The more success I have with iPhone apps, the more uneasy I get about the whole tax situation. Can anybody who has been doing this for a while help me understand what to expect? Basically, I have two questions. 1. What percentage of my Apple income should I expect to have to pay next year? 2. What percentage of my advertisement income should I expect to have to pay next year? I'm sure these numbers vary a lot depending on the person, state, etc. I'm just looking for a general idea of what to expect so I am not ambushed with owing a huge chunk of money I don't have p.s. I live in the United States

This is probably way too advanced a question for the forum, and any advice you get should be checked with a tax professional. That being said...I think it all depends on your tax bracket. Apple isn't going to take out any taxes, so I think you'd just apply all your extra income to your total income for the year, and then figure out taxes based on that. But, I think you can expect somewhere between 20%-30%? Mark

I think you need to pay quarterly too.

I know here in Aus with my Family Business we keep 20% a side each week and use the Tax System PAYG ( Pay as you go) in quarterly statements.. On top of that over here if you make over $70k here you also need to pay GST which is 10% more ... If you have a lot of expenses you end up geting a fair chunk of the Tax you paid back ( none of the GST though)

Yes! With success follows with the taxman :) if I were you I would form an LLC. to separate it from your individual taxes. That way you can deduct your expenses etc and be taxed from the LLC. Good luck with it! I file yearly based on all of my affiliate, client and app income totals..

if I were you I would form an LLC. to separate it from your individual taxes. That way you can deduct your expenses etc and be taxed from the LLC. Expenses can be deducted either way. Having LLC may have some advantages with certain expenses (think health care, entertainment expenses but may not be worth the added expense). By LLC I suppose you mean Limited Liability Corporation (if so think C. P. A. required to do your taxes, not cheap). Probably better to go with Limited Liability Company (proprietorship) doesn't require corporate tax return or C.P.A. Fred

Thanks for the replies...sounds like my best bet is to put 25% of every check into savings for now

35% :-(

man, that's gonna take some discipline..it would be nice if they just took them out

Well, another way to approach it is to have more taxes taken out of your "regular job," which in ordinary situations would result in an end of year refund, but in this situation could be used to make up the difference in what you would owe as a result of app revenues. Mark

Hey, it is cool that you are making so much money at this that you have to worry about taxes! Great work! What's your secret for success?