For simplicity, let’s assume that I earn $100 working full-time and pay $50 in taxes each year. This leaves me with $50 in my pocket.
Now let’s say that in addition to my income, I start a YouTube channel reviewing perishable widgets costing $1.
Ignoring any other costs and expenses, if I spent $5 reviewing 5 widgets this year and have $45 left in my pocket, assuming any income the channel earns me will also be taxed at 50%, how much money will I have in my pocket after tax season if the channel earns me:
1) $0
2) $5
3) $10
4) $25
Thanks!
In: 2
1. $45. If your Deductions exceed your revenue for tax reasons you can’t use that to offset income from another source, you can carry forward the -$5 into the next year though to offset youtube profit in 2022.
2. $50. The business made nothing so as far as taxes are concerned it didn’t happen
3. $52.50. You’ve made an effective income of $105 so that gets taxed at 50%
4. $60. As in 3 You’ve made an effective income of $120 so that gets taxed at 50%
Latest Answers