Google Withholding Taxes from AdSense Checks

Mar 28, 2005 • 9:05 am | comments (3) by twitter Google+ | Filed Under Google AdSense

There is a WebmasterWorld thread where a dozen members are reporting that Google has taken the liberty to withhold taxes from the AdSense checks they have sent to publishers. The thread starter said " I have a U.S. corporation with an EIN number registered with Google AdSense. The most recently reported payment (not yet received) was reduced by an approximate 25% "Tax Withheld". " Other members have verified this information. But why hasn't Google notified anyone of the change? Or did they when they released the updated AdSense TOS? I have not looked that carefully.

One member thinks it has something to do with Wired Article where it reads;

Do you have to report the money you make from hawking stuff on eBay? It appears to depend on whether you're running a business or just cleaning out the attic, but the IRS says all income can be taxed.

Update: RCJordan and ThreadWatch thinks it might have to do with IRS Backup Withholding FAQs.

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03/28/2005 05:40 pm

How does that work ... is Google now taking the position of employer?

Barry Schwartz

03/28/2005 05:53 pm

That is the current speculation in the forum thread. I never heard of it any other way.


03/29/2005 03:09 am

Thanks, Barry. I think these are two different issues: one is the question of what constitutes taxable income, and the other is whether an advertising source such as Google is responsible for withholding taxes from those who display its ads for in exchange for payment. Though I am not a tax professional (and am in the U.S.), my generic understanding is that all income is taxable, less what it took to make that income -- whether you're selling shoestrings on Ebay or selling your company for millions. And, though I don't use Adwords, I'm curious about Google's stance (probably because I'm not a tax professional).

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