Yes, income does not necessary just come from selling physical things but also from services. If your country taxes you on Income, ie Income Tax, then you certainly need to report your paypal income. If only tangible items are considered income then anyone earning a salary or offering services like accountants would not need to pay taxes.
Well, no one would ever find out, but still, I'll declare it. PayPal isn't known here, but it's just a couple of dollars in taxes, and I like to be a model citizen Thanks.
You sure no one would find out? There was a big go about here (canada) last year with ebay users who use paypal. They weren't declaring their sales on Taxes and the Canadian Government was going to pressure ebay/paypal to hand over user account data Link: http://www.nytimes.com/2007/10/01/technology/01ebay.html
I don't know where "here" is for you, but taxing authorities may know more about PayPal than you think. Report your income.
If your country audits and you get audited, you could get found out. They could audit your bank account and see that you were receiving deposits from Paypal.
Well, here there's no audit: they just "trust" you Second, I PayPal doesn't support bank accounts here: I use xoom.com to bring my money to my doorstep I'll still declare it though... Where I used to live 6 months ago (Belgium), taxes where 40% + 21% Sales Tax! . I didn't have to pay though *cough* diplomatic immunity *cough*
Wow... are you for real... When I started reading this the first thing that came to my mind was, once my earnings get up there I'm not going to claim anything but... god damn. Now I got to claim my $20.
Where is 'here' ? I guess the diplomatic corp and head of states do have their priviledges. Here in Singapore, you do not need to submit supporting documents when you file your taxes but they do have other ways to determine if what you are declaring fits your lifestyle. There are people who are randomly tax audited or caught for tax evasion. Since Singapore is a small country and it does not have the resources to audit everyone, I would think it is the same with any other countries where they would do random audits. However since you have diplomatic immunity, I supposed that puts you above the law.
I am wondering is it really a must to declare the paypal income if you haven't received it in your bank account or via check. I've just thought of that because it's possible that paypal locks your account and you lose your money (it happens) so if you've paid taxes for these virtual money at one point it may appear that you've paid taxes for nothing.
Yeah, I haven't thought of that... I think it should be declared once it is in your possession. What I mean by the title is not whether it should be declared, but whether it should be declared while it's on the internet. That's why I mentioned the word "intangible".
Yes, of course you need to declare it even if you do not withdraw the money. Because we are are talking about 'Income Tax' and not 'Deposit Tax'. Once you earn it, you need to declare it. Even if you never withdraw the money but spend all your paypal balance, it still is considered earnings/income . If the money is locked by Paypal, you can always withdraw it after 180 days so it is still income, just consider it as accounts receivables, ie income not being paid yet but nevertheless still income. However if there is a dispute or chargeback and the buyer gets the money back then it would be considered 'Bad Debts' or 'Returns' in which you would not need to pay taxes for those.
Pay it. PayPal might even be reporting this to the IRS as many other companies do. Don't risk it buddy.
I'm not in the US, so the IRS can't touch me . But read the thread. I said that even though I will not get caught, ever (I know my country), I will pay it anyways just to be a good citizen.