I have a full time W-2 job as a software developer.
I have an idea for a software product that I intend to develop in my spare time. This is not for any specific company/person but rather something that could be of use to a large group of potential customers.
I intend to make "basic" version of software free and potentially charge for the "advanced" version. Have not decided whether I will charge or not at this point. If so, I would probably use PayPal, Digital River or some similar service.
I don't intend to create a corporation because at this time I just don't think it is worth the money and complications. From what I understand it would cost at least $500/year even if there is no activity of any kind (I may be wrong on that).
On the occasion that I do charge something - what do I need to keep a track of in order to be able to claim it as an expense on my income tax return? Some things are obvious, like web hosting fees, cost of the software I need or new computer. But does it make sense to track the time I used to work on that software? This is not a situation where I would do this for someone who would pay me on an hourly basis.
Am I correct in understanding that if I do charge something for my product I would need to file my taxes as self-employed even though my main job is full-time W2?
