by tpw
147 replies
I'm Dead, as soon as my wife figures out how much I will be paying in taxes for 2011... :p

This is the first year when PayPal will report my earnings to the IRS...

The last 6 years, I have paid my taxes on my online earnings voluntarily, but this year, it will be mandatory...

PayPal struck a deal with the IRS to report all earnings to the government, beginning in calendar year 2011...

Will you be ready?
#2011 #dead #irs #tax time #taxes
  • Profile picture of the author James Black
    Banned
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    • Profile picture of the author AnitaCross
      I don't use Paypal... but my merchant account providers will also be reporting what goes through my account with credit card charges.

      As Mama would say, 'six of one, half a dozen of the other"



      -Anita
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  • Profile picture of the author thegabrieljibril
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    • Profile picture of the author iAmNameLess
      Originally Posted by thegabrieljibril View Post

      Only if you do 200 sales and $20k monthly per year, that is when paypal would report your income.
      Proof? Please?

      I'm not doing 20K a month with paypal, but would like to know if this is actually true or just IM "theory".
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      • Profile picture of the author tpw
        Originally Posted by iAmNameLess View Post

        Proof? Please?

        I'm not doing 20K a month with paypal, but would like to know if this is actually true or just IM "theory".

        I have heard the numbers are much, much lower than quoted above.
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        Bill Platt, Oklahoma USA, PlattPublishing.com
        Publish Coloring Books for Profit (WSOTD 7-30-2015)
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        • Profile picture of the author Christian Chan
          Originally Posted by tpw View Post

          I have heard the numbers are much, much lower than quoted above.
          How much are you making per year?
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          • Profile picture of the author tpw
            Originally Posted by Christian Chan View Post

            How much are you making per year?

            Enough to know that PayPal will send my paperwork to the IRS, and I will be paying my quarterly taxes in January.
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            Bill Platt, Oklahoma USA, PlattPublishing.com
            Publish Coloring Books for Profit (WSOTD 7-30-2015)
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            • Profile picture of the author iAmNameLess
              Originally Posted by nicheblogger75 View Post

              I do 200 sales but I don't do 20K per month.

              The bottom line is if you are in business for yourself you should be putting money aside to pay your taxes.

              You might be able to slide for a time, but sooner or later the IRS will find out. So, just pay your taxes and avoid the drama.
              200 sales... and 20K a year, has to clear both of them.

              Originally Posted by tpw View Post

              Enough to know that PayPal will send my paperwork to the IRS, and I will be paying my quarterly taxes in January.
              I thought it was going to be the same for me, but for websites and SEO I'm only at 160ish transactions for the year with paypal. Over the 20k, but you need to clear both those for them to send it off.

              I wonder how many people are going to split this between paypal, google checkout, 2checkout and whatever other 3rd party merchants are out there. lol.
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      • Profile picture of the author tpw
        Originally Posted by iAmNameLess View Post

        Proof? Please?

        I'm not doing 20K a month with paypal, but would like to know if this is actually true or just IM "theory".

        From Paypal:

        Under the new legislation, we'll report to the IRS the total payment volume received by US account holders whose payments exceed both of these levels in a calendar year:

        * $20,000 USD in gross payment volume from sales of goods or services in a single year
        * 200 payments for goods or services in the same year

        The IRS changes apply to all payment providers, including PayPal and include all sales that occur on or after January 1, 2011, with the first reports going to the IRS in early 2012. Our goal is to help PayPal sellers understand and comply with the new requirements.

        Before your payment volume exceeds the reporting thresholds, you'll be asked to add your tax ID number, such as a Social Security Number (SSN) or Employer Identification Number (EIN), to your existing account(s), if you don't already have one on file.

        Source.

        Per Year is the key measure.
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        Publish Coloring Books for Profit (WSOTD 7-30-2015)
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      • Profile picture of the author travlinguy
        Looks like $20,000, and/or 200 payments a year...

        https://www.thepaypalblog.com/2008/0...ts-become-law/
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      • Profile picture of the author onegoodman
        Originally Posted by iAmNameLess View Post

        Proof? Please?

        I'm not doing 20K a month with paypal, but would like to know if this is actually true or just IM "theory".
        They report your taxes if you make 20,000 in gross payment volume AND (NOT OR) over 200 sale

        Refrence : www.paypal.com/irs
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        • Profile picture of the author AnitaCross
          Originally Posted by onegoodman View Post

          They report your taxes if you make 20,000 in gross payment volume AND (NOT OR) over 200 sale

          Refrence : www.paypal.com/irs
          "Applies to sellers receiving over $20,000 in gross payment volume AND over 200 payments" ~Paypal

          Damn! He's right... that makes my code obsolete!

          LOL
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    • Profile picture of the author nickdamodda
      Originally Posted by thegabrieljibril View Post

      Only if you do 200 sales and $20k monthly per year, that is when paypal would report your income.
      There goes Paypal. Say bye! What's next? Do they not realize how much it will die out with this IRS deal?
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      • Profile picture of the author tpw
        Originally Posted by nickdamodda View Post

        There goes Paypal. Say bye! What's next? Do they not realize how much it will die out with this IRS deal?

        You mean they have a choice? :rolleyes:
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        Publish Coloring Books for Profit (WSOTD 7-30-2015)
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        • Profile picture of the author Richard Van
          Originally Posted by tpw View Post

          You mean they have a choice? :rolleyes:
          I was thinking that. I was certain this was something the Government told them to do.

          What's in for Paypal? A gold star?
          Signature

          Wibble, bark, my old man's a mushroom etc...

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      • Profile picture of the author CyberAlien
        Originally Posted by nickdamodda View Post

        There goes Paypal. Say bye! What's next? Do they not realize how much it will die out with this IRS deal?
        They will lose a lot of customers over it most likely, but a lot of the huge companies that they are making money off will keep using them. For example, GoDaddy accepts PayPal and they already report their taxes so they wouldn't have an issue with PayPal doing it. You know what I mean?
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      • Profile picture of the author Azarna
        Originally Posted by nickdamodda View Post

        There goes Paypal. Say bye! What's next? Do they not realize how much it will die out with this IRS deal?
        Why? The only people who need worry about this are those who were not declaring their earnings already. If you are doing things legitimately this will have no effect on you at all.
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      • Profile picture of the author iAmNameLess
        Originally Posted by nickdamodda View Post

        There goes Paypal. Say bye! What's next? Do they not realize how much it will die out with this IRS deal?
        People said bye bye to amazon after state laws effecting affiliates. Or at least they said it would die out. Paypal is still the premier option. More people trust paypal than 2checkout and other 3rd party merchants. This doesn't only effect paypal though, it effects all of them!

