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  • Writer's pictureM k Bhatiya

What is Affiliate Marketing and How Does It Impact Your Taxes?| BhatiYaa

Updated: Feb 6

Affiliate marketing is not only a profitable business, but it can also give you a great return. If you are new to it and simply want to know if the commissions you earn from affiliate links are taxable or not, before joining a personal loan program, there are several things you need to know. For example, before joining a personal loan affiliate program such as LeadsMarket, you may need to learn what affiliate marketers pay in taxes and how to trace taxable income before knowing about attaching affiliate links to your platform and using affiliate marketing templates.

Is Affiliate Marketing Taxable?

Affiliate marketing is a taxable profession. It's important to know that you're required to pay taxes and report them on an IRS form called Schedule C. The only exception is if your earnings are less than $600. Once you hit that mark, you must file taxes with the IRS at tax time. Some examples include freelancers, small business owners and those who have a side gig. You can speak with your accountant if you're still unsure what Schedule C is.

How to Trace Your Taxable Income.

It's much easier to claim your income from affiliate marketing if you track your earnings as they come in. If you're still starting out, use a spreadsheet. However, once your business starts growing and you join multiple programs at once, you will need to use another program to track your income. For example, you can invest in accounting software like QuickBooks and FreshBooks that track your income and expenses.

What Taxes Do Affiliate Marketers Pay?

Affiliate marketers must pay the Employee part of the Social Security and Medicare taxes, which comes in a 15.3% self-employment tax. You may also need to make estimated affiliate marketing tax payments for state and federal income taxes to the IRS. You're not required to pay sales taxes in the US if you're an affiliate marketer since you're technically not selling products and services yourself, but rather helping companies sell their goods and services. You probably won't be required to pay local taxes either since various countries have varying rules on affiliate marketing taxes.

What If You Simply Don’t File Taxes?

Filing taxes for your affiliate marketing business can sound complicated, especially if you’re a beginner, and this may lead some people to neglect filing taxes. However, you should not be one of these people because even if you don’t file taxes, you’ll still owe them. The IRS can seek you out and ask for the amount you owe plus fines. So, you’ll wind up paying the government a larger amount than if you had just responsibly filed your taxes in the first place.

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