Dynadot

Parking and Taxes

NameSilo

Jak Blak

Established Member
Impact
13
I have no sales, but I am making a couple thousand on parking - maybe a bit more than my net pay for one month at work. Live in the US. What is the legal / legitimate way to report what I make parking and pay my fair share of taxes? Also can I deduct my purchases from this year? Renewals before I report? Last year I asked my parking company for a 1099, but that doesn’t allow me to subtract purchase / renewals. It just says I earned X. I may have overpaid in taxes because there was no recognition of what I paid for my donains. I want to do the right thing and not get into any trouble. I would also like to be able to keep some of my parking profits.
 
Impact
13,162
Hi

expenses from domains, can be deducted from income earned on/from them.

also, you may have to pay some "Self- Employment" taxes

best advice, if you have job and do domaining as a hustle, then it's best to ask your employer to deduct extra tax from your paycheck, to help cover any tax due the next year.

imo....
 
Last edited:

Jak Blak

Established Member
Impact
13
Hi

expenses from domains, can be deducted from income earned on/from them.

also, you may have to pay some "Self- Employment" taxes

best advice, if you have job and do domaining as a hustle, then it's best to ask your employer to deduct extra tax from your paycheck, to help cover any tax due the next year.

imo....
 

poweredbyme

Top Contributor
Impact
852
In most countries income tax differs based on frequency of income.

tax authorities don't allow deducting of expenses if the income is not continous. If the income is continous (e.g. if you receive multiple payments in a year or in a 2-3 years period) then you can deduct expenses but will need to register business/company under your name.
 

poweredbyme

Top Contributor
Impact
852
In other words, you are not allowed to deduct expenses if you don't have a registered business with a tax auth. I don't know the exact rules in the US or in any particular country. What I wrote is a general rule. You need to make your own research and look for an expert advise.
 
Last edited:
Impact
8
I am going to help you out here as I am a master degreed accountant with a concentration in taxation.

If you have "earned income" in the US whether you physically exert labor or earn income passively through an investment, be it real estate or in your situation, virtual real estate. You need to report all income earned. Whether or not you receive a 1099 is going to be up the company. They should by IRS standards issue them, but not all companies operate correctly. Believe me, I have worked for many that had no clue what to do.

Here is what YOU DO NOT WANT TO HAPPEN: An audit. If you have under reported income in a prior year you will subject to large penalties and taxes.

I recommend doing this right from the start. If you earn more than $600 from an individual company (not all companies combined) then you need to report that as income. You do not need to own a business or be in business.

You would file this income as other income on schedule C. Here is where folks get misguided: I read where you ask about expenses and the company issuing you a 1099 not subtracting your expenses. Well think about that. They are not bookkeepers for us, respectively. It is our responsibility.

Schedule C has sections (many and varying) for deductions to income. You will begin with your gross income (total parking revenue). From there you keep up with all your annual, monthly, or one-time expenses in a spreadsheet and a copy of all receipts digital or otherwise.

Just plug them in as you pay them for backup if you are ever audited.

If you earn $700 a year from ABC Company and $200 from XYZ...only report ABC. You really should report it all, but you are not required too. Many contractors avoid taxation with this tactic.

If your expenses from parking from Company ABC are $200 for the year, then your reportable and taxable income from that venture is $500. Whereas many make the huge mistake of paying taxes on the entire $700. The IRS is NOT going to ask you for your deductions or encourage you to write things off, so you need to be proactive as not to pay too many taxes.

Now, let's say you earn a large portion of your annual income working from your home office parking sites or doing other jobs that earn you income, i.e., content writer. You can now write of home office expenses taking the standard home office deduction (which is generous) or take actual expenses based upon the square footage of your home and the correlating dedicated home office square footage. Think of all the items it takes to run your home office. Electric bills, cable, internet, water, taxes on your home, rent, mortgage payment, and so forth. If your home office is 20% of the total square footage, then your 20% of those bills will be deductible. See which is larger, the standard or the actual home office expenses and you are allowed to take the larger.

By the time someone correctly writes off their expenses from income, the result is not so scary at all. Often it is close to null if you are not making much income. Plus, you got some great write-offs you could not utilize initially. And best of all, your mind and conscious are at ease for being above board and doing the right thing!

I hope this helps you in your understanding of passive income. Please be careful when talking to tax "experts." I have worked for the H&R Blocks of the world. These folks get a two-week training course and know enough to be very dangerous, misleading, and lack a true understanding of taxation. They know how to jump from one field to the other in a computer screen and how to ask appropriate tax situation questions.

They are good for those that could do just as good of a job as a high school grad filing their own taxes with a couple of W2s.

Past filing a simple tax return with a couple of W2s, I would get a real accountant with a degree (Bachelor's minimum) to do my taxes. Despite common opinion, they are just as cost effective (way less expensive usually), way more knowledgeable, and they can do the quick turnaround taxes directly deposited into your account just as fast as a chain. I say this not to bash the tax chains of the world but to alert people to what they can and cannot do. They have cost me way too much money and lost savings on taxes in the past before I knew better. It's like hiring a butcher to do a surgery. Very bad idea. He has a knife but knows nothing medical.

Good luck! :)
 
Impact
8
In other words, you are not allowed to deduct expenses if you don't have a registered business with a tax auth. I don't know the exact rules in the US or in any particular country. What I wrote is a general rule. You need to make your own research and look for an expert advise.
In the US you do not have to have a registered business or tax name. An individual "sole-proprietor" running a business can deduct normal business expenses including depreciation and amortization expenses.
 
Impact
8
In most countries income tax differs based on frequency of income.

tax authorities don't allow deducting of expenses if the income is not continous. If the income is continous (e.g. if you receive multiple payments in a year or in a 2-3 years period) then you can deduct expenses but will need to register business/company under your name.
I am sorry poweredbyme but that is incorrect. Tax authorities absolutely allow deductions to income in about every country I have ever read about. The income need not be continuous for more than any year as you state. Also, incorrect is your assertion that you must register a business name to take allowable deductions. You can be a sole proprietor forever without ever registering a formal business name and can be doing business as last name business. For example, Jones Home Rentals. The IRS only cares that mainly that you report all forms of income be it actively earned or passively. Their goal: to earn money from all forms of taxes. Therefore, they do not put-up barriers to reporting income and they do not disallow deductions based upon the criteria you refer to. I have never heard of "frequency of income" rather I have heard of limits of income earned before it becomes reportable such as the $600 rule.

I am trying to be fair in my statement but here we go...

Tax is a complicated and very confusing topic for taxpayers. Therefore, you should always be extremely careful when commenting on topics that you have vague knowledge in. It concerns me that folks reply to posts such as these and taxpayers take that advice and are misguided. It is a costly mistake for many. I would not comment on this topic if I thought one thing or another. If my incorrect thoughts or opinions cost someone even $100, I would feel really bad about that. Your advice could cost folks thousands in tax savings and is not fair to give out without proper knowledge and I apologize in advance for saying this: you do not know what you are speaking about here.

You could injure someone that did not know better. Please people consult proper tax accountants for advice and always visit credible websites such as the irs.gov. The irs.gov actually has easy to understand literature and tax advice.

Make sure you are on the official irs.gov before moving forward in your tax research.

I hope this helps.
 

Jak Blak

Established Member
Impact
13
I am going to help you out here as I am a master degreed accountant with a concentration in taxation.

If you have "earned income" in the US whether you physically exert labor or earn income passively through an investment, be it real estate or in your situation, virtual real estate. You need to report all income earned. Whether or not you receive a 1099 is going to be up the company. They should by IRS standards issue them, but not all companies operate correctly. Believe me, I have worked for many that had no clue what to do.

Here is what YOU DO NOT WANT TO HAPPEN: An audit. If you have under reported income in a prior year you will subject to large penalties and taxes.

I recommend doing this right from the start. If you earn more than $600 from an individual company (not all companies combined) then you need to report that as income. You do not need to own a business or be in business.

You would file this income as other income on schedule C. Here is where folks get misguided: I read where you ask about expenses and the company issuing you a 1099 not subtracting your expenses. Well think about that. They are not bookkeepers for us, respectively. It is our responsibility.

Schedule C has sections (many and varying) for deductions to income. You will begin with your gross income (total parking revenue). From there you keep up with all your annual, monthly, or one-time expenses in a spreadsheet and a copy of all receipts digital or otherwise.

Just plug them in as you pay them for backup if you are ever audited.

If you earn $700 a year from ABC Company and $200 from XYZ...only report ABC. You really should report it all, but you are not required too. Many contractors avoid taxation with this tactic.

If your expenses from parking from Company ABC are $200 for the year, then your reportable and taxable income from that venture is $500. Whereas many make the huge mistake of paying taxes on the entire $700. The IRS is NOT going to ask you for your deductions or encourage you to write things off, so you need to be proactive as not to pay too many taxes.

Now, let's say you earn a large portion of your annual income working from your home office parking sites or doing other jobs that earn you income, i.e., content writer. You can now write of home office expenses taking the standard home office deduction (which is generous) or take actual expenses based upon the square footage of your home and the correlating dedicated home office square footage. Think of all the items it takes to run your home office. Electric bills, cable, internet, water, taxes on your home, rent, mortgage payment, and so forth. If your home office is 20% of the total square footage, then your 20% of those bills will be deductible. See which is larger, the standard or the actual home office expenses and you are allowed to take the larger.

By the time someone correctly writes off their expenses from income, the result is not so scary at all. Often it is close to null if you are not making much income. Plus, you got some great write-offs you could not utilize initially. And best of all, your mind and conscious are at ease for being above board and doing the right thing!

I hope this helps you in your understanding of passive income. Please be careful when talking to tax "experts." I have worked for the H&R Blocks of the world. These folks get a two-week training course and know enough to be very dangerous, misleading, and lack a true understanding of taxation. They know how to jump from one field to the other in a computer screen and how to ask appropriate tax situation questions.

They are good for those that could do just as good of a job as a high school grad filing their own taxes with a couple of W2s.

Past filing a simple tax return with a couple of W2s, I would get a real accountant with a degree (Bachelor's minimum) to do my taxes. Despite common opinion, they are just as cost effective (way less expensive usually), way more knowledgeable, and they can do the quick turnaround taxes directly deposited into your account just as fast as a chain. I say this not to bash the tax chains of the world but to alert people to what they can and cannot do. They have cost me way too much money and lost savings on taxes in the past before I knew better. It's like hiring a butcher to do a surgery. Very bad idea. He has a knife but knows nothing medical.

Good luck! :)
 

poweredbyme

Top Contributor
Impact
852
Of course my main drive is not to injure anyone even $1. That is why I wrote that "you should seek professional advice"

I do not hold master degree, hold a lower degree in finance. I know USGAAP and IFRS. But taxation in every country maybe different though general principles are almost the same. As I see noone leaves a comment, I think I should help as much as I can. I see you know US taxation much better than me. Thanks for correcting me, readers will appreciate for your input. Thanks.


I am sorry poweredbyme but that is incorrect. Tax authorities absolutely allow deductions to income in about every country I have ever read about. The income need not be continuous for more than any year as you state. Also, incorrect is your assertion that you must register a business name to take allowable deductions. You can be a sole proprietor forever without ever registering a formal business name and can be doing business as last name business. For example, Jones Home Rentals. The IRS only cares that mainly that you report all forms of income be it actively earned or passively. Their goal: to earn money from all forms of taxes. Therefore, they do not put-up barriers to reporting income and they do not disallow deductions based upon the criteria you refer to. I have never heard of "frequency of income" rather I have heard of limits of income earned before it becomes reportable such as the $600 rule.

I am trying to be fair in my statement but here we go...

Tax is a complicated and very confusing topic for taxpayers. Therefore, you should always be extremely careful when commenting on topics that you have vague knowledge in. It concerns me that folks reply to posts such as these and taxpayers take that advice and are misguided. It is a costly mistake for many. I would not comment on this topic if I thought one thing or another. If my incorrect thoughts or opinions cost someone even $100, I would feel really bad about that. Your advice could cost folks thousands in tax savings and is not fair to give out without proper knowledge and I apologize in advance for saying this: you do not know what you are speaking about here.

You could injure someone that did not know better. Please people consult proper tax accountants for advice and always visit credible websites such as the irs.gov. The irs.gov actually has easy to understand literature and tax advice.

Make sure you are on the official irs.gov before moving forward in your tax research.

I hope this helps.
 
Impact
8
Of course my main drive is not to injure anyone even $1. That is why I wrote that "you should seek professional advice"

I do not hold master degree, hold a lower degree in finance. I know USGAAP and IFRS. But taxation in every country maybe different though general principles are almost the same. As I see noone leaves a comment, I think I should help as much as I can. I see you know US taxation much better than me. Thanks for correcting me, readers will appreciate for your input. Thanks.
Hi again poweredbyme,

Happy New Year! I know your intent was to help and you did give the great advice of "seeking professional advice."

I have a passion for helping others NOT PAY TOO many taxes or avoid reporting income out of fear of owing large amounts.

From speaking with many taxpayers, most are unaware that they can deduct expenses against their 1099 income. Instead, these poor folks pay taxes on 100% of that income. The IRS will NEVER come to them and ask for their deductions. The goal of the IRS is to ensure all income is reported and that they collect as much tax as possible.

I have met many folks such as plumbers even that sit there and report all this income and just don't know better.

I find once people understand the allowable, reasonable, and yes legal deductions that they are entitled to, they feel great about reporting income and keeping their savings. Many even have losses to report that offset other W2 income. (Not always, but it does happen).

I advocate for the taxpayer versus the IRS. The IRS often puts out studies that focus on the amount of under-reported income from sources such as tips, contract labor, and income types from paying our landscapers, nannies, and property-exchange transactions.

I do not see studies out there from the IRS that focuses on tax-savings that are lost by taxpayers due to lack of knowledge from taxpayers, missed allowable deductions, and ways to reduce your tax bills.

It just makes me crazy as the working man/woman in our country works so hard to make ends meet and the government takes a third of our income.

We bring home approximately 70% of what we earn. Then we use that 70% of our income to live. They continue to tax those funds with our transactions. We buy groceries and then our already taxed income is taxed again around 6% for sales tax. We buy a car and pay sales tax. We buy a home and pay taxes. Every year we are presented with property taxes on our home we paid for with taxes with our taxed income. It never ends.

Those that do not work are supported by the working. If they disagree, they need to wonder where the money came from that the government received. Hmmm...

Then we have these folks that form companies that pretend to be tax experts. They know how to work the system to get tax relief. The same relief individuals can do themselves. They capitalize off ignorance.

I despise these tax settlement companies. I just found out a friend of mine gave $5k to one earlier this year for tax relief. I could not believe it. I could have done everything he needed with a few clicks and forms. He just didn't know better!

I have been following the Great American Resignation. Folks are tired of working for nothing for huge corps to profit grossly. This has only happened due to masses of folks having enough.

I look forward to the day Americans have had enough of being used financially by the government to waste our money on the lazy, refuse to work Americans that have lived better than the working man in nicer homes that our tax money paid for while we live in cruddy homes most of us and actually get up and go to work to pay for these programs for all these non-working families getting great free homes, free groceries, medical care, and income.

It is so hard for me to stomach. I do not have the privilege of sitting home and collecting a check. I earn my money and I do not vote to spend it on these programs. I wish the taxpayers could vote on how their tax money is spent. That would end all of these programs quickly and lower the amount of money we pay. Then, maybe Americans could have their American dream again! The 50s are gone!!! Bring them back!!!

Ok...sorry. Thanks for reading. Off my Soap Box now. :) IMO
 
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