Trying to Figure Out the TAX Thing in the U.S.

Last Update: April 04, 2013
I have been struggling with the Expense(s) part of my business on a Schedule C for my Income Taxes in the United States.

Not sure how it is in any other country... Here they really have just one place to put Income... but Expenses, they make you guess and who knows what happens if we do it wrong!

What about Domain Purchases? Hosting Fees? Smart Phones? Apps? Books on HTML? memberships? to Wealthy Affiliate? JAAXY? Photoshop Upgrade? Dragon Naturally Speaking? New Headset for Dragon? Microsoft Office? and on and on and on.

I checked the IRS Sites and the Small Business Administration Sites and magazines and blogs and...

Finally, I hit Gold... May or May Not be right but I this point I don't care. I can rationalize my decisions, leave a note in my file about how I decided and just finish up... I am exhausted and brain-dead from trying to do it right...

Anyone else wanting somebody with a little knowledge (Maybe a lot of knowledge). Check out eCommerce Bytes, "Guest Column: Categorizing Ecommerce Expenses on IRS Schedule C" By Ina Steiner interviewing Kevin Reeth, CEO of Outright.com on April 13, 2011. (Hope I did everybody's credits right) Never heard of them before but glad I found them today.


For instance:
ADVERTISING EXPENSE:
  • Website Creation
  • Domain Name Registration & Hosting
  • Flyers and Brochures
  • Blog Giveaways
  • Business Gifts to Clients/Contractors

And So Much More... Hope this helps someone else.

Sherry M.

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rebeccas Premium
I recommend getting something like Quick Books to track your expenses. It makes it very easy to convert when tax time rolls around. If you are not familiar with some of the basic accounting terms, you may want to get someone to help you set it up. Once it's set up you can use it to write checks and code your expenses or capital purchases as you go.
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Thanks... The software was not the problem; and I had "Experts" I work with. I have had my own business since 1965 and normally love the accounting side. (It is nice and clean and logical and predictable)

My frustration was the conflicting advice from "tax professionals" including multiple people on the IRS support line about what EXACT categories the various Internet/Affiliate Marketing Expenses really belonged under.

My engineering desire for everything being "right" got the best of me and my perfectionism... :-)
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rebeccas Premium
Oh, I get it now...I did business and individual taxes for six years. I think internet/affiliate marketing is a relatively new animal for most "IRS Experts". You will always get conflicting advice from experts about how to categorize. It always amazed me how you could give the exact same data to 6 different preparers and come up with 6 different "Correct" returns. In this case, I would advise you not to over-think it. As long as you are consistent in reporting year to year you should be fine.
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Thanks, Great Advice!
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Labman Premium
Gee, Turbo Tax made that part really easy. They asked, I answered. There was a list of things I spent toward my online business.
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I tried that but they got into a disagreement about what went into which line item, called in someone else, who said they were both incorrect... I decided to research it on my own. I guess what I have learned is that they are all guessing. I just want to make the most educated guess. :-)
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fenxx Premium
Did you know you can call the IRS for live help? When calling just make sure that you select the right division, business vs individual taxes. I have found them to be responsive to my questions. Good luck.
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Thanks fenxx, I had no idea there was any chance of a live person to talk to. I do have a couple more things I would like their input on. Great!
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fenxx Premium
I'm not a tax expert but categorizing the listed examples as advertising expenses seems right. You should be able to confirm your hunch by looking at the schedule c iinstructions located within the publications page at IRS.gov. Take care.
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Thanks fenxx but the Schedule C Instructions totally ignored the Line 8 Advertising Expense and put zero description. I guess they thought it was intuitively obvious what Advertising Expense is and I guess I am not so intuitive...

But this article went more in-depth about each area in the internet based business and into what needs to be classified where, such as what goes in Other Expense and how to describe it. The Schedule C Instructions said that Other was for Parking Fees and Toll Roads... also didn't help me much.
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