        I don't think it will die out at all.
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    • Profile picture of the author nicheblogger75
      Originally Posted by thegabrieljibril View Post

      Only if you do 200 sales and $20k monthly per year, that is when paypal would report your income.
      I do 200 sales but I don't do 20K per month.

      The bottom line is if you are in business for yourself you should be putting money aside to pay your taxes.

      You might be able to slide for a time, but sooner or later the IRS will find out. So, just pay your taxes and avoid the drama.
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    • Profile picture of the author kevinzeo
      Originally Posted by thegabrieljibril View Post

      Only if you do 200 sales and $20k monthly per year, that is when paypal would report your income.
      If so,I have nothing to worried aboutat least so far.
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  • Profile picture of the author DestinyCoder
    I make $200-500 per day. I need to pay any tax?
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    • Profile picture of the author E. Brian Rose
      Originally Posted by ir0n M@n View Post

      I make $200-500 per day. I need to pay any tax?
      Unless you don't mind confining yourself to a 6' x 6' room for 5 to 7 years.
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      • Profile picture of the author AndyBlackSEO
        Originally Posted by E. Brian Rose View Post

        Unless you don't mind confining yourself to a 6' x 6' room for 5 to 7 years.
        ... and enjoy the built in gym, tennis court, TV room and all the other pleasantires that these establishments offer these days...
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      • Profile picture of the author Itachi
        Originally Posted by E. Brian Rose View Post

        Unless you don't mind confining yourself to a 6' x 6' room for 5 to 7 years.
        I wonder if they 6 feet tall too .. lol
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    • Profile picture of the author theemperor
      Originally Posted by ir0n M@n View Post

      I make $200-500 per day. I need to pay any tax?
      Depends on the jurisdiction in which you live.
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    • Profile picture of the author Richard Tunnah
      Originally Posted by ir0n M@n View Post

      I make $200-500 per day. I need to pay any tax?
      There's only 2 things certain in life...taxes and death. Neither of which you can avoid!

      Rich
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  • Profile picture of the author topgold
    The IRS seems pretty brutal in their undertakings! Best of luck to you and to everyone else (including me) with their paypal accounts!
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  • Profile picture of the author HeySal
    LOL Bill - the first thing I thought when I read that subject title is that if it were an email we'd be unsubscribing.

    I'm surprised that people don't set a portion of their earnings and sales aside for taxes regardless of what they are making. Ya just never know when the IRS is going to tighten their stranglehold.
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    • Profile picture of the author MikeAmbrosio
      Originally Posted by HeySal View Post

      LOL Bill - the first thing I thought when I read that subject title is that if it were an email we'd be unsubscribing.

      I'm surprised that people don't set a portion of their earnings and sales aside for taxes regardless of what they are making. Ya just never know when the IRS is going to tighten their stranglehold.

      Exactly why I pay estimated taxes throughout the year - who needs a big tax bill at the end of the year? Plus, I know I am no good at saving, so simply putting money in a separate account just for taxes wouldn't work for me

      Not only that, both Fed and State (NY) you can pay on line. So easy.

      Last year I overpaid big time... I wonder how I did this year.
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  • Profile picture of the author imagene
    You know what they say....death and taxes
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    • Profile picture of the author AnitaCross
      This shouldn't make any real difference in your tax liability, unless you've been misrepresenting your income in years past. As Kindsvater mentions above, that can net you an extended holiday in a 6' by 6' cell.

      Let's just be happy that all Paypal is doing is reporting the overall income. The letter I received from my merchant account explained I had to have all my contact and tax information correct, or they would be withholding funds for the IRS... I suppose it is only a matter of time before that becomes a reality.

      As I understand it, $20K gross and/or 200 payments in a year means 1) the income will be reported regardless of how little, if you receive 200 payments or more--for example, 200 affiliate sales in a years time--or 2) the income will be reported regardless of how few payments you receive, if the gross is $20K or more.

      Think code:
      if (A == true || B == true) {
      $reported_taxes = YOU_ARE_SCREWED;
      }


      -Anita
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  • Profile picture of the author Thomas Wilkinson
    Just pay the taxes and don't worry about it. You'll be amazed at how well you'll sleep.
    Being a self employed small business owner will get you audited much more often than a regular wage earner. Keep a straight set of books and meticulous records. The I.R.S. doesn't mind if you practice tax AVOIDANCE but they get a bit upset at tax EVASION. Its just not worth the hassle.

    Thomas
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  • Profile picture of the author Robert Michael
    Im just under the radar this year, but next year it will be mandatory under these guidelines.
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  • Profile picture of the author Robert Michael
    lol nope, and FRAGGLER!!

    haha whats up man, u know me from bht from long long ago before i got into it with drax
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  • Profile picture of the author sal64
    As my accountant always tells me...

    If you owe the tax man $1m then that's great news because you've made at leat $2m this year.

    Frankly, I wish I had this problem.
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    • Profile picture of the author AndyBlackSEO
      Originally Posted by sal64 View Post

      As my accountant always tells me...

      If you owe the tax man $1m then that's great news because you've made at leat $2m this year.

      Frankly, I wish I had this problem.
      ... Unless they've already spent it :-/
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  • Profile picture of the author Alan Petersen
    Hey this is the forum where we talk about making money not about giving most of the money we make to Uncle Sam!
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  • Profile picture of the author Paul Barrs
    Originally Posted by tpw View Post

    I'm Dead, as soon as my wife figures out how much I will be paying in taxes for 2011... :p

    This is the first year when PayPal will report my earnings to the IRS...

    The last 6 years, I have paid my taxes on my online earnings voluntarily, but this year, it will be mandatory...

    PayPal struck a deal with the IRS to report all earnings to the government, beginning in calendar year 2011...

    Will you be ready?
    Bill, I don't know whether to laugh or cry for you, LOL.

    Been there, done that, wasn't a happy camper ha ha

    Paul
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  • Profile picture of the author Black Hat Cat
    Banned
    Originally Posted by tpw View Post

    This is the first year when PayPal will report my earnings to the IRS...

