Do affiliates need to pay TAX
David Hamilton emailed this question to me, thanks its a very good question!The answer is absolutely, any income you earn from affiliate marketing is subject to taxation where ever you are in the world. If you are in a day job and affiliate marketing is a spare time revenue earner, any commissions you get is classified as additional income which must be declared. If affiliate marketing is your day job you have to pay income tax.
For the UK I would recommend beginners guide to tax or from HMRC direct (wow do they make it hard)
For the USA, IRS or a comprehensive laymans term guide
You have companies that can do all the paper work for and happy to answer questions, for the USA, EasyTaxReturns and for the UK this company has a free one off consultancy service, TaxAssist they need an affiliate program :0)
Most UK affiliate networks operate a self billing invoice for tax purposes example PaidOnResults.com have a system where by you raise an invoice. Affiliatewindow.com send you a paper invoice, every money transaction has to have a paper trail.
Example of a US Affiliate network, LinkShare.com through an affiliates online interface has a reporting where by you can see every check that has been paid to them and if you click on the check you can see a breakout of the amounts paid in that check by each Merchant to you. So this is on an ongoing basis but at the end of the year LinkShare is required in the US to send you a1099 form which shows what you have been paid throughout the year in commissions by each Merchant. Again there has to be a trail.
All the government wants at the end of the day is your money, sorry…typo “cough”, all they want is to see how much you have coming in, where it is from and how much you should be paying the government.
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