Income Taxes and Affiliate Marketing

I’m getting checks in the mail now from Linkshare, Azoogle, Commission Junction and soon from Kowabunga. How do I handle these checks as far as income?

This question comes from Greg Hoffman, the Marketing Gorilla. First, let me preface everything by saying that I am not a tax expert or an accountant by any means.

I would urge you to get an accountant to handle all of your financial affairs, so you don’t take any missteps when it comes to your tax obligations.

I’ve been turning over my affiliate earnings to an account for as long as I can remember. Not only does it reduce some stress, but it allows me to concentrate in areas where I can build my business.

Anyhow, in the past when I was managing independent affiliate programs, we would issue a 1099 form to affiliates who earned $600 or more in a year.

I am not sure if that has changed in the past few years, because all affiliate programs I’ve managed in recent years were on Commission Junction, and they handle the affiliate commission payments.

As an affiliate, when you get the 1099 form to chronicle your earnings, it doesn’t include any withholding. In other words, you receive your affiliate commissions in full with no taxes removed in advance.

So those funds are taxable, assuming you are in a bracket where you have to pay taxes. Again, consult with an accountant.

All of those affiliate earnings need to be claimed. Otherwise, you will be hearing from the IRS at some point, and it won’t be a birthday card.

Look at it this way. It’s a good thing if you’re making enough in affiliate marketing that you need to pay taxes. OK, maybe not a good thing, but you’re earning, and that’s good.