    The last 6 years, I have paid my taxes on my online earnings voluntarily, but this year, it will be mandatory...
    It was always mandatory.
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    • Profile picture of the author Daniel Evans
      I done my taxes today. The office was scattered with bank statements. Despite having read Jim Rohns supposed wise words about tax the night previous, I still wasn't happy with the figure that I have to pay!
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  • Profile picture of the author UncleDearest
    I'm surprised how many people on here don't pay taxes! I'm either too wimpy to try and go under the IRS radar or too smart.
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  • Profile picture of the author nicholasb
    I find it wise to always pay your taxes and if you don't pay your taxes it is even wiser not to mention that you don't pay your taxes on a public forum.
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  • Profile picture of the author Jesus Perez
    Extremely ready.

    Here's my simple process that works year in and year out with NO surprises.

    1) Paypal
    2) Business Checking
    3) Business Savings.

    I transfer funds (earnings) out of my Paypal account to my Business Checking.
    Once the transfer lands in my business checking, I immediately transfer 20% to my Business Savings. So if I transfer $1000, $200 immediately goes to the savings account.
    I pretend the Business Savings account doesn't exist until tax time.
    At tax time, I withdraw my Business Savings balance to pay Uncle Sam.

    Next year, I start over from zero. Works perfectly for me.
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  • Profile picture of the author Andyhenry
    I just got a big tax bill so I'm already feeling this. 200 sales in a year is nothing. I hope people who have been selling their stuff for $7 to build their list are ready to reap the tax collectors revenge.
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    nothing to see here.

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    • Profile picture of the author J Bold
      Originally Posted by iAmNameLess View Post

      Proof? Please?

      I'm not doing 20K a month with paypal, but would like to know if this is actually true or just IM "theory".
      Looks like you have a lot of proof now if you're read the rest of the thread!

      Originally Posted by E. Brian Rose View Post

      Unless you don't mind confining yourself to a 6' x 6' room for 5 to 7 years.
      Originally Posted by AnitaCross View Post

      As Kindsvater mentions above, that can net you an extended holiday in a 6' by 6' cell.
      I wasn't aware E Brian Rose was also Kindsvater. Uh oh!



      P.S. I think you typed the wrong username, there.

      Originally Posted by Andyhenry View Post

      I just got a big tax bill so I'm already feeling this. 200 sales in a year is nothing. I hope people who have been selling their stuff for $7 to build their list are ready to reap the tax collectors revenge.
      Revenge? It's just taxes, everyone is supposed to pay them.

      And 200 sales is nothing, really, but $20,000 is a lot of $7 reports. It has to be both $20,000 and over 200 sales for Paypal to report your earnings to the IRS, but really, it's irrelevant in one sense as everyone should be reporting their earnings, anyway. If one falls under the threshold that person should still report all their earnings, regardless.


      Originally Posted by Black Hat Cat View Post

      It was always mandatory.
      Indeed it was and is. Perhaps he meant that it's now mandatory for Paypal to report your earnings for you, if you go over those thresholds.

      In any case, the place where some would need to be careful is where some other organization you sell for and pays you via Paypal is reporting your earnings to the IRS and Paypal is doing the same thing. The earnings reports will overlap and everyone in this situation needs to make sure not to pay double taxes!
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      • Profile picture of the author tpw
        Originally Posted by tpw View Post

        This is the first year when PayPal will report my earnings to the IRS...

        The last 6 years, I have paid my taxes on my online earnings voluntarily, but this year, it will be mandatory...
        Originally Posted by Black Hat Cat View Post

        It was always mandatory.
        Originally Posted by redicelander View Post

        Indeed it was and is. Perhaps he meant that it's now mandatory for Paypal to report your earnings for you, if you go over those thresholds.

        Indeed, paying taxes has always been mandatory.

        But reporting all of one's income hasn't always been enforceable.

        It is often hard for the government to prove all revenue in an all-cash business, and for years, they did not have the capability to measure revenues for an all-online business.

        Now the U.S. Government has the mechanisms in place to make sure that online vendors cannot hide their revenues from the government. It is all out in the open now.

        My point was that I could have hidden a certain portion of my revenue, but instead I chose to report all of my revenues, take all of my deductions, and pay all taxes owed to the government.

        The prisons for tax-evaders may be almost like a country club, but I would not see my kids every day if I was living at the country club. :rolleyes:



        And to those outside the country who were asking, employees have their taxes taken out with every pay check. The self-employed folks like myself generally pay our taxes quarterly.
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        Publish Coloring Books for Profit (WSOTD 7-30-2015)
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  • Profile picture of the author Jim Howard
    Banned
    Hope they dont report to my govt lol
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  • Profile picture of the author IM Lover
    tpw purchase some ear plugs they will work wonders for you .

    -Lee
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  • Profile picture of the author onegoodman
    I personally excited to fill for my taxes, after all the amount of money I spent online so far and earnings, I bet IRS will send me check

    This year I really spent too much, and things just starting to pick up
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    • Profile picture of the author Richard Van
      Originally Posted by ir0n M@n View Post

      I make $200-500 per day. I need to pay any tax?
      So you earn between $73,000 and $182,500 a year and you need to know if you have to pay tax?

      You're clearly a good internet marketer but I can see tasks like crossing the road and other similarly easy tasks for the rest of us, will be difficult for you.

      Get an accountant but get someone else to decide if they're good or not.

      What country are you in out of interest? I may move there.
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  • Profile picture of the author serena85
    Glad that it is not like this in my country to, good luck guys.
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  • Profile picture of the author lisakynan
    I'm confused, do you only pay tax yearly? Stuff that for a joke the bill would be HUGE! Here we pay it monthly if we are self employed, or it just goes straight out of our pay if we are employed. I am glad there are such things as accountants
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    • Profile picture of the author Aaron Doud
      Originally Posted by lisakynan View Post

      I'm confused, do you only pay tax yearly? Stuff that for a joke the bill would be HUGE! Here we pay it monthly if we are self employed, or it just goes straight out of our pay if we are employed. I am glad there are such things as accountants
      Employed is it normally taken out.

