Affiliate Marketing Income Taxes

Whenever the affiliate has more than 600 in sales during a calendar year the parent should issue a 1099 misc form.

Affiliate marketing income taxes. Be careful as it comes to state taxes. You pay a 15 3 fica tax. If you re paying those percentages don t worry be happy. It is very important to have all affiliates complete a w 9 form and the parent company keep them on file.

If you re a small business owner you re technically both your own employer and employee. When you earn money as an affiliate you have to pay taxes for future social security and medicare benefits that come to a total of 15 3 of your earnings. If you have a regular job your employer takes on half the burden. Note that when earning gains as an affiliate you will have to pay taxes for future social security and medicare advantages.

And keep good records. Again consult with an accountant. This tax makes up 15 3 of your profits. Neil johnson a tax professional points out exactly what your obligations are.

You may pay corporate tax if your affiliate marketing company is incorporated. As an affiliate when you get the 1099 form to chronicle your earnings it doesn t include any withholding. If so you are deemed as operating a sole proprietorship for tax purposes with all income from your affiliate marketing activities flowing through to your personal tax return on your schedule c. Now compare it to 49 of personal income tax on the same 500 000.

The amount of income tax due will vary of course depending on factors such as how much money you re making from affiliate marketing and how many deductions you claim but 20 percent for the federal and 5 percent for the state is usually a decent benchmark. This effectively means that any earnings from affiliate marketing are treated as earnings by you as an individual and you ll pay taxes on these earnings on your personal tax return. Your affiliates earn income from your business creating some obligations for you as a tax payer. In other words you receive your affiliate commissions in full with no taxes removed in advance.