in, then there can be a real benefit. But given that the self-employed are historically much more frequently audited than people who get W-2s are, in most cases investing in setting up an offshore structure only to turn around and pull your funds out of your offshore account at a local ATM once a week is just an invitation to get your ass stomped by the IRS.


Frank
 
fm1234 said:
How is offshore "the darker side?"

Talk to an accountant and a lawyer, and get yourself taken care of before you end up fucked. Offshore strictly for tax purposes is frowned upon and has been for years, something which people advocating offshore don't seem to have noticed. You can't even temporarily emigrate (if you have any money) without getting a rectal scan from the IRS, thanks to Clinton. Obama introduced legislation last year that changes the presumption on offshore funds to the position that all funds moved out of the country are presumed to be undeclared income until proven otherwise.

I did the offshore route for years, and used to work in the business, and there just isn't much of a point to it. If you have a legit trans-national operation then there's real benefit in offshoring. If you have monstrous assloads of money coming in, then there can be a real benefit. But given that the self-employed are historically much more frequently audited than people who get W-2s are, in most cases investing in setting up an offshore structure only to turn around and pull your funds out of your offshore account at a local ATM once a week is just an invitation to get your ass stomped by the IRS.


Frank
Click to expand...


I'm not at this level but, I was wondering what about moving to the Bahamas? Is that a way to get out of paying taxes? If it is then it's probably not easy to move there? Or is all the bahamas stuff and not having to pay u.s. taxes false?
 
It's totally false. Unlike most other countries in the world, the US presumes to tax the worldwide income of its citizens. You are exempt on the first $85,700 (that's the 2007 rate at least) but liable above that. Thanks to the "expatriate tax" Clinton pushed in the 90s, even if you are leaving, renouncing your citizenship, and never coming back, the IRS will still take a bite of your ass.

Whether or not this income can actually be traced, whether or not you would be a big enough fish to be worth extraditing, etc. are all common responses to this line of conversation, and all worth considering "to yourself" (ie. it's stupid beyond human comprehension to start a conversation about how to avoid taxes on an interent discussion forum.) But as far as the basic law goes, no, moving to the Bahamas gets you nothing but astonishingly good head from Bahamian chicks, and an exemption on income tax if you happen to be in the sub-$85k a year bracket.


Frank
 
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