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Affiliate Marketing And Taxes


Affiliate marketers do not sell products. They work by encouraging prospective customers to buy products sold by other businesses, and are paid for each referral that brings in customers for those companies and businesses. So how does this work when it comes to affiliate marketing and taxes? If you are an affiliate, your taxes are different from those who sell products and services. You need to understand the way your income will be taxed.

Paying Taxes for Sales

When businesses sell products online, most states will charge a tax on sales; however, the taxes the seller pays are owed to the state in which the affiliate works. Because affiliates find the customers and are not the actual sellers, your affiliate business is not responsible for those taxes.

Paying State Taxes

Your business is not exempt from state taxes because state taxes are figured by your income. The organization of your business determines whether you will pay corporate taxes or taxes for a limited liability company. You will also owe taxes for your own income. Depending on the state tax laws, the state tax you must pay may be in the state in which the seller's business resides. Affiliate businesses are a business that is separate from the seller, and so the state tax you owe is figured differently.

Paying Federal Taxes

Federal taxes on your income are not part of the business or businesses for which you are marketing. If you are a company that is limited liability, your company will not be responsible for any federal income tax, but you must file a return with information on income from your affiliate marketing business. You will still have to pay your own income tax on your earnings. You must also file a W-9 for every business to which you refer customers.

Paying Taxes Locally

The county tax for property used for your business is your responsibility. If the city in which you live charges a tax, you will have to pay that tax. Because you do not sell a product, you will not be responsible for a local sales tax. Depending on your county, any assets that are considered to be fixed assets will count and you will be charged a tax for those.

Paying Self-Employment Taxes

As a marketer, you are considered to be self-employed. This means that the taxes an employer normally contributes for Medicare and Social Security are owed by you. The current rate of income taxes for the self-employed is 15.3 percent. Medicare and Social Security are included in the current rate.

Managing Taxes for Affiliate Marketers

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 Patrick Stevens
 544  246440  7/11/2024



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