I own a small website that posts news articles and serves as a forum for people who work out. It’s not a business, but to help with keeping the website running, I have an option for people to pay $1 monthly or $10 annually for more access to things on the forum. There are no transactions other than the $1/$10 payment for access to this section. Since all the money goes directly to helping keep the forum running, do I need to pay taxes on that money?
Any income is to be reported on your various income tax filings. Since this is a website that you are running, you should have established an employer identification number (EIN) for this business. Once that is done, then you would report the fees as income, and you can deduct any expenses you have incurred such as hosting fees, design fees, etc., against that income to get to a taxable amount. If the net income is less than $400, you will be exempt from self-employment taxes on your 1040, but you will still have the income tax to account for. You will also have state and local taxes that could be applicable as well.
I suggest consulting with a CPA or licensed tax professional for additional advice.
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Answered by: Chad Schweighart, CPA, is an accounting manager with Gift & Associates in Mechanicsburg, Pa.