Before the end of January of the next year, you will receive 1009-MIS from your affiliate programs, your AdSense and any additional online companies you have worked with and generated, over $600 in income (Note: If you earned over $400 in your online business, you must file a Schedule C)

Regardless, if you received a 1099-MISC or not, you must still report your income on your tax return.

You may have thought your web site ventures were a hobby, however, the existence of a 1099-MISC, which are mailed to you and the IRS, puts you in business, regardless if you like it or not.

Being in business is not a bad thing, when it comes to taxes. It just means that you will need to add a Schedule C to your form 1040. The end results from a Schedule C, will show up on Line 12 - Business Income or (Loss) of your Form 1040.

One of the major concerns with income from a website, is the low amount of annual expenses. (It's one of the few businesses where you can invest less than $100 and earn in excess of $100K, all in the same year) This is why it is important to count every penny when it comes to expenses.

For example:

ISP - Internet Service Provider, High Speed Internet connections, phone line (only if you have two telephone lines in your home) And of course your monthly or annual fee for web hosting is also tax deductible.

Additional Write-Offs, Once Online:

The cost of software (can be depreciated if used for longer than one year) used to run or operate your online business. The cost of online services and support services are also deductible.

Design, Templates, Upkeep of Web Site(s)

Regardless if you design your own site, purchase a template, or pay and Independent Contractor, these expenses are deductible, as well.

When you pay someone to optimize your web site, analyze your keywords or to write your content - tax deductible.

Online Marketing, Web Promotion Cost

If you received a 1099-MISC for income earned from your website, more than likely you have online marketing cost.

E-mail campaign and e-mail capture monthly service cost - tax deductible

Purchasing of e-mail targeted list or bulk e-mail delivery services - tax deductible

If you purchased traffic to build up the number of web visitors, this cost is also deductible.

Online and offline, promotional campaigns, such as contest, give-a ways, and prizes are deductible

Independent contractors that you pay to post in blogs, forums, social networking sites and classified ad sites (to build creditable back links) - these expenses are deductible. If you pay the same Independent Contractor over $600 in one year, you must provide a 1099-MISC to your Independent Contractor.

Payments, regardless if it is over $600 or not, are reported on Schedule C, Line 11 - Contract Labor.

Office Rent or Business Use of the Home

If you have out grown the office in your home, congratulations. All of your rent and the monthly cost of the up keep for your commercial office, is tax deductible.

If you have an office in your home, where you conduct business (in this case, operate your online business) a portion of the cost for the up keep of your home (purchased home or rental) is tax deductible.

The amount that is deductible for business use of your home, depends on the total square footage of your entire home and the number of square feet you use for business.

This same formula will apply to your utilities, maintenance, repairs and insurance.

Business Use of Your Car

When you use the standard mileage race deduction (58.5 cents per mile in the latter half of 2008) you will need to keep a detailed log of miles driven for business. (visit: irs.gov for more information) If you select to use the actual cost, you will need to keep all of your receipts.

Travel Meals and Entertainment Costs

Fortunately, when you attend an workshop or conferences, related to your online business, and there are plenty each year, in all the hot spots, Las Vegas, New York, Miami, etc, your travel expenses are tax deductible.

Your meals and entertainment are deductible also, however, only 50 percent of the total of meals and entertainment is counted.

This information is a summary, based upon the expenses that website owners would encounter. For more details and precise information, you should visit the Internal Revenue Site at: irs.gov

Recommend : Ojon Hair Products