One of these online companies chacha is saying they will report what I earn even if im not actually paid out that money this year. They cited some regulation in the IRS. I always thought you report what you were PAID. For example if you earned something in 2007 but received the payment in january, you report the january payment and if you earn something in december but not paid till the following year you don't report that. What exactly do you report for affiliate programs, how much you were paid to your bank that year or how much your balance was overall for the year even? Perhaps im not supposed to report a payment in january from 07 because the IRS isn't concerned what happened in 07? Ive never done taxes before so this year will be my first filing. Help.
In the US you are supposed to report income in the year you earn it. If you earn $1000 Adsense income in December 2007 - you report it as 2007 income even though you don't get paid until January 2008. It stops people deliberately postponing receipt of income to reduce taxes owed.
Here in Singapore, it is the same thing. You report what you earn and not about what you get paid. It is basically 'Income Tax' and that means earnings. Generally, for 2008 tax submission, you will need to report all earnings you received between Jan 1st 2007 to Dec 31st 2007 which includes all the money you earn for that time frame irregardless of how you spent it or whether you received it as yet.
Actually im reading more about this regulation on IRS since i did this post. It basically says you declare it in that year if you have reasonable access to the money in that year, without limitation or restrictions. Since google adsense doesn't issue the money until the following month(into the next year) I can't say I had access to it. The program Chacha allows you to witdhraw the money anytime, so that makes sense why they do it on earnings and not payments since you COULD withdraw the money at anytime.
I do. When i started i didnt, then i began earning a few 1000 a month and the taxcampany noticed. Then the 1000 went to 10,000 and i got a visit. After that, i really really dont want to get those visits again
Here's the deal: If you earned say $5,000 in December of 2007, and you weren't paid that $5,000 until January 1st or after, you do NOT report that on your 2007 returns. That will be reported on your 2008 returns (unless you're in Chacha's situation). I earned in upwards of $27k for the month of December 2007 and I did not receive that money until January 2008, therefore I didn't claim it for that year. It's all about when you get the money. Hell, I didn't even receive my W-2s from that company for the $27k, so there's no way I could file it anyway even if I wanted to. So this time around, when I do my taxes in 2009 for the 2008 year, I will report that $27k I received in January of this year.
When I did my company taxes I had the choice to pick. I went with what I was paid since that makes more sense to me. But I assume you are asking about person taxes?
This type of income is business income. Businesses choose to report their income when it is received (cash basis) or when it is earned. (accrual basis). Most corporations must operate on the accrual basis, but sole proprietors usually operate on the cash basis. You must be consistent from year to year and you must report your expenses the same as your income. (Either cash or accrual). If you have access to the funds then you have "received" the funds and they must be reported as income either way. I hope this helps!
yep, even if the money sits in a paypal account it is still earned because it can be withdrawn. no avoiding uncle sam!