Domain tax query

[domainerd1]

I did a search but did not find this info, so I thought I would ask. Regarding the yearly domain registration fees, how do those that setup a business around domaining handle these fees? Do you report the total amount you paid over the course of the year? Also, is it necessary to break down each, individual purchase for the IRS? Thanks.

 

[BizBot]

Here is an NP thread on taxes for domainers:

http://www.namepros.com/parking-and...377342-legal-tactics-reduce-irs-tax-owed.html

I report the total amount paid over the year. I don't break out each purchase - but since I mostly use PayPal I print and save all my expenses for purchases and renewals if it is ever needed by the IRS.

 

[enlytend]

I also report it as a total amount - and retain proof of payment (credit card statements or paypal, as the case may be. I'm not an accountant, but afaik there's no reason to break it down further than that unless the domains fall into different expense categories for some reason.

 

[ComKid]

Report total amount(s) of registration and re-registration fees. You do not have to list each fee individually but be sure to be accurate in case the IRS does come back to check which they can at any time. Always have a record of these as well (Datasheets, ect) just in case.


Business Income

- Revenues earned from domain names
- Sales
- Other

Business Expenses/Operational Costs

- Total amount spent on registration/re-registration fees for all domain names for the tax year.

- Supplies (ie. computer, laptop, printer, printer ink, paper, software and accessories ect. ect.) Anything pertaining to your domaining business and in conjunction with total time spent with the business is fair game. If you purchased a laptop during the tax year and used it 50% of the time for your business then let your tax preparer know this. Be as accurate as possible to avoid any problems or discrepencies later. The IRS is watching.

- Services (internet and cable fees, auction house fees, membership fees, ect. ect.)

- Travel expenses (gas, mileage, ticket fares, business meals and accomidations)

.....and more. Your tax preparer should have a good knowledge of other categorical expenses involved with business. It is best to go prepared with figures in hand.

My preparer also needed to know by which means I was paying my expenses (via Paypal, Credit Card, ect) and how I was recording these for reference if needed.

Always keep records and reciepts.

Since my domaining business has slowed down the past 2 years, my tax preparer brought to my attention that there was a flag in the system (from last years taxes) about total amount of time I spend running my business and if it could be deemed as a "hobby" rather than a full time business. I still have to discuss this further with my preparer.

Disclaimer: Check with your CPA for tax information regarding your own tax situation. The above information pertained to my taxes only and is not a complete list.

 

[domainerd1]

OK, thank you for the replies. NP$ sent.