Three Types of Taxes You Need to Be Aware Of:
Personal Federal Income Taxes
When doing your taxes, the IRS askes about all sources of income. Therefore, no matter how you came to receive that money, it's going to be taxed (even if you made it online).
Personal State Income Taxes
Most states will tax any income according to their state-specific laws. Most likely, income derived from internet marketing is going to be taxed. You must become familiar with your state’s tax laws.
Sales Tax
In the United States, there is no clear and consistent policy about how to charge sales tax to income made online. The question that usually arises is: “Is it fair to tax out of state retailers who have no physical presence in the state?”
PotPieGirl, a Wealthy Affiliate internet marketer, talks about this. She's made two blog posts about it here in Wealthy Affiliate: https://my.wealthyaffiliate.com/potpiegirl/blog/i-got-fired/a_aid/fda05b1e
https://my.wealthyaffiliate.com/potpiegirl/blog/amazon-tax-law-in-your-state/a_aid/fda05b1e
The best way to determine all your business requirements, including state sales tax treatments, is to contact your state Small Business Administration (SBA) office. They will be able to direct you.
Next Up: This Applies to You/Going Forward
Reply
"The general rule is that if you have not turned a profit in at least three of the prior five years, the IRS will categorize your business as a hobby. This may be extended to a profit in two of the prior seven years in the specific case of horse training, breeding or racing."
Also, how long ago was that? You are able to file an amended return for up to three years after the due date of the original return (File IRS Form 1040X).
Finally, your WA business has nothing to do with those other businesses. You are legitimately operating an internet business to make a profit. Thus, you can, and should, treat it as such. If your CPAs are telling you that you cannot claim expenses for your WA business, I'd look for another CPA.
Anyway, wish you continued success,
Joshua
