The fast and easy answer to this question is, yes.
As an American citizen, you are expected to pay taxes on all of your
earnings, worldwide. Because these earnings are attached to a blog or
website that you run on the Internet, it does not exempt them from
being part of your taxable income.
Contrary to some opinions, the Internet is not a
tax-free zone where you do not have to relinquish income to the taxman
because it is generated over the web. Every dollar you earn from your
Internet endeavors is taxable, period.
Google Ad-sense will collect tax information from
those participating in their program. If you have a business, you will
need to provide an EIN. If you are participating as an individual, you
will need to provide them your Social Security Number. They will allow
you to participate in their advertising program without, first,
providing them this information. They will, however, withhold any
payment to you until they have your tax information. If you earn more
than $600 annually with Google Ad-sense, they will supply you with a
form 1099 for filing with your income taxes.
Some people wonder if they should report these
earnings as part of a business, or if they might be better off
reporting their activities as a hobby.
First of all, it might be difficult to convince
the IRS that someone would place income generating advertising on a
website or blog that is solely used as a hobby. Secondly, you are
severely limiting your opportunity for tax deductions if you report
your blog or website as a hobby. It would be better if you reported
these endeavors as a sole proprietorship and filed for business
deductions on your income tax return.
Some of the business deductions you might qualify
to claim are costs for domain names, web-hosting costs, costs to
advertise and promote your site, computer costs, hardware costs,
software costs, digital camera costs, scanner/printer costs, office
equipment and supplies costs, utilities costs, internet service
provider costs, rent or mortgage costs, business cards, business
travel/mileage, trade journals, magazines, books, and all costs related
to running a business. If you run your business from home, you can even
deduct some of your everyday living costs, as well.
If you earn more than $600 in a tax year, Google
Adsense will report your earnings to the Internal Revenue Service and
issue you a 1099. Even if you do not earn more than $600 in a tax year,
you are still required by law to report your earnings to the IRS
Article Source:
http://www.articlesbase.com/taxes-articles/am-i-expected-to-pay-
taxes-on-my-google-adsense-earnings-1629006.html
About the Author
Chintamani Abhyankar, is a well known expert in
the field of finance and taxation for last 25 years. His famous Tax eBook
“Stop donating your money to IRS” which is now running in its second
edition, provides intricate knowledge and valuable tips on personal
finance and income tax. Just visit his website
http://www.planningyourtax.com/ and claim your FREE eBook.
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