we dont work for yahoo, if you signed up under a corp, you claim it as earnings to the corp, if you signed up under your SS#, you claim it as personal earnings. either way, you pay. if you are making a decent amount, you should talk to an accountant to figure out the best way to handle your tax burden. of course, i could be totally wrong, im not an accountant and i havnt used them for a full tax year yet. so, jmo
You are not an employee. You will get a 1099 for all revenue earned (they also send this to the IRS). Depending on your situation and the amount you earn, you might be required to be making quarterly estimated tax payments to avoid hefty penalties for waiting until the end of the year to pay taxes on what you have earned. You should talk to an accountant or at least give the IRS a call unless you are talking about hundreds, not thousands of dollars for the year.
Do we need to pay any penalty when filling our taxes? as most of the employers withheld the tax every month from our pay.
No, you don't need to pay any penalty, but you will definitely need to claim your earnings on your taxes. And if you have made money as an individual for more than 1 year (I believe) you should be paying your taxes from self-employment quarterly.