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According to the IRS you are a private contractor employed by Google

etymonline.com

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Re: According to the IRS you are a private contractor employed by Google

#41

Post by kls »

larsberg wrote: post #2

It wasn't entirely clear from this article, but it looks like he was paying normal income tax on the money coming in, but failed to pay self-employment taxes. I have talked to more than a few iPhone developers whom this happened to as well -- forgetting about that extra 15.3% can really hurt. But, did he remember to track and deduct all of his expenses? The flipside to that income is that the server costs are all ded…

Well that is what I don't understand about the article, sure unless you are a S-corp you are going to get nailed for FICA and even if you are you don't totally duck them. By my issue with the article is; great you are now a company, you just got a ticket to take a boat load of new deductions, write-offs and depreciations. If he was just skirting by, he should be able to prove this via deductions which should more than offset the mandatory FICA portion. I mean if he is spending that much it should not be that hard to shave off 8% in deductions.

Re: According to the IRS you are a private contractor employed by Google

#42

Post by kls »

rbarooah wrote: post #39

What level of tax professional does someone in the OP's situation need? Will a trip to the local H&R block sort it, or does he need to look for someone more specialized and if so, how would he identify them?

He needs a CPA in a situation like this, mine a very good one for my area charges around $600 for my taxes and that is a "Dump Papers" job. In other words I dump the papers off and they figure it all out. It would be around $300 for a here is all of my information, it's all organized find stuff I have missed. Every year, with out fail he has paid for himself and then more. The first two years I organized everything and did the online DIY tax thing as a reference. The first year he came in $6000 over the best I could do on the DIY stuff. I can't to stress it to people enough, if you are a professional making over $60k, you cannot afford to not have a CPA. You are without a doubt walking away from money.

Re: According to the IRS you are a private contractor employed by Google

#43

Post by kevinpet »

I've looked through the IRS site and there are explicit statements that if you have profit from a hobby, that should be reported as "other income". I think the author could have made a very reasonable mistake.

It is pretty clear that he should have been deducting his expenses from the site and only reporting the profit as self employment income. If he was actually making $10k in profit, then he should have been aware that it was more "business" than "hobby" and used those rules.

For those not familiar, the IRS has a category for a hobby because some people may have a hobby that looks a lot like a business that loses money. You can't deduct losses against your outside income, as you can in a serious business that just happens to have not made money that year.

Not a lawyer, not an accountant. Just someone who can read.

Re: According to the IRS you are a private contractor employed by Google

#44

Post by dotBen »

rbarooah wrote: post #39

What level of tax professional does someone in the OP's situation need? Will a trip to the local H&R block sort it, or does he need to look for someone more specialized and if so, how would he identify them?

I wonder if some of the problem the OP is in this mess is because he's either using a do-it-yourself tax return system and not made the correct deductions or he's gone to an HR Block 'chop shop' who have not listened/understood his income streams.

I'm not sure CPA is needed (my rule is >$100k total income, use a CPA else just a 'tax attorney'/'accountant' type person). But someone who understands these things would be helpful.

Re: According to the IRS you are a private contractor employed by Google

#45

Post by M1573RMU74710N »

pinksoda wrote: post #20
enjo wrote: post #18

Earlier quoted context omitted.

You make 10K a year at a yard sell or selling pot, you owe the IRS money on that income. Just because you're less likely to get caught doesn't make it any less illegal. Probably the closest "real world" example would be a flea market. Those large flea markets are the google, and the vendors are the independent folks putting ads on their sites. You sell $10k worth of goods at a flea market, you bet your ass that marke…

There was a guy who got caught selling a lot of marijuana and didn't get in much trouble because he was paying taxes on it since day 1.

That sounds like complete BS to me, unless you're talking about some time ago when marijuana and tax law were actually intertwined.

The best you could hope for is some sympathy from the judge and/or not also getting slapped with tax evasion.

Source?

Re: According to the IRS you are a private contractor employed by Google

#46

Post by dotBen »

dmfdmf wrote: post #33

Perhaps this is a startup idea for the ambitious types on HN. There are literally 1000's of very successful blogs making some marginal amount of money from ads on their site. Most of these bloggers are not in it for the money and would like a publisher to take care of the business side of things, including the taxes. Perhaps this already exists but I am not aware of it.

The problem is that the "taking care of business" is basically you putting it on your tax return correctly.

No one else can really do that for you other than your accountant.

Re: According to the IRS you are a private contractor employed by Google

#47

Post by M1573RMU74710N »

DanielBMarkham wrote: post #10

I'm always amazed, when the-tax-system-sucks posts come up on HN, how quickly most commenters are to trash the author and/or lecture the complainer on how wrong they are. There is a impedance mismatch at work in our system of governance that's not going away any time soon. The government makes laws by sticking people into little boxes and making rules for those boxes. This system of boxes and rules -- the tax code --…

If I'm not mistaken what happened was this person was the one reporting the income, they were just reporting it incorrectly.

Re: According to the IRS you are a private contractor employed by Google

#48

Post by earl »

icco wrote: post #22
pinksoda wrote: post #20

Earlier quoted context omitted.

There was a guy who got caught selling a lot of marijuana and didn't get in much trouble because he was paying taxes on it since day 1.

That sounds hilarious, source?

I don't know about the not getting prosecuted bit, but drug taxes are real -- see eg http://www.time.com/time/nation/article/0,8599,1578857,00.ht...

http://marijuanastamps.com/state-stamps.htm

Mostly, it's another way for pigs to steal from people. The idea being they can not only throw you in prison for dealing, but then use tax forfeiture laws to take everything you own.

Re: According to the IRS you are a private contractor employed by Google

#49

Post by earl »

smokeyj wrote: post #34
DanielBMarkham wrote: post #10

I'm always amazed, when the-tax-system-sucks posts come up on HN, how quickly most commenters are to trash the author and/or lecture the complainer on how wrong they are. There is a impedance mismatch at work in our system of governance that's not going away any time soon. The government makes laws by sticking people into little boxes and making rules for those boxes. This system of boxes and rules -- the tax code --…

If you sympathize with the tax code it's probably because you've never bootstrapped a start up. It's hard enough to make it, even without financing the government. A high quality of living is enabled by technology and innovation, and the process that stifles innovation - taxes - should be regarded with extreme caution. If trading with each other is a taxable offense you can expect a severe impediment on innovation. D…

Come on, your post is stupid on it's face. If a high quality of living is enabled by technology and innovation, said technology and innovation is enabled by stuff the government does -- a huge quantity of technology has it's roots in US government spending, and education is one of the 3 big things that states spend money on.

Further, you conflate taxation laws and laws that prohibit things, eg "trading with each other is a taxable offense". In the real world, someone has to pay for the government and businesses pay a piece of the cost.

Re: According to the IRS you are a private contractor employed by Google

#50

Post by PedroCandeias »

I fully sympathize with Douglas. But I do think he's dramatizing his two most realistic options a bit too much:

1. If he runs Adsense, he's not going to get casino or penis ads. Last I checked, Adsense was pretty strict about that.

2. Asking users for donations is hardly begging. He's providing (one hell of) a service in return, so it's only fair.

I've seen this before. People reviling the notion of associating money with the service they provide, and eventually running into money trouble sooner or later.

Even if Douglas chooses to go down the nonprofit road, he'll still have a much harder time than if he just declared etymonline.com a business and ran it as he saw fit.

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