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MDNW says
I would really LOVE a bllog post on the Aussie taxes. When you go to withdraw your money it has a tick box for Australians, but im afraid to click it incase Kevin Rudd gets all my money :P If anyone has the know-how could someone also talk about registering a business name and getting an ABN for a sole trader business in Australia? That would be awesome and im sure alot of startup freelancers would love to know it.

Agreed – when I’m done with the US post, I’d be happy for someone from AUS to copy my format and fill in the blanks with country specific info – frankly, I’m interested in knowing how the rules change from country to country. Maybe it’s time to move :)

Speaking of which, it’d be awesome to see the breakdown of countries here in terms of authors / buyers. Is this info available anywhere?

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uDesignStudios says

Hi Rzepak, Im not that familiar with law in Poland, but I think that your tax laws are quite similiar to ours (Slovakia).

Basically in my country you can solve this by setting up your own company (Ideal if you make more money on regular basis – there are a lot things you can reduce from your tax base as a company). The downside is that you need some money to start business. You have to have at least 5000e to set up your company here, no biggie the money stays in your company but you have to have it :)

If your income is lower than certain rate – I think it is around 4-5k euros a year here, you can just register as a web designer at the office, it is something called “free employment” – this is special for designers, programmers, artists etc. You get your own identification number for taxing purposes. So basically, if you earn less then 4-5k euros a year, you dont pay taxes, you just fill the form but no taxes are needed. If you income is higher then this amount, you pay 19percent of the amount that exceeds the limit, e.g: If you earn 10k euros a year, you pay the 19p tax of 5-6k euros. Actually it is not that bad :)

Hope this helps.

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MDNW says

As promised, I did some research and wrote a comprehensive article about taxes from online income in the US. All US based authors should definitely check it out – http://blog.themeforest.net/general/extremely-important-tax-rules-for-freelance-designers-in-the-united-states/

I’ll remind you that this certainly isn’t a fun article (ok, it sucks – so grab someone to cry with), but I’d love to see some comments on there as this is my first official blog post :)

Who’s volunteering to spearhead the Australian based post?

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SiamJai says

I’ve just read your article, Brandon. Nice work – you’ve clearly put much thought and effort into it.

It’d have been all too easy to write about this subject in a dry, scholarly tone just to establish an air of authority, so it’s nice to see that you’ve chosen a laid-back, informal tone instead. It really feels like advice from one author to another, rather than a top-down approach. ;)

I’d imagine that your words made many US-based authors more aware of the big IRS monster and rightly so. But even then, I’m not sure how many of them would volunteer to turn in 50+ percent of their online income to Uncle Sam. Is there even a possibility to reclaim any of this money?

From my short five-year work/study experience in the US, I recall that I was able to claim back quite a lot of my taxes. Although a pain in the back, filing tax returns actually brought in money year after year. This might be the case for some authors as well.

All in all, congrats to the good job and to the well-earned $200. Here is hope that you can claim back as much as you can from your taxes! And if not, good karma will make up for the rest. :D

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MDNW says
...To make their decision easier, perhaps it would have been useful to mention the possibility to reclaim some of the reported income.

From my short five-year work/study experience in the US, I recall that I was able to claim back quite a lot of the taxes that were automatically deducted from my paychecks. Although a pain in the back, filing tax returns actually brought in money year after year. This might be the case for some authors as well.

All in all, congrats to the good job and to the well-earned $200. Here is hope that you can claim back as much as you can from your taxes! And if not, good karma will make up for the rest. :D

First – Thanks for the compliments on the article :) Much appreciated!

Second – I totally hear where you are coming from regarding the notion of “reclaiming taxes through deductions”. The simple fact is that when you work for a company in the US as an employee, they usually deduct taxes from your paycheck automatically – which is why lots of people get money back at tax-time.

This couldn’t be further from the truth for freelancers who don’t pay a dime during the year though… when tax-time comes around, they usually owe quite a bit. This can be a shock to anyone working freelance if you’ve had a job that handled tax-payments for you without your knowledge.

There are certainly ways to keep as much of that money in your pocket (and I mention a few in the article – your CPA can give you professional advice though), but the reality for most freelancers this is still a harsh tax environment – I mentioned that I’m paying about 52% – I can get it down to the mid-forties if I’m lucky and spent a lot on business during the year, but it’s still a throat-clenching figure if you aren’t paying on a quarterly basis.

Sigh – I know – the article ain’t no fun. My next article is going to be titled “Free Beer and Pink Ponies for Everyone!”.

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SiamJai says
The simple fact is that when you work for a company in the US as an employee, they usually deduct taxes from your paycheck automatically – which is why lots of people get money back at tax-time.

This couldn’t be further from the truth for freelancers who don’t pay a dime during the year though… when tax-time comes around, they usually owe quite a bit.

Yes, you are right. And I have realized the same thing just after posting. I’ve immediately rephrased my post to make it look less dumb, but you’ve caught me! :p

My next article is going to be titled “Free Beer and Pink Ponies for Everyone!”.

Looking forward to it! :D


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MDNW says
My next article is going to be titled “Free Beer and Pink Ponies for Everyone!”.

Looking forward to it! :D

Something tells me it won’t quite pass the editing team, but it’s a grand idea nonetheless :)

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Kriesi says

great article brandon, although i am not living in the US it was an interesting read =)

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YA says

Interesting article, Brandon.

Congrats on the new paw, Christian! Awesome.

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Mastergreed says

Taxes? I would have to figure out how to prove my FlashDen income first, lol. No prove, no income, no taxes :P

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