Doesn't Google™ Handle This For Me?

Google plays a part, but the responsibility is ultimately all yours.

#1 - Google™ WILL report your income.

Why? Because they have to pay taxes too. They get paid by the advertisers, and then they pay us publishers a part of that. We are an expense, and they rightfully only want to pay taxes on their profits. Remember, you filled out a W-9 form when you signed, and they have all your personal information and your Social Security Number or other Tax Identification Number. Don't bet on the chance that you'll "fly under the radar".

Reference: W-9 Form in PDF format, IRS.gov.

#2 - Is this why Google™ takes out 28% of my earnings every month?

Yes, some publishers have a chunk of their earnings withheld each month by Google. When you filled out your W-9 form (mentioned above), there was a box labelled "Exempt from backup withholding". If you did not check this box off, Google will withhold 28% of your Adsense earnings from each check toward your taxes. This is designed to make sure you have set aside enough money to pay your taxes at the end of the year. There are various reasons why one might be subject to backup withholding. For example, you may have provided an incorrect Social Security Number. For all the reasons why you may be exempt, see the reference article below. If you want to play things safe, just leave the box unchecked. You'll get any extra taxes you paid back when you file your income taxes.

Reference: Backup Withholding, IRS.gov.

#3 - I heard if I made less than $600 in a year then Google™ won't report anything.

Legally, if you make over $600 in one year, then Google is required to file and send you a tax form called a 1099-MISC outlining how much money you made after the end of each year. If you made less, then you may or may not get a 1099. This does not mean that any income under $600 is not taxable. Google will still have your income in their records, and it remains your responsibilty to report all income that you receive. But how much tax you'll have to pay on that income depends on a lot of things.

Yes, if you make less than $600, then there is less of a paper trail and there may be a smaller chance of you being audited. The thing is, for those that make under $600, it is so easy to not pay any taxes on your income by reporting it properly, why bother trying to hide it and risk a penalty later?