In April, the IRS issued new rules for 2018 that prohibit online businesses from deducting business expenses related to sales commissions, search engine optimization, and travel expenses, among others. This means your web traffic is no longer tax-deductible. So, if you’re serious about making money online, you need to re-evaluate your strategies. Fortunately, there are still ways to earn cash online without having to worry about your taxes.
Keep reading for ways to earn money online without being taxed. It’s not as easy as it sounds, but if you’re determined, there are certainly options available to you.
The IRS Issues More Specific Rules For Online Businesses
The new rules affect businesses and organizations operating online. So if you’re running an online store, you need to be aware of the rules that pertain to your specific situation.
In terms of the IRS’s new sales tax rules, all online retailers must figure in the sales tax on their customers’ purchases. This is regardless of whether you and your customer know or live in the same state. So, even though you might not collect sales tax in your state, you’ll still need to figure it in at the end.
Another important area the IRS has ruled on in its new sales tax rules is the issue of affiliate marketing. You’ll need to determine if this is an approved method to earn money online or not. You’re essentially promoting a product or service that doesn’t necessarily belong to you, but you get paid if a purchase is made from an affiliate link. There are several issues with affiliate marketing that the IRS takes into consideration when determining if it’s an approved way to make money online or if it’s a tax-avoidance scheme:
- The product or service being promoted needs to be relevant to your audience. This is very difficult to do when you’re not physically in the same room as the person reading your content.
- The affiliate program should be transparent about the fees it charges for bringing in new customers, and you should be paying taxes on those earnings.
- If you receive compensation when a person clicks a link that sends them to an unaffiliated website, you could be in danger of having your income treated as a form of advertising.
- The IRS allows for certain exceptions to the affiliate marketing rule, including ‘natural and necessary’ expenses like food, clothing, and shelter.
Alternative Avenues For Income
If you’re looking for ways to earn money online without using your computer or having a website, you have several options. These include:
- If you have a social media account, you can put out content like video tutorials and add affiliate links to products and services that you mention in your videos. You’ll be able to earn money on a commission basis if your videos are viewed online.
- Blogging is another great way to make money online. You can start a food blog that focuses on healthy recipes or an affiliate blog that promotes a variety of products. It’s a bit harder to make cash this way, but you can use tools like affiliate networks to make the process easier.
- If you’re looking for an extra income stream, you can start a YouTube channel. People love earning money from their passions and hobbies, and you can develop a niche by creating video tutorials on a variety of topics, from dog grooming to cooking.
- If you’re a graphic designer or artist, you can put your talents to work by creating logos and marketing materials for some of the other businesses listed above.
In the long term, owning a website is a great way to earn money online. You can build a platform that promotes your freelance services or creates a resource for potential customers to find the products and services they need. You can also use your site to promote your offline business and gain new customers.
Reducing Your Tax Burden
If you’re reading this, you’re probably wondering how you’re going to pay for all of this. Luckily, there are multiple options available to you. To begin with, you can reduce your taxable income by moving to a lower-tax state. If you’re earning money from your own site, you can also look for ways to reduce your personal expenses. Cutting back on eating out and travel is a great way to save money. And if you’re looking for an extra boost, you can even consider investing in a high-quality webcam and making occasional live videos, which can be monetized through various online avenues.