      Self employed should be paying quarterly in the US.
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    • Profile picture of the author Silas Hart
      Originally Posted by lisakynan View Post

      I'm confused, do you only pay tax yearly? Stuff that for a joke the bill would be HUGE! Here we pay it monthly if we are self employed, or it just goes straight out of our pay if we are employed. I am glad there are such things as accountants
      I pay every quarter.
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  • Profile picture of the author magnates
    generally not happy to let the wife know how much you are earning;( .She might ideas on how to spend it . Hold on to your credit card real tight .hehe
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  • Profile picture of the author JasonParker
    If you pay quarterly then it doesn't sneak up and bite you in the butt.
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  • Profile picture of the author Christian542
    Banned
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    • Profile picture of the author Richard Van
      Originally Posted by Christian542 View Post

      I'm surprised how many people on here don't pay taxes! I'm either too wimpy to try and go under the IRS radar or too smart.
      Definately too wimpy.
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    • Profile picture of the author JasonParker
      Originally Posted by Christian542 View Post

      I'm surprised how many people on here don't pay taxes! I'm either too wimpy to try and go under the IRS radar or too smart.
      Nothing shameful about not wanting to go to federal pound me in the ___ prison.
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  • Profile picture of the author John Romaine
    ...bugger. youre still alive.
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  • Profile picture of the author Daniel Wilson
    Is that only for the US?
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    • Profile picture of the author daprof
      Originally Posted by Daniel Wilson View Post

      Is that only for the US?
      When lived in Canada a few years back I read that paypal and ebay will report any earning over 1000.00 a month to the gov't. Since I applied for paypal account back around the year 2000, they never requested my SSN, even to this day no request for SSN as I am still using the account, therefor, there is no possible way to report my earnings through paypal to gov't. Not a big deal anymore since I have since left Canada.

      If you are USA citizen, no matter if you leave the USA for several years and live in another country, you are still supposed to file taxes every year until your dead. If you are Canadian citizen, you can file for non-resident and stop filing taxes but the way Harper is bending over to Obama these days, that may change.. Living in the USA is new world slavery at it's finest.
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  • Profile picture of the author anahita56
    Surely you should only pay taxes on your profits and not your gross earnings. Don't know about US, but in UK, everyone even has a personal allowance, which is determined by their tax code, before they are liable for taxes.
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  • Profile picture of the author adnadn
    We all have to pay taxes
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    • Profile picture of the author Alexa Smith
      Banned
      Originally Posted by adnadn View Post

      We all have to pay taxes
      I think this is true, one way or another, but of course there are many countries in the world which don't have income taxes, per se.
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      • Profile picture of the author David McKee
        Well, I suppose you could always switch to bit-coin over TOR or create your own currency... Or try opening several Paypal accounts and have an automated switcheroo system that cycles through them.

        But most likely, and personally safe way to go is that you pay the taxes so that the government cancer continues to grow...until it sucks up 100% of all wealth. Then it won't matter.

        -DTM
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      • Profile picture of the author cjreynolds
        About 200 or so years ago we threw a "boston tea party" that eventually lead to a revolutionary war.

        And what started it all? A tax on consumables (like tea) that amounted to less than 1%!

        We yankees never have liked payin' taxes!
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      • Profile picture of the author Jarvis Edwards
        Support the fairtax and soon enough the IRS will dwell in the past.
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        • Profile picture of the author tpw
          Originally Posted by tektime View Post

          Support the fairtax and soon enough the IRS will dwell in the past.

          LOL

          I have supported similar measures for most of my adult life. Yet, the previous Fair Tax measures failed, and the IRS remains supreme...

          I doubt this round of Fair Tax legislation will achieve a different outcome than its predecessors...
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      • Profile picture of the author goindeep
        I dont pay taxes for IM yet.

        You have to make at least around 16K - 20K per year in Australia for it to even be considered a business.
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  • Profile picture of the author Lucian Lada
    I am not from US, but I am curious: what about the US citizens that do not currently live in US and use PayPal ? Do they have to pay taxes for the US Gov too ?
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    • Profile picture of the author strangest
      I'm UK and not read or heard anything about this applying here, or for any other country for that matter. Is this just something that the IRS have jumped on to raise a lot of revenue, as the American economy is as fu*ked as fu*ked can be?
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      • Profile picture of the author JeanneLynn
        Originally Posted by strangest View Post

        I'm UK and not read or heard anything about this applying here, or for any other country for that matter. Is this just something that the IRS have jumped on to raise a lot of revenue, as the American economy is as fu*ked as fu*ked can be?
        I think so. The United States desperately needs higher tax revenues. There is a current movement for the wealthier people to pay 3 or 4% more in taxes. And another movement to dismantle entitlement programs like medicare. However, it would also help if everyone paid taxes on their earnings. I'm sure that there are billions of uncollected tax dollars from eBay, Paypal, gambling wins and the underground economy in general.

        Some people are under the impression that they only have to pay taxes if they get a 1099 in the mail. That's not true. You are supposed to pay taxes on all income, even if it's not enough to generate a tax form being mailed.

        I hate to pay taxes too. But I sure enjoy living in a civilized society.
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    • Profile picture of the author Jason Rankin
      Originally Posted by canyon View Post

      I am not from US, but I am curious: what about the US citizens that do not currently live in US and use PayPal ? Do they have to pay taxes for the US Gov too ?
      If your a US citizen, you owe US taxes no matter where you live.
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      • Profile picture of the author Lucian Lada
        Originally Posted by Jason Rankin View Post

        If your a US citizen, you owe US taxes no matter where you live.
        Seems that US is not that free of a country after all. It doesn't make sense. If you live in France for example, you would have to pay taxes for the French Government and the US one?

        Why it doesn't make sense?
        Because taxes are for purposes like: infrastructure, education, health etc. In other words they are for the roads we drive on, the schools we go at, the hospitals that we treat in etc.

        So what's the point of paying something to a country when you cannot benefit from those things? If you're driving in France.. you're not driving on US roads.

        Does this explanation make any sense? For me it does.
        I see it this way: I pay money and I expect something in return. Being in France and paying to the US Gov gives me nothing in return (for the time that I'm in France of course).

        Some people might say that the money you pay when you're not in US are for things like: US councils around the globe, the costs of repatriation (is this word used appropriately?) in case of death etc. But these services are very low cost (or should be) and rarely occurs the need of them.

        Anyway, a law is a law and you cannot bend or break it (although depends in what part of the world you live in )
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  • Profile picture of the author onSubie
    Originally Posted by tpw View Post

    I

    This is the first year when PayPal will report my earnings to the IRS...
    In Canada, PayPal and eBay also have reporting agreements with Canada Revenue Agency (CRA).

    Mahlon
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  • Yes, pay your taxes and eat your vegetables.
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    • Profile picture of the author SpiralX
      Looks like I'll be in need of good tax accountants!

      I think Canadians and other foreigners doing business in the US do have to pay tax in the US. Then they deduct that from the tax they have to pay in their countries.

