I do some web design work in my free time. I never get more than $400. Do I have to report this as income?
I would also like to know this. I live in the UK... Also... What happens if I don't report things? Is there a fine or prison sentence?
To clarify, if the total you make over a year is over $600 you have to report it. If you do two jobs for $400 each then you report it. Just because the individual job is $400 doesn't mean it doesn't count as part of your income.
Legally, you must report your income. Do you have money from other sources? If your total annual income is below a certain amount, you do not have to report it, but it is not based on how much each job was. But, you can make appropriate tax deductions for earning that money (electricity, software licencing fees, depreciation on your computer, etc), so that you don't pay as much taxes.
There are two sure things in life, Death and Taxes. In all countries everywhere you have to report ANY financial income no matter how low it is, its the amount of tax you pay based on your income level thats the issue. Otherwise everyone will be magