State Taxes

Today TaxMama hears from Georgette in the Tax Parlor, who says. “While I assume that I should be reporting the income I earn online, ClickBank in particular, I am unsure about state tax for PA. I am not charging state tax for digital downloads. So do I only have to report the income I make to the federal government on my tax returns? Or is there something in particular I should be doing?”

Hi Georgette,

Ah, come on my friend, you know the answer to this.

You live in PA, report all your income to both IRS and your state.

OK, your concern is the sales tax you’re not charging on your downloads.

You should be charging sales tax to anyone with a PA address.

So go forth and contact your state’s sales tax department and get set up. If your sales in PA were minor for last year (like $500 or less), don’t sweat last year. If they were $1,000 or more – file returns for last year and pay the penalties. (In between those numbers…use your best judgement.)

And Georgette, if you’re really planning to make a decent living online, it’s time to treat your business like a business. First thing – get a good local tax professional to help you.

And if you can’t find one locally, let me know and I’ll try to point to someone online who can help you. OK?

And remember, you’ll find answers to lots of questions about online income, and other tax information, free. Where? At TaxMama.com

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