      But in Canada, I'm not sure the exact figure, but I've been told that under a certain limit you don't have to report or pay taxes. So it's not the same in the US? Ie., if Paypal reported you for $20,000 or even use $7,000 you would have to pay tax on it? There's no cutoff like $45k and above is when you begin having to pay taxes on self-employment?
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      • Profile picture of the author tpw
        Originally Posted by SpiralX View Post

        Looks like I'll be in need of good tax accountants!

        I think Canadians and other foreigners doing business in the US do have to pay tax in the US. Then they deduct that from the tax they have to pay in their countries.

        But in Canada, I'm not sure the exact figure, but I've been told that under a certain limit you don't have to report or pay taxes. So it's not the same in the US? Ie., if Paypal reported you for $20,000 or even use $7,000 you would have to pay tax on it? There's no cutoff like $45k and above is when you begin having to pay taxes on self-employment?

        If you sell more than $20,000 per year AND you do more than 200 transactions, then PayPal must report to the IRS for U.S. citizens.

        I don't believe that the U.S. government collects taxes against foreigners who don't live in the U.S., but only for foreigners who work in the U.S., and U.S. citizens who work in other countries.

        Even if the U.S. wanted to collect income taxes on foreigners, it would be near impossible to enforce.
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      • Profile picture of the author athenistic
        Originally Posted by SpiralX View Post

        I think Canadians and other foreigners doing business in the US do have to pay tax in the US. Then they deduct that from the tax they have to pay in their countries.
        If they are physically doing business in the US and being paid by a US company, then yes. There is a tax treaty in place between the US and Canada that pretty much does that.

        Otherwise, if your work is physically done in Canada but you are paid by an American company, this does not apply. They shouldn't be withholding, and if they want to, a W8-BEN will clear that up. Please note that you cannot be a US citizen or a legal alien of the US.

        Originally Posted by SpiralX View Post

        But in Canada, I'm not sure the exact figure, but I've been told that under a certain limit you don't have to report or pay taxes.
        That's kind of true. There is a personal exemption of around $10K.

        You should still report regardless. If you have any self employed earnings, the CRA will want you to pay into your social security. Also, there are government rebates and such that low income earners can take advantage of, but only if they file.

        And, speaking from experience, you don't want to mess with the CRA. They will come after you, and they will make you hurt. They have far more power than the IRS does. They shut down all of my financial accounts over a tax bill of less than $2k - completely legal, of course, and only notified me after they did it.
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  • Profile picture of the author Jason Rankin
    If they report earnings, you and the IRS will recieve the same reports. It's a 1099. These will be sent in January. I wait till the end of February to start my taxes. By then, all my 1099's are in.
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    • Profile picture of the author tpw
      Originally Posted by Ron Douglas View Post

      I spend all my money on WSOs to avoid paying taxes.

      Let me guess...

      You have bought every WSO, and they all sit on your hard drive collecting dust bytes?
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      • Profile picture of the author Ron Douglas
        Originally Posted by tpw View Post

        Let me guess...

        You have bought every WSO, and they all sit on your hard drive collecting dust bytes?
        Yep bought them all and now I'm a super ninja killer assassin who has discovered a little known push button method to kick butt on auto pilot LOL.
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        • Profile picture of the author tpw
          Originally Posted by Ron Douglas View Post

          Yep and now I'm a super ninja killer assassin who has discovered a little known push button method to kick butt on auto pilot.

          If you go and do that, then you will have to find a lot more products to spend your money on, so you can wipe out your tax obligations.
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          • Profile picture of the author Azarna
            It's only a matter of time before they start knocking on the door of everyone who puts up an 'I earnt $50K in a month with this secret method' type WSOs.

            Be a good deterrant to people lying about their massive earnings from them if they think the IRS will be round for their share soon.
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            • Profile picture of the author tpw
              Originally Posted by Azarna View Post

              It's only a matter of time before they start knocking on the door of everyone who puts up an 'I earnt $50K in a month with this secret method' type WSOs.

              Be a good deterrant to people lying about their massive earnings from them if they think the IRS will be round for their share soon.

              They have already done that to some people... Billed em according to their claims rather than the reality of their actual earnings... :p
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            • Profile picture of the author celente
              Originally Posted by Azarna View Post

              It's only a matter of time before they start knocking on the door of everyone who puts up an 'I earnt $50K in a month with this secret method' type WSOs.

              Be a good deterrant to people lying about their massive earnings from them if they think the IRS will be round for their share soon.
              can see those greasy slimeballs, reading this forum right now. I bet. LOL.

              We welcome you IRS guys, by the way.

              (insert silence) **knock knock**

              "hang on guys there is someone at the door, be back in a jiffy"
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  • Profile picture of the author Lori Kelly
    Are you operating your business as a sole proprietor?

    There are many, many deductions available to offset your income. If you are working out of your home, you can claim deductions for a home office, etc.

    If you are set up as a corporation or LLC and have elected a pass through of Subchapter S status, any profit or loss of the corporation will flow through to your individual tax return. Also with this formal entity, you can start a retirement plan, SEP, etc. and contribute money to the retirement plan with tax free dollars.

    A good CPA will help you also determine the cost of goods sold, one of the deductions that can get your bottom line down.

    I have been told, but I'm not positive, that sole proprietors - those you file the Schedule C, are more apt to be audited. This has never bothered me because I keep impeccable records and have no problem paying my taxes.

    However, when I operate businesses as an LLC, I hire an accountant and a good one. He saved me a fortune.

    Even if paypal did not have this new rule, it is income that you would be transferring from your paypal account into either a personal or business account. In the event of an audit, you'd have to explain, so I would simply report it.


    I'm not an accountant, but I do believe that anyone outside the US who makes an income inside the US is subject to income taxes. A taxpayer ID number would be necessary and the income must be reported. Not sure about this, I'd have to do some research. I do know that if a person outside the US used my services (former registered agent for a decade) to form a corporation, LLC, etc., the only way we could get the taxpayer ID number was to have that individual get a tax ID number that identified himself/his business and was subject to paying taxes on income just like he was a US citizen.


    tpw - nice thread title BTW. I had to click on it. : )
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  • Profile picture of the author Lori Kelly
    If you outsource, you should be sending 1099s to anyone you pay $600+ to annually.
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  • Profile picture of the author mrinternational
    if you ask em it is not such a bad problem to have as it implies that you are making a decent amount of money online
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  • Profile picture of the author Flowithit
    We gotta pay to play!
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  • Profile picture of the author Scott Lambency
    I don't know about this IRS thing... It seems like a scam to me!
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  • Profile picture of the author Brendan Vraibel
    You'd better get to work writing off all of those lunches that you forgot happened to be with clients and those vacations where you think you went to a seminar at some point.

