Living Tax-Free as an Affiliate Marketer (Part I)
Here’s how to work and live as an affiliate marketer and pay zero in US taxes. If you market other people’s products online, you can effortlessly structure your business to be tax-free and completely compliant with US laws. If you’re working and living outside of the US, this article on how to live tax-free as an affiliate marketer is a must-read.
This article is purposely tailored to affiliate marketers, people who promote other people’s services or products online. You might use SEO, PPC, or PPA. The point is that you are promoting other folk’s products and not selling a physical good into the US.
The Tax Picture
If you’re selling your own products online or white labeling products, the tax analysis is way more complex. If you’re selling other people’s products, the tax picture is simple. It’s unproblematic to live tax-free as an affiliate marketer if you understand the rules.
And these same methods can be used by anyone selling a service online. You’re doing the service of marketing. And services are taxable wherever the work is done. So, affiliate marketing done outside the US is deemed foreign source income.
The same rule applies to any other service business or business where labor/work is what makes the money. If you’re selling subscriptions, hosting conferences outside of the US, writing blogs or marketing other people’s services or products, you’re in the service business.
The difference with a physical product sold into the US market is that products generate some sort of US source income. Some value has to be assigned to the product itself, and that value is taxable in the US regardless of where the work is done to ship, create, pack, support, and promote the product.
Living tax-free as an affiliate marketer:
- Create an offshore business and run your business through that thing.
- Open an offshore bank account and have your customer’s bills pay into that account.
- If you must have a US business and account, move your income out of the US and over to the offshore business every month or quarter.