Question regarding International Internet income?

Question

I have income, profit sharing, from an off shore internet company. I am wondering how I should be computing my "estimated tax" on this money, as there is an element of risk. Should I calculate it once the funds reach my payment processor, or once they are accumulated in my account?

Also, I'm not sure how to classify this income on my tax forms.

Before anyone suggest...I will be hiring a tax professional, but I won't be doing it until the end of year, and want to be sure that I am paying "enough" tax so as not to incur penalties.

Answer 1

You handle it EXACTLY the same as if it was US sourced income.  There is no difference.  The fact that it's off-shore income is irrelevant.  Self-employment income is reported as self-employment income.  Investment income is reported as investment income, etc.

If you are on the cash accounting method, you report the income as soon as you constructively receive it.  If you are on the accrual accounting method, you report the income as soon as you earn it, regardless of when you receive it.

If you're not sure how to proceed, you need to be consulting with a tax pro NOW, not at the end of the year when it will be too late to correct any errors.

Answer 2

When in doubt, consider it all income and make quarterly payments for income and self-employment tax.  At a minimum, that means you need to submit at least 30% of your earnings.

Answer 3

It is will be self employed income. Read more about self employed tax and estimated tax filing: http://taxipay.blogspot.com/2008/04/tax-...