111–118 of 118 posts
Thus far, I've only made $0.24 with my adsense account so if the IRS wants their nickel, I'm glad to give it to em. If my site should take off, I'll worry about it then. But thanks for making me aware of the problem.
The guy's a dumbass. If you're making money off your site, it's a business, just that simple. It does cost a few 100$ every year, but if you get income from anything other than W-2 jobs, you'd better have an accountant. I've definitely had little accidents in my filings and minor trouble with the IRS but my experience is that, with the help of an accountant and some common sense, these problems can be worked out easi…
More likely he has a Hobby not a business http://www.irs.gov/irs/article/0,,id=186056,00.html
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 --…
The system isn't broken. It just wasn't written with individuals in mind. The system works wonderfully if you're a CPA or large financial institution. If people understood their best interests and elected officials acted on behalf of those best interests we would have a simpler tax code. The opacity of law benefits only those who can understand it. Clarity of tax code is simply not in the interest of those who pay fo…
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Hey ars, well the best way to explain the concept is to think about how you are taxed on dividends. When you buy stock in Google and receive dividends, you would pay tax on that income on your 1040, but it would not be taxed as a "self-employment income" and thus SE Tax is not levied. An S-Corporation is a standard C-Corporation that has elected for special treatment. Instead of paying double taxation, its income is…
I've always wondered what the proper criteria for "reasonable salary" were. Care to offer one of your wonderful Hacker News summaries on that matter? By the way, it's great to see a qualified member of the HN community offering help to Etymonline. Do let us know if anything comes of it (he's says he's made contact with a local tax lawyer, but based on your reputation here, I'd rest easier if he were in your hands ;-)…
I've yet to hear back from him, so I haven't had anything to update. I'm guessing that he feels comfortable with the information he learned from the tax attorney and is satisfied with the help he's received.
In regards to the "reasonable salary" issue that's a difficult topic to explain because its a subjective test. The word reasonable is going to be very different for the IRS compared to the average taxpayer.
In my experience, a "reasonable salary" is going to depend a number of factors. The best way to prove that you're getting a reasonable salary is to have "comps" or comparable positions with the same functions and them take the average of their salary.
Ex: Your job description is an entry level developer. Average salary is in the range of 55k to 75k but the mean is 60k. In this situation you could argue for any salary between 55k and 75k, but the clearest answer would've been 60k. Subjectivity please a big role in this area.
Also, experience has given me a "gut feeling" on what is reasonable so often times I go by just guessing based on what I've seen on the past.
Lastly, thanks for the props! I'm honestly surprised that anyone even bothers to read my posts about boring tax loll but I'm glad to have been of help =D.
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It's not in the government's interest to collect tax on every transaction at every scale, because (a) it costs money to collect tax, and (b) economic activity is itself dampened by the transaction costs of keeping reliable accounting records in case of audits etc. That's not to say that 10,000 USD annual revenue is too low to be efficiently taxed; but there certainly are points at which it doesn't make sense.
Hi - (this is my first post). I'm not sure I agree with that. For example: Starting in 2011, any vendor or independent contractor payment that aggregates to more than $600 in a year gets a Form 1099-MISC. Do you think $50/month is worth all these paperwork? I sure don't.
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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 othe…
The government also promotes bad IT practices overall.
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The right, even obligation, of the sovereign is to dip a straw in the stream of commerce and extract revenue. Tax farming was the way to do this in olden days, a highly inefficient and grossly unjust means. Today the income tax is the predominant means, and it is sold as the socially just alternative. I don't want to argue the social justice aspect. I pointed out some contradictions in another comment. I will argue f…
The correlation between energy use and ability to pay large tax bills is at best, loose. Alaskans on average consume >5x the amount of energy New Yorkers, which certainly doesn't reflect their respective per capita incomes http://www.census.gov/statab/ranks/rank30.html On average the rich use energy more than average people, but the proportional difference isn't huge, and it's pretty safe to assume the top 1% of earn…
More importantly, such an energy based tax system would result in the vast majority of tax being remitted by business and institutions, not individuals. Businesses would not be able to avoid taxation through accounting tricks, but at the same time the cost to business of paying tax would be eliminated because it requires no bookkeeping. Like all taxes on business, this reflects in cost of products and services. Less energy intensive products and services become more competitive on cost.
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If he had incorporated, absolutely. From the context of his blog, it seems he didn't.
I'm pretty sure you don't need to incorporate to take deductions on self-employment expenses. Self-employed income isn't just a free ride to a kick in the balls - if you're paying that extra 15%, you get to take expenses as deductions. If it's low-level income that is just covering expenses, you're not going to owe the IRS a dime.