I am 14 and am making a few thousand online. When do I have to file taxes? I am making the majority off of CPA networks doing PPC marketing which means about 75% of my income are advertising expenses that I use to buy clicks off of Google Adwords, do I still have to pay taxes on that too?
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Yes, you do.
If you are self-employed, you must file (and pay) if you make over $400 for the year.
Your age is irrelevant.
Absolutely. Get help from a professional and get it done correctly the first time. Being 14 means nothing taxwise. Child stars have to pay taxes too.
Yes, you need to file a tax return. I would recommend getting help from a professional tax preparer, because you will need to file your return as if you own a business (Schedule C or C-EZ).
Taxes for wage earners and business owners work a little bit differently. As an individual, when you earn money working for, say McDonald’s, you are taxed on all of the money, regardless of what you buy with it.
As a business, the money you bring in is called revenue. Then, you can subtract most of the costs of running the business as expenses, such as your Adwords fees, etc. Your taxable income is the DIFFERENCE between your revenues (what came in) and your expenses (what went out).
Again, this is really oversimplified, so I highly recommend a professional preparer. You also may be responsible for paying some of the other taxes that normally get withheld from paychecks, like social security and medicare.
14 or 64 means nothing with regard to income tax liability. If your gross income is greater than $400 you are required to file a tax return. That said much of the internet type transaction are unreported to the IRS so there is little if any enforcement of the filing requirements.
If your net income from the online work is over $400, yes you have to file a tax return and will owe some self employment tax (social security and medicare) even if you don’t owe any income tax.
Net income is the amount you’re paid minus what you pay out for expenses. So if your income is $3000 and your expenses $2200, you’d only pay tax on the other $800. You’d show all the numbers on your return though, the $3000 income and the $2200 expenses.
Taxes are filed annually, betweeen January 1 and April 15. Each year, you report your income and expenses from the previous year.
You must report the entire amount that you receive on either Schedule C or Schedule C-EZ. You may deduct the advertising expenses on another line of that schedule. You then compute the difference (subtract the expenses from the income) and pay tax on the remaining amount (your profit).