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Income Tax Information for Bloggers, Publishers and Affiliates
Income Tax and Internet Marketing
If you're online publisher, blogger or affiliate marketer then one thing you need to constantly keep eye on is income tax information in your country which applies to your online income activity. As most of the online revenue models are from US, CA or Europe based networks so there are plenty of things you need to know before promoting their products or being associate of these affiliate companies. I'm listing information which applies to every publisher irrespective of his citizenship, if anything needs more relevant explanation then you should get help from tax adviser or accountant in your country.
W-8BEN and US Affiliate Networks
Almost every US based affiliate network asks you to fill up W-8BEN(Non-US resident) or W-8/W-2(US-resident) form before you do business with them. These forms are for those affiliates or associates who are non-us residents/residents and do business with US based affiliate networks. Make sure you fill up these forms and fax or mail to your affiliate manager from respective network before promoting their products. If you earned any amount of money and didn't filled up form for long time then chances are there your payments are likely to remain pending or will be kept on hold from 2011 and onwards.
Ask your affiliate manager if there is anything you need to do other than filling up W-8BEN/W-8 form. If you're earning more than 10,000$ from any network then chances are there that you need to do some more documentation irrespective of your status as foreign or US affiliate.
SSN/VAT/Tax-ID and Affiliate Networks
Many affiliate networks and payment processors expect you to show SSN or tax-ID from your country. SSN stands for social security number which is applicable within united states whereas PAN is permanent account number which is similar to SSN and is used in india. Make sure you provide them this ID (whichever name applies for your country) to affiliate network when you sign up or expect payment from them.
If you're a freelancer or blogger who sells his/her service online then subscribing to receipts sites is one good option. This will help you keep history of transaction when you work online with clients and it'll also help you to pay taxes for the income you pay online. You can sign up for services like freshbooks, harvest or blinksale to keep records of your transaction. Payment processors like paypal and other shopping carts do allow your clients to print their purchase history but if you're taking any custom work or consulting then you can use the billing services to keep the receipts.
FTC and Commercial Intention Notice
Your blog, website needs to mention commercial intention near footer or other specific page so that FTC(US govt authority that keeps eye on trade) or any other tax department don't come across as resistance between you and affiliate network. Many states in US and other countries are having issues with affiliate or ad networks due to FTC and other online revenue rules so before signing up check if this applies to your state or country.
Tax information and Checklist
Worldwide Taxation - If you're indian or spanish blogger/publisher who earns money from US based affiliate or ad-network then still your income is taxable, in this case from US as you do transaction from that country and from your own country. So your income is likely to be cut out from two places via payment processor or directly from network. These rules vary depending on your country, but no matter where you stay, once you receive cheques from foreign banks then your country will charge some tax on that amount. You'll also be taxable if your annual income from foreign currency reaches some X threshold which is taxable in your country. For example, in india if your annual income reaches 1,60,000/- bucks then you become taxable citizen for that financial year.
Skipping Taxes - One thing you can't do with online activity is that you can't skip your taxes no matter where you live, so don't try to game the system. Every income generating activity is monitored by almost every government these days using payment processor monitoring, bank cheque and threshold monitoring etc.You're responsible citizen of this planet and no matter where you live you need to support the respective government.
Deductible Income - Charity work and some other online activities are tax-deductible which you can find out by reading the tax acts in your country. I suggest you to read online tax sites of your country. Also do read tax information of the country where your affiliate network is based on and pays monthly revenue.
Non-taxable revenue - There are times when your earning goes down and can't be in line for taxation. In such case contact your accountant or tax adviser and notify him about yearly earning history and get yourself free from taxation. During early years of online publishers efforts or bloggers revenue remain non-taxable in many cases so unless scaled up above taxable income you remain under non-taxable revenue bar.
Hope these tips helps you during taxation of your online income. If you need any country specific information then it is better to consult tax adviser and affiliate manager of your ad/affiliate network.