OK, this is a VERY SPECIFIC question, please follow:

Rental (leases) income is not subject to social security tax, which is 15.3%.

If I, say, leased a nice apt at the shore for the whole year but then subleased it out for individual weeks in the summer, I'd still be working on it, maintainence, cleaning etc. My actual participation is still required, but in any case I'd be declaring the income as rental income and not as a service...

If you lease a server, then lease out parts to clients, is it a service or rental?

So, can I declare my webhosting income as rental income? If not, why?

You should contact an accountant for this. Any advice we give you here could be wrong and misleading.(and then you might end up breaking the law) You are safer to contact an accountant in your local area, wherever that might be.

That's a tough question. Any answers you find here are just "hear say". I'd contact an accountant like Zenutech said, or someone with legal knowledge.

Welcome to the board by the way.

Hah. Nice idea but it won't fly. Leasing or renting personal property (as opposed to real property) is definately subject to SECA taxes.

What are SECA taxes?

Hah. Nice idea but it won't fly. Leasing or renting personal property (as opposed to real property) is definately subject to SECA taxes.

Thanks - you're right. ...never "rented" anything before....

Let this thread be a warning to those thinking along these lines!

for the below poster: social security taxes for non-employees (schedule C) is referred to as "self employment" taxes, which is part of the "Self-Employment Contributions Act" - SECA.