Can I start an internet business that nets $1,000/wk which I can donate to a church and write that off?

Answer 1

You can write it off, except you have a couple of problems. The internet business that nets $1,000 per week, would make a profit of $52,000 per year, which you would have to report on a Schedule C, and which would be subject to Self-Employment (SE tax). The tax would be 15.3% of 92.35% of the $52,000 or $7,347, which you would have to pay. The second thing would be that you can only take up to 50% of your AGI in one year on your Schedule A - Itemized Deductions, which would be $26,000, the remaining $26,000 would be carried forward and used in future years. So you might still end up with taxable income. And I think showing $52,000 on your Schedule C as either Advertising or Contributions would send up a red flag to the IRS.

Answer 2

If you engage in the Internet business as an individual, it will be considered a for-profit activity and you will pay substantial self-employment taxes as indicated in the other answers.

If you want to do this activity to raise money for your church, ask the church if they will accept you as a volunteer to do the Internet sales for them. The money will go directly to the Church, it will not be your income. No income taxes or self-employment taxes will be owed. Any out of pocket expenses you have as a volunteer for the Church in conducting the Internet sales can be deducted as a charitable contribution to the Church.

So, if you do not take possession of the money, but have it go directly to the Church, the Church benefits from all net profits and you will get a deduction for your expenses.

See "Not for Profit Activities" in IRS Pub 535 Business Expenses for details.

Answer 3

Only if you have another $1000 per week in taxable income. Charitable donations are limited to 50% of your AGI. Anything beyond that can be carried forward to future years where it will again be subject the the 50% limitation when added to that future year's donations.

Regardless of the donations' deductibility, you'll still have to pay the self-employment tax at 15.3% of the net income from the business.

Answer 4

If you are not a corporation and use a Schedule C to report your business you are not required to file if you have less than $400 net profit from the business. If however you have other income the filing requirement is any amount in excess of the total of your standard deduction and your exemptions (for example $8,200 for a single person in 2005) or the $400 business profit.

Answer 5

You can do whatever you want with the profits. However, you will be taxed at 15.3% of the self employed business profits before any charitable contributions are factored in.. This is the FICA and Medicare tax.

So if you took 100% of your profits and donated them, you would owe the IRS about $7,900 and not have the cash to pay it.

Answer 6

Assuming that this was just a side business, you would still owe some taxes.

You wouldn't owe any income taxes as the income and the charitable deduction would net to zero, but you would owe self-employment taxes on the money.

Answer 7

If you are donating cash or product you would be able to write off.

Answer 8

Surely, even the Church "should" help you.