This is based in United States. I have Ad revenue that I pay taxes on as Misc income on a schedule C. I also do freelance web development for a hourly rate, and hold a W2 job.
The question: If I work 1000 hours a year on my website and I make $5,000 that year in Ad Revenue, is all of that taxable? Because technically that's below minimum wage. The web development is mostly a hobby, but I know I have to report the ad revenue. Paying taxes on $5,000 when I already made nothing on my time is a kick in the face.
My freelancing pays a good hourly rate and I report that via a 1099. Is there anyway that I can pay myself for the website so that I reduce my tax liability? Would my freelancing rate that clients pay be a justifiable rate to myself if this is even possible? Does the US government really put me in a position of paying 1/3 of my ad revenue in taxes on a below min-wage rate?