The quick and easy answer to this question is yes. As a US citizen, you are expected to pay taxes on all your earnings around the world. Because these earnings are attached to a blog or website you run on the Internet, it does not exempt them from being part of your taxable income.
Contrary to some opinions, the Internet is not a tax-free zone where you don’t have to give up income to the tax collector because it is generated through the web. Every dollar you earn from your internet efforts is taxable, period.
Google AdSense will collect tax information from those who participate in its program. If you are a business, you will need to provide an EIN. If you are participating as an individual, you will need to provide them with your Social Security Number. They will allow you to participate in their advertising program without first providing them with this information. However, they will withhold any payments until they have your tax information. If you make more than $600 a year with Google AdSense, they will provide you with a 1099 form to file your income taxes.
Some people wonder if they should report these earnings as part of a business, or if it would be better to report their activities as a hobby.
First, it can be difficult to convince the IRS that someone would place revenue-generating advertising on a website or blog that is used solely as a hobby. Second, you are severely limiting your opportunity for tax deductions if you report your blog or website as a hobby. It would be best if you reported these endeavors as a sole proprietorship and claimed business deductions on your tax return.
Some of the business deductions you might qualify for are domain name costs, web hosting costs, costs of advertising and promoting your site, computer costs, hardware costs, software costs, digital camera costs, costs scanner/printer fees, office equipment and supply costs, utility costs, Internet service provider costs, rent or mortgage costs, business cards, business travel/miles, trade publications, magazines, books, and all costs associated with running a business. If you run your business from home, you can also deduct some of your daily living costs.
If you earn more than $600 in a tax year, Google AdSense will report your earnings to the Internal Revenue Service and issue you a 1099. Even if you don’t earn more than $600 in a tax year, you are required by law to report your earnings to the IRS.
