In the 21st century, affiliate marketing has become a very viable way to earn a living. For individuals who work in this field, there are few partners as elite as Commission Junction. As the world's largest affiliate marketing network, Commission Junction users often generate hundreds or even thousands of dollars each month.
Of course, when you receive income on a freelance basis such as this, you will be required to give the Internal Revenue Service their share. Since freelance taxation works a little differently than W-2 taxes, the process can often be difficult for people to understand. As such, our team of skilled Atlanta CPAs has put together this handy guide to walk you through how it works.
Affiliate Marketing Taxation
When you earn money through Commission Junction, or any other affiliate marketing network, the IRS will treat you as a self-employed small business owner for taxation purposes. As many of our seasoned accountants will tell you, this can have a huge impact on your year-end tax return.
Since you are classified as a self-employed business owner, your tax calculations will work a little differently than they would if you were a regular employee. Generally speaking, you will pay a higher marginal tax rate when filing as self-employed. This is mostly because you will be treated as both an employer and employee within your business. In a traditional W-2 employment scenario, the employer is responsible for paying half of the employee's FICA taxes (for Social Security and Medicare). However, since you will fill both employment roles, you will be responsible for paying both halves. Should you require assistance in determining exactly how much tax you should be paying on your Commission Junction income, please reach out to one of our knowledgeable CPAs today. We will be more than happy to assist you.
Business Expense Deductions
Even though being self-employed puts you on the hook for both halves of your FICA bill, there is a way of reducing your overall tax liability - business expense deductions. In the case of individuals operating on Commission Junction, these expenses might include internet costs, hosting fees, development costs, or office supplies. Depending on your situation, you may even be able to deduct your home office. By maximizing these deductions, you can often massively reduce your final tax bill. For more information on which expenses you are allowed to deduct, feel free to get in touch with one of our experienced accountants who specializes in freelancer and self-employed taxes.
Operating a business through Commission Junction can lead to a huge increase in your income. However, as your earnings increase, so too will your tax liability. Indeed, if you are unprepared, you may end up owing the IRS quite a bit of money come tax season. Luckily, our team of Atlanta tax accountants knows exactly how to maximize your deductions, reduce your tax bill, and ensure that the whole process is handled in a professional and timely manner. Give us a call today to find out exactly how we can assist you.
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.