Ah yes, tax season—the magical time of year when we get to play detective, searching for lost passwords, digging through digital files, and navigating the ever-fun world of multi-factor authentication.
Nothing quite like the thrill of logging into government portals, only to be locked out because you forgot that one security question answer from three years ago.
And after all that effort? You either get a small refund (yay, a free coffee!) or brace yourself as you empty your pockets once again.
Of course, like every year, I ask myself the same question: Why don’t I just hire an accountant and spare myself the headache? And every year, I come to the same conclusion: Because I enjoy suffering, obviously.
If you’re in Québec, hiring a professional to handle this mess will cost anywhere between CAD $100 and $500, depending on how much of a financial disaster your situation is. But hey, why pay someone when you can spend hours pulling your hair out instead?
All jokes aside, this brings us to a very real question that many new affiliate marketers ask: Do I actually have to declare the money I make from affiliate marketing?
Affiliate marketing can be a fantastic way to earn passive income, but one thing many affiliates overlook is the tax obligation that comes with it. Whether you’re making a few extra bucks or running a full-fledged business, it’s important to understand how to properly report your earnings to avoid any legal trouble.
In this blog, we’ll cover the basics of affiliate marketing and taxes, including when you need to declare your income, tax rules in different countries, and how to legally minimize your tax burden.
Do You Have to Pay Taxes on Affiliate Income?
Unfortunately, yes!
The government wants its share of your hard-earned commissions, no matter how much or how little you make. Whether you’re cashing in through PayPal, direct deposit, or checks, it’s considered taxable income.
And no, just because an affiliate program doesn’t send you a tax form doesn’t mean you can pretend the income never existed.
Nice try, though.
Income Thresholds & Reporting Requirements by Country
Each country has different tax rules regarding self-employment and online business income.
Here’s an overview of how some of the major countries handle affiliate marketing income:
Canada
- The CRA considers affiliate income as business income—so congratulations, you’re a business owner now!
- If you earn more than CAD $3,500 per year, you must file a tax return (because of course, they want a cut of even your side hustle money).
- Once you cross CAD $30,000 in a 12-month period, you have to register for GST/HST. Yes, more taxes—how exciting!
- The silver lining? You can deduct expenses like website hosting, software, and marketing.
United States
- The IRS expects you to report every single cent you earn (because Big Brother is always watching).
- If you make over $600 from an affiliate program, you should receive a 1099-NEC form.
- Made more than $400 in profit? Congratulations, you also get to pay self-employment tax!
- Deductions include business expenses like internet costs, advertising, and software—because at least there’s some relief.
United Kingdom
- If you make more than £1,000 per year, HMRC considers you self-employed (so yes, even if it’s just a little side gig, you’re in their books).
- Earn more than £12,570? Say hello to the 20% income tax rate.
- If you somehow end up making £85,000+, you may also need to register for VAT. Lucky you.
Australia
- The ATO classifies affiliate income as business income, so don’t try to hide it.
- All income must be reported, but hey—you can deduct business expenses, so there’s that.
- Cross AUD $75,000? Guess what—you now need to register for GST!
How to Track & Declare Your Affiliate Income
Let’s be real: No one enjoys tracking income and expenses, but if you don’t, tax season will be even worse. Here’s how to avoid unnecessary pain:
- Track Every Penny – Keep a record of your commissions, because “I forgot” won’t fly with tax authorities.
- Save Those Receipts – Hosting fees, email software, online ads—all tax-deductible if you keep proof.
- Use Accounting Software – QuickBooks, FreshBooks, or even a simple spreadsheet will save you from a future headache.
- Set Money Aside – Don’t wait until tax time to realize you owe more than you have in your bank account.
- Consult a Pro – An accountant can help you avoid mistakes and possibly even save you money (yes, really!).
Tax Deductions for Affiliate Marketers
Here’s the good news:
The government may take a cut, but at least you can deduct business-related expenses.
Here’s what you can write off:
- Website costs (domain registration, hosting, design fees)
- Marketing & advertising (Facebook ads, Google Ads, sponsored posts)
- Software & tools (SEO tools, automation software, Canva, AI writing tools)
- Internet & phone bills (partially deductible if used for business)
- Office supplies (laptops, printers, ergonomic chairs)
- Education & training (courses, books, coaching programs related to affiliate marketing)
Final Thoughts
Ignoring taxes won’t make them go away (sadly), so it’s best to face the reality and get your finances in order. The earlier you track and plan, the less painful tax season will be.
Let me know in the comments—how do you handle your affiliate taxes? Or are you still in denial?
Talk soon,
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