    But on a more serious note, I'm grateful for the year that I had and if that means forking over a small to medium sized portion of it - thems just the breaks.
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    • Profile picture of the author MikeAmbrosio
      Originally Posted by B and B View Post

      You'd better get to work writing off all of those lunches that you forgot happened to be with clients and those vacations where you think you went to a seminar at some point.

      But on a more serious note, I'm grateful for the year that I had and if that means forking over a small to medium sized portion of it - thems just the breaks.
      I save every receipt - even if I am not sure. I bring them to my accountant and she tells me what I can write off and laughs at me for the rest :rolleyes:
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  • Profile picture of the author Rose Anderson
    TPW...would you like us to make donations to the IRS in lieu of flowers?

    Rose
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    • Profile picture of the author tpw
      Originally Posted by Rose Anderson View Post

      TPW...would you like us to make donations to the IRS in lieu of flowers?

      Rose

      All donations are appreciated...

      But remember, they are going to get your cash even if you don't donate to my cause...

      Are you ready?
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  • Profile picture of the author Rose Anderson
    Please don't change the subject. I much prefer to discuss your tax issues rather than my own.

    Rose
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    • Profile picture of the author tpw
      Originally Posted by Rose Anderson View Post

      Please don't change the subject. I much prefer to discuss your tax issues rather than my own.

      Rose

      Rose: That reminds me of something my wife would say... :p
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  • Profile picture of the author miserman
    I am looking for such a big amount of earning, so that i can pay tax to paypal :-)
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  • Profile picture of the author jrpt
    You do realize you just told the world you haven't been paying the proper taxes for the past 6 years, right?

    I didn't realize you could 'voluntarily' pay taxes?! Must be nice to be you. I'd expect a fairly unfriendly letter sometime soon requesting some information but that's just an educational guess on my part.
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    • Profile picture of the author tpw
      Originally Posted by jrpt View Post

      You do realize you just told the world you haven't been paying the proper taxes for the past 6 years, right?

      I didn't realize you could 'voluntarily' pay taxes?! Must be nice to be you. I'd expect a fairly unfriendly letter sometime soon requesting some information but that's just an educational guess on my part.

      You do realize that you have that backwards, don't you? LOL

      I could have hidden some or all of my revenue from the government for the last 6 years, but I have reported 100% of my earnings to them.

      I "voluntarily" reported what could have been hidden from Uncle Sam.
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  • Profile picture of the author JCorp
    Paying taxes means you're making money, but when you're not making money the govt pays you....which one would you rather be?
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  • Profile picture of the author cashcow
    I already pay mine quarterly and claim every penny so it's no problem for me. I do think that there are going to be quite a few surprised people that sell stuff on ebay as well as people that sell website, services, digital downloads etc...

    I know one friend of mine who sells on ebay and insists that if you sell stuff on the internet you don't have to pay any taxes on it. Boy is she gonna be surprised when she gets that 1099! Especially since she doesn't keep any record or any receipts of what she paid for the stuff to begin with.

    Lee
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  • Profile picture of the author iDesigners
    Anything that affects people outside the US, apart from the changes in policy?
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  • Profile picture of the author iAmNameLess
    Just got off the phone with paypal, and after doing research... if you do 200 transactions but didn't make over 20K, you aren't reported. If you make 20k but didn't do 200 transactions you are not being reported.

    You have to do 200 transactions AND make over $20,000 for it to be reported to the IRS. By transactions, it means incoming payments.
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  • Profile picture of the author RichBeck
    Warriors,

    It really doesn't matter what PayPal's "official policy" is.... The IRS governs that for US citizens... When you file taxes, the IRS has a set period they can audit your returns.... Last I read, it was three years......

    So, if you claim all of your income, take wild and crazy deductions and don't get audited... You are scott free.... The IRS cannot come back and audit you later.... and challenge your deductions....

    However, if you fail to report income, they can come back anytime and collect taxes, interest and penalties.... This happened to my mother.... My deceased dad made $3,000 ten years earlier from some "side work"..... The IRS came after her for taxes, interest and penalties....

    So, all the IRS has to do is force PayPal to release all their past records.... This would mean big trouble for those who failed to report income... I highly doubt PayPal would fight the IRS to protect their customers...

    Is it worth the risk? Only you can answer that question......

    Rich
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  • Profile picture of the author Devon Brown
    I report my Paypal income even if they don't. The IRS is one group of the government I DO NOT want to mess with.

    And by the way.. do your business a favor and get a CPA or at least some professional advice. Contact other people you respect and ask who they use.
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  • Profile picture of the author ericbryant
    Time to talk to a tax lawyer about incorporating and incurring some expenses and deductions. It's the only way to fly.
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  • Profile picture of the author yamphy
    Paypal never ceases to amaze me.
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    • Profile picture of the author tpw
      Originally Posted by yamphy View Post

      Paypal never ceases to amaze me.

      People who use this as another opportunity to slam PayPal never cease to amaze me... :rolleyes:
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    • Profile picture of the author Karen Blundell
      Originally Posted by yamphy View Post

      Paypal never ceases to amaze me.
      PayPal has no choice but to adhere to government regulations with regards to taxes. Please don't make this thread yet another "PayPal sucks" diatribe.

      Our governments are all in trouble financially. They want every tax dollar they can get, so does it really surprise you that they are going after online payment systems to begin reporting?

      No matter how you make your money, you have to report it. The only way around this is if you are paid cash, under the table, in person, without using any payment system or bank...in other words, no paper trail. - and even then it's a risk.

      So, if you sell stuff and get paid via PayPal, consider around 20%, at least, belongs to the the tax man of your country depending on your country's tax laws.
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  • Profile picture of the author maryland168
    Is that only US account holder ?
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  • Profile picture of the author JieLim
    HAha well at least if you're paying lots of taxes, it means you are earning LOTS more money too!! Maybe time to think about corporations so that you can balance your incomes with more tax-deductible expenses. =)

    Jie
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  • Profile picture of the author qluemb
    So, I can't be the only guy here thinking of methods to help soften the blow of taxes.

    I'm sure a lot of lovely people have used paypal to hide, or just couldn't afford paying taxes because of life and family expenditures.

    As a member of Law enforcement, I don't condone breaking the law; especially not on a federal level. I respect that we all have to pay to play, and I myself would very much be doing exactly that just for the peace of mind.

    BUT, hypothetically, wouldn't it be easy to bypass something like this just by having a multitude of merchant accounts that doesn't exceed the 20k and 200sales?

    Rabble rabble: "I do believe that would be tax evasion young sir".

    I do believe you're right Gentlemanly monocle wearing colleague.

    I understand if it were easy, everyone would be doing it...but... I feel like there's a loophole here
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    • Profile picture of the author tpw
      Originally Posted by qluemb View Post

      So, I can't be the only guy here thinking of methods to help soften the blow of taxes.

      I'm sure a lot of lovely people have used paypal to hide, or just couldn't afford paying taxes because of life and family expenditures.

      As a member of Law enforcement, I don't condone breaking the law; especially not on a federal level. I respect that we all have to pay to play, and I myself would very much be doing exactly that just for the peace of mind.

      BUT, hypothetically, wouldn't it be easy to bypass something like this just by having a multitude of merchant accounts that doesn't exceed the 20k and 200sales?

      Rabble rabble: "I do believe that would be tax evasion young sir".

      I do believe you're right Gentlemanly monocle wearing colleague.

      I understand if it were easy, everyone would be doing it...but... I feel like there's a loophole here

      The most effective loophole requires cash payments and no money deposited in the bank.

      But I cannot imagine how someone running an online business could pull that one off.
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  • Profile picture of the author MaryK
    Does this apply to Australian Paypal accounts? If it doesn't it probably soon will(:
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  • Profile picture of the author soobeeoz
    Finally I have a reason to be happy about having made only $27 online (so far). No taxes! lol
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  • Profile picture of the author webmaster1742
    Originally Posted by tpw View Post

    I'm Dead, as soon as my wife figures out how much I will be paying in taxes for 2011... :p

    This is the first year when PayPal will report my earnings to the IRS...

    The last 6 years, I have paid my taxes on my online earnings voluntarily, but this year, it will be mandatory...

    PayPal struck a deal with the IRS to report all earnings to the government, beginning in calendar year 2011...

    Will you be ready?
    Yeah, ready, Always pay all Taxes and sleep well. I am paying a lot from STOCK market earnings as well... thousands and thousands
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  • Profile picture of the author Adnan Firdous
    Looks like Paypal is becoming a headache for all of us!
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  • Profile picture of the author greggorio28
    This thread has given me anxiety! But the good news is....I have not received the reached earnings threshold notification asking for my Tax ID/SS# so I guess I just made it!
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  • Profile picture of the author Lori Kelly
    Whether or not paypal reports your income, you have to report your earned income. Get audited and you will be producing your bank statements. The deposits will be listed, obviously, so save yourself time and possible penalties, report all of your income.

    The key is being able to find allowable deductions to reduce the amount of taxes you pay.

    Self employed tax deductions:

    - internet expenses, websites, hosting, internet access.

    - cell phone

    - advertising

    - computers (depreciation)

    - tax costs - either software or your accountant fees

    - postage

    - state business license fees (or incorporation/LLC fees)

    - office supplies, paper, ink, pens, paper clips, any office supply. Keep your receipts

    - do you use your car in your business? Meeting clients, etc? Look up the deductions for the auto expense.

    - Take a client to lunch? Deduct 50% of meals

    - 1/2 of self employment tax

    - home office deduction - look at IRS form 8829. If you have a mortgage, you can deduct part of your property taxes, MID, maintenance, utilities, office furniture, depreciating items
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    • Profile picture of the author tpw
      Originally Posted by Lori Kelly View Post

      Whether or not paypal reports your income, you have to report your earned income. Get audited and you will be producing your bank statements. The deposits will be listed, obviously, so save yourself time and possible penalties, report all of your income.

      The key is being able to find allowable deductions to reduce the amount of taxes you pay.

      Self employed tax deductions:

      - internet expenses, websites, hosting, internet access.

      - cell phone

      - advertising

      - computers (depreciation)

      - tax costs - either software or your accountant fees

      - postage

      - state business license fees (or incorporation/LLC fees)

      - office supplies, paper, ink, pens, paper clips, any office supply. Keep your receipts

      - do you use your car in your business? Meeting clients, etc? Look up the deductions for the auto expense.

      - Take a client to lunch? Deduct 50% of meals

      - 1/2 of self employment tax

      - home office deduction - look at IRS form 8829. If you have a mortgage, you can deduct part of your property taxes, MID, maintenance, utilities, office furniture, depreciating items

      In some years, I am absolutely astonished at how much my PayPal fees were for the year.

      And yeah, I deduct those fees also.
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  • Profile picture of the author Joseph Robinson
    Banned
    I wasn't aware that you could pay taxes quarterly...to the IRS website!

    I guess it's a good and bad thing that I have only made enough money online this year to put a dent in my return. Maybe next year I can grumble about having to pay soooo much lol.
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  • Profile picture of the author HeySal
    Well there weren't any income taxes before the FED was installed on top of us - and that's all fed income tax goes to anyway, so if everyone is all torked about paying income taxes -- start petitioning congress to kick the FED (a.k.a. World Bank) to the curb. You band together strong enough to get that done and you won't be posting laments about taxes on forums any more.

    Bill - you might be dead, but your thread seems to be lingering for posterity. Good grief.
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  • Profile picture of the author Patrick Kelly
    Hi,

    If your making as much in IM as the revised reporting requirements for PayPal suggest, then your wife might just hug you instead of killing you!

    cheers, Patrick
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    • Profile picture of the author tpw
      Originally Posted by Patrick Kelly View Post

      Hi,

      If your making as much in IM as the revised reporting requirements for PayPal suggest, then your wife might just hug you instead of killing you!

      cheers, Patrick

      LOL

      Some people just don't follow that kind of logic.

      I remember having a convo with my dad one night, and he was telling me what a loser Ronald Reagan was.
      Please don't let my story turn this into a political discussion, because that is not my point.

      I was younger, and I could not understand his hatred of Reagan.

      So I asked him what was so wrong with Reagan.

      He responded that "he paid more taxes under Reagan than he paid under any other president."

      I laughed hysterically when he told me that. Then I said, "Yeah, and you made more money when Reagan was president, than during any other time in your life."

      And he did too...

      He made $40k year before Reagan, $80k year while Reagan was president, and $50k year after Reagan was president. LOL

      My wife unfortunately has the same kind of mindset.

      She always bitches about what I spend, with little thought to what I actually bring into our household. :rolleyes:

      In her world, the glass is always half empty, or more accurately, almost gone.

      There is a real good reason why I don't let her see my books until tax time. She would literally freak if she knew what all of my expenses were, while I was spending that money. LOL
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      Bill Platt, Oklahoma USA, PlattPublishing.com
      Publish Coloring Books for Profit (WSOTD 7-30-2015)
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      • Profile picture of the author Gail_Curran
        Hey Bill,
        You've got a stinking, good-for-nothing cookie stuffer by the name of Jack58687 polluting your nice thread. I've reported him several times but he's still hanging around, plying his evil ways.
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        • Profile picture of the author tpw
          Originally Posted by Gail_Curran View Post

          Hey Bill,
          You've got a stinking, good-for-nothing cookie stuffer by the name of Jack58687 polluting your nice thread. I've reported him several times but he's still hanging around, plying his evil ways.

          Yeah, I have reported him too. We just have to wait for the mods to login and get rid of his junk.
          Signature
          Bill Platt, Oklahoma USA, PlattPublishing.com
          Publish Coloring Books for Profit (WSOTD 7-30-2015)
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  • Profile picture of the author CoryW
    Thanks for the great post Lori! I didn't know about "1/2 of self employment tax". And I assume all of the SEO services I purchased would fall under "advertising"?
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    • Profile picture of the author Lori Kelly
      Originally Posted by CoryW View Post

      Thanks for the great post Lori! I didn't know about "1/2 of self employment tax". And I assume all of the SEO services I purchased would fall under "advertising"?
      Depends. Are the SEO services used to promote your site(s)? Then yes, I believe it would be an advertising expense. If you using the SEO services to promote your clients' sites, it could be considered a cost of goods sold. I'm not an accountant. Sometimes for the couple hundred bucks it costs for an accountant, they can save you several thousand in allowable deductions.
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  • Profile picture of the author RefundHost
    Do you need to pay taxes on the amount earned
    but paypal refunded to fraudulent scamming folk?
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  • Profile picture of the author Landro
    This is a great problem to have. If only we were all so lucky. Some institutions like banks are taking it a step further by withholding money from earnings (interest income for instance).
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  • Profile picture of the author duality32
    So I'm still confused on this topic, I know that Paypal will be sending me a form, but does anyone know a way to look on the site to see how many transactions were made for the year? And how much revenue was brought in? I've tried getting the reports, and I don't see anything anywhere.

    I'm scared to see the amount made that I'm going to pay taxes on. I have 178 printed pages of transactions, but I don't wanna have to count them all. And I would like to see a total for the year somewhere on the site. Anyone have any ideas? So I can decide if i need to hang myself or not.
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  • Profile picture of the author dannygnenerate
    I hope you kept all your receipts to give you some type of break. Some people donate during the year rather it be money or items. I wish we could donate time...

    Just remember to itemize your deductions not itemizing the deductions on your tax return will mean you won't be able to claim deductions. If you do, then you'll get a tax benefit. That's it.
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  • Profile picture of the author duality32
    Well, I'm not sure I can write off enough from online sales to even it out. I still work a regular job, and they pay my LLC company, just kinda scared to see the final sales for the year through paypal, it will be well over 100k, I happened to have too much fun with it instead of saving some.

    Don't get me wrong, I'll still pay the taxes, but its going to be a pain in the ass trying to figure everything out, and I'm too cheap to get a CPA, which is probably needed. BLAH! Heads spinning now, I actually just looked up today to see if Paypal would send some sort of form to me, and this is how it ended up haha
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  • Profile picture of the author kindsvater
    Originally Posted by tpw View Post

    I'm Dead, as soon as my wife figures out how much I will be paying in taxes for 2011...
    Gee Bill, there are a lot of ways you could reduce your taxes and make your wife happy.

    Some people voluntarily fork over their money to the man. Others take advantage of deals selectively offered to them and make use of legal strategies to drastically reduce the amount they owe to only the minimum required.

    Maybe I should send your wife a letter.

    .
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  • Profile picture of the author Ryan David
    There's a lot of talk about building a business on this forum, but this thread kinda shows me that very few are likely putting it into practice...even at a basic level.

    I'm surprised that people could be doing this for so long and not realize that all revenue *should be* reported.

    It kinda reminds me of a few years back when a friend of mine ran a summer camp with a teacher her worked with (self-employed) and took in like $20K. I told him to set aside money for taxes and he said he didn't need to, because he deposited it into a personal account and not a business account. I told him he could do whatever he pleased, but keep in mind he wasn't getting away with anything..he was just rolling the dice.

    Which by the way is a tax strategy that a lot of people employ, probably people like Tim Geitner. But they are at least aware of the odds/downside.
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  • Profile picture of the author vivi62
    look just take the tax man out for dinner its called the dinner tax,one company has got away with not paying 6 billion in tax that the uk needs to pay off our deficit but they are squeezing everyone else who owe small amounts.So once again its not what you know but who you know.
    Regards
    vivi62
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  • Profile picture of the author mattlaclear
    I figured our taxes out a couple of months ago for the first three quarters and nearly died from shock when I saw what our liability was. Of course I hadn't sent any estimated tax payments in. So now I'm pretty much handing everything over to Uncle Sam this final quarter and the beginning of next.

    I always have claimed every single penny I earned from PP as well as from any other income sources. The IRS doesn't throw people in prison for being late on their tax bill. It's better to owe the IRS money than it is to hide your income from them.

    But if you make over a certain amount you are responsible to have all your estimated tax payments in by January 15 to avoid interest penalties.
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  • Profile picture of the author Ryan David
    My CPA gives me a spreadsheet to use when figuring out quarterly taxes/payroll. As an S-Corp, I know I'm going to be paying taxes at year end anyways so I try to pay as I go. So I do a quick P&L at the end of the quarter, and then distribute the cash out of my business checking account.

    The spreadsheet takes into account part of the income is being paid through payroll (income taxes+FICA), another part as a distribution (just income taxes). The spreadsheet tallies up how much I owe to Federal+State and then I make the deposit.

    I've been using this for the last couple years and I'm usually pretty close when it comes time to do the returns.
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  • Profile picture of the author duality32
    One way to find out! Dont pay your taxes on your Paypal earnings haha!
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