advice Domaining and Tax

[kite26]

My question is quite simple. How can i prove my domain income? My accountant asked me if i have the receipts from domain sales.
The problem is that not every company (except for Dan and Sedo) gives a clear receipt of the transaction. You know, the .pdf receipt which i can print it.
How you face it? I suppose that from the time it is not a ''job'', it may bring problems to me.
My main job is on public sector.

 

[Kingslayer]

Should be easy to work out what you paid for a domain and what you sold it for, once you have this, it's easy to work out what profit you made and with that percentage of tax you owe, its all done online, so should be all documented (check old e-mails/previous Escrow transactions etc).

If you don't do domaining for a living, all sales should be capital gains.

 

[bmugford]

My question is quite simple. How can i prove my domain income? My accountant asked me if i have the receipts from domain sales.
The problem is that not every company (except for Dan and Sedo) gives a clear receipt of the transaction. You know, the .pdf receipt which i can print it.
How you face it? I suppose that from the time it is not a ''job'', it may bring problems to me.
My main job is on public sector.

Why do you need to prove it to your accountant? You don't need to record them with the IRS.
The accountant is on your side.

I just report my raw numbers, and my accountant does the taxes.

You just need to be able to provide receipts and/or documentation should you need it later.

Brad

 

[kite26]

Should be easy to work out what you paid for a domain and what you sold it for, once you have this, it's easy to work out what profit you made and with that percentage of tax you owe, its all done online, so should be all documented (check old e-mails/previous Escrow transactions etc).

If you don't do domaining for a living, all sales should be capital gains.

First of all, thank you! Escrow works great too. I found some sales there. But still it's impossible to find a solution with GD and Afternic. No .pdf there.

 

[bmugford]

First of all, thank you! Escrow works great too. I found some sales there. But still it's impossible to find a solution with GD and Afternic. No .pdf there.

The best you can do there is an email saying the domain was sold, or an email showing payment was made.

All you need to know are the numbers. If you need records later, you can worry about that.

I just maintain an excel file with records. If I actually pulled up every receipt/document it is just adding extra work. You just need to save them, or have access to them if you need them later.

Brad

 

[kite26]

The best you can do there is an email saying the domain was sold, or an email showing payment was made.

All you need to know are the numbers. If you need records later, you can worry about that.

Brad

Great, thanks. When you say ''raw numbers'' do you mean your usual income without domain sales?

 

[bmugford]

Great, thanks. When you say ''raw numbers'' do you mean your usual income without domain sales?

The vast majority of my income is via investments, not "earned income".
Stock investments, with any major broker, are reported when you buy or sell now.

Dividends are reported as well.

You generally get a consolidated from your broker. I do provide that document to my accountant.

My domain sales I just calculate the total numbers. Income, expenses, etc. If I need to pull up the documents later, I can, but it is just extra work to do now.

Brad

 

[kite26]

I keep a such Excel file. I will save the e-mails to the folder. The accountant just wanted to check the form of the receipts.

 

[bmugford]

I keep a such Excel file. I will save the e-mails to the folder. The accountant just wanted to check the form of the receipts.

There is no standardization, which can be an issue. You would basically just need some documentation.
That could be a receipt, email, bank transaction, etc.

Brad

 

[kite26]

There is no standardization, which can be an issue. You would basically just need some documentation.
That could be a receipt, email, bank transaction, etc.

Brad

The expenses are equally important? I mean, i have to save every receipt when i buy a domain? (It would be crazy work if you add the renewals or other expenses)

 

[bmugford]

The expenses are equally important? I mean, i have to save every receipt when i buy a domain? (It would be crazy work if you add the renewals or other expenses)

Right, there is no reason to add extra work. If you need the receipts later you can produce them.

GoDaddy for instance you can click on many receipts at once and export them to one file, which makes it easier.

Brad

 

[kite26]

Right, there is no reason to add extra work. If you need the receipts later you can produce them.

GoDaddy for instance you can click on many receipts at once and export them to one file, which makes it easier.

Brad

Yes, i confirm that it is very easy to get the receipts (when i buy a product) on GoDaddy. They should add a .pdf style receipt as Dan or Sedo to do our life easier. ''Press a button and download it'' style. It was very unclear for me to understand the ''receipt''.

 

[Crysis]

First of all, thank you! Escrow works great too. I found some sales there. But still it's impossible to find a solution with GD and Afternic. No .pdf there.

If you email GoDaddy at [email protected] and request for payment receipt for the particular financial year, they provide the invoice in PDF format.

 

[kite26]

If you email GoDaddy at [email protected] and request for payment receipt for the particular financial year, they provide the invoice in PDF format.

Oh, thank you so much.

 

[Reddstagg]

I'm no tax expert so this is just an advisory post. Please do not sue me. In most businesses, there is the possibility to offset tax/claim back expenses such as the day to day business costs. If you were a painter and decorator for example you may be able to offset the ongoing cost of doing business i.e. the cost of paint or brushes or ladders, overalls, fuel costs etc etc.

Now, if you are a domain name investor it may be possible to claim back or offset some of the costs such as NP membership, ad-hoc charges, such as upgrading your technology, new phone etc etc.

Just putting this out there in case there is a legitimate way to recoup some money.

Regards,

Reddstagg

 

[Future Sensors]

If you don't do domaining for a living, all sales should be capital gains.

This is highly dependent on country. For individuals, it can be taxed as 'other income' as well.

 

[biggie]

if you are a domain name investor it may be possible to claim back or offset some of the costs such as NP membership, ad-hoc charges, such as upgrading your technology, new phone etc etc.

Hi

yeah, i think being able to have proof or docs for the expense of domaining
is pertinent to offset any income from domaining.
expenses like renewals, purchases, internet, phone, website hosting

additionally, you may have to pay some "self-employment" tax.
but if this is a hobby and you have full time gig....
then i'd advise having extra $ deducted from your payroll, to go towards taxes.

it's like paying more tax in advance coming from your job than you might pay, just to cover any taxes due on domain income. particularly so, if you're getting any 1099's
then at tax time, you may not have to come out of pocket, as much or none at all.

imo....

 

[Samer]

US is going to “tax the rich soon”

Taxes suck,
and i’m not rich

 

[bmugford]

US is going to “tax the rich soon”

Taxes suck,
and i’m not rich

US needs to enforce the tax rates that currently exist, and you wouldn't have billionaires paying 3.4% effective tax rates via accounting shenanigans.

Brad

 

[Samer]

US needs to enforce the tax rates that currently exist, and you wouldn't have billionaires paying 3.4% effective tax rates via accounting shenanigans.

Brad

Thanks Brad.

But capital gains proposition scares most.

We should be encouraging investment;
I respect the $400,000 hard line stance though i suspect most of the country makes below that

 

[bmugford]

Thanks Brad.

But capital gains proposition scares most.

We should be encouraging investment;
I respect the $400,000 hard line stance though i suspect most of the country makes below that

Raising rates is largely irrelevant. Rich people don't pay them anyway.

What is really needed is a proper AMT, so the rich can't use accounting tricks to get out of paying their fair share.

Brad

 

[NickB]

I'm no tax expert so this is just an advisory post. Please do not sue me. In most businesses, there is the possibility to offset tax/claim back expenses such as the day to day business costs. If you were a painter and decorator for example you may be able to offset the ongoing cost of doing business i.e. the cost of paint or brushes or ladders, overalls, fuel costs etc etc.

Now, if you are a domain name investor it may be possible to claim back or offset some of the costs such as NP membership, ad-hoc charges, such as upgrading your technology, new phone etc etc.

Just putting this out there in case there is a legitimate way to recoup some money.

Regards,

Reddstagg

I put everything through and let the account tell me if I'm taking the piss or not......works for me

They get paid to be creative and check the legality of it......not me

 

[Kingslayer]

This is highly dependent on country. For individuals, it can be taxed as 'other income' as well.

Which countries are you talking about? I'm from the UK and self-employed, I'm just about to do my tax returns and going to claim my 2 domain sales last tax year (1 big one) as what they are, investments and a 'capital gain'.

 

[kite26]

Greece for me (EU country)

 

[Future Sensors]

Which countries are you talking about? I'm from the UK and self-employed, I'm just about to do my tax returns and going to claim my 2 domain sales last tax year (1 big one) as what they are, investments and a 'capital gain'.

Let's take my country as an example - the Netherlands (EU).

Individuals doing domaining as a small side business, may declare domaining income, and associated deductible expenses, in the category "income from other work". This is a category will all kinds of side jobs, freelance work, affiliate income, and more. Deducting costs can be done as an individual, but one should not go too crazy with this.

https://www.belastingdienst.nl/bibl...nformatie_2016-inkomsten_uit_overig_werk.html

Translation from that page:

If you do not work as an employee, but earn money, for example as a freelancer or childminder, you must also declare your income from this in your income tax return. No payroll tax has been deducted from this income. We call this 'income from other work'.​

You can not make unlimited use of this method of declaration. At a certain point, the tax authorities may state that your domaining activities will take on more serious forms, that you will have to start a company for this, and have to declare it fiscally in that way. Criteria for this have not been laid down exactly, but attention is paid to, among other things, the number of hours you spend on domaining (also in combination with any other work you perform), the number of clients you serve, and the amount of your domaining turnover.