It's really very simple... you take all your revenue you made from online porn, subtract all the expenses you incurred in making that revenue, and the difference is the income you made. You declare that income on your income tax forms. In Canada, there is an "Other Income" box where that goes; I'm sure the USA has an equivalent. That is Income Tax 101.
It's a bit more complicated when it comes to the purchase of assetts such as computers and content licenses - you need to depreciate that shit, rather than simply declare it as an expense. That's where you need to do some reading or hire an accountant. And that is Income Tax 201.
Don't forget to count all your "business use of home" expenses. So if your home office is 12% of your home's floorspace, you should be able to justify 12% of all of this as legitimate business expenses:
- home owners insurance
- mortgage interest
- heat, electricity, water and other utilities
- the maid (if you got one)
- and well, you get the idea - all reasonable home expenses.
Also don't forget to include a portion of your intenet connection costs and phone bills as expenses. Just estimate how much of each was business related vs personal.
You don't ever really want to cheat by failing to declare any revenue; unless you have really big balls. I'm not sure what it is like in the US, but in Canada, the Customs and Revenue Agency can access your bank records without a court order or anything. All they need to do is write a letter. Which means taxpayers have fewer rights than murderers up here. But that is probably not news to the rest of you who live in this tax-loving country.
And for people running part-time businesses one of the first things that Customs and Revenue Canada likes to do when they audit you, is look at your bank records and compare all your deposits to your revenue to make sure the two match closely. I'm going through this right now - and thank God I am clean and everything adds up.
|