This question concerns a small business owner (tavern owner) and the video gaming machines on site. The income from the video gaming machines are approximately $10,000 per month (this is clear - after the state takes 30% off the top and the remainder of the net terminal income is split between the owner and the terminal operator (owner of the machines). THE QUESTION is : Although 30% has already been paid to the state - HOW MUCH of that $10,000 that I receive do I need to pay federal income taxes on ? Does that $10,000 count as income and is that lumped together with my bar business income ? Please advise.
1 Answer from Attorneys
You pay tax on net taxable income. To arrive at net taxable income, you start with gross revenue and subtract tax deductible expenses. You need an accountant to review your recordkeeping system to make sure you are keeping track of your business income appropriately, and to "bullet proof" yourself against any potential Sales Tax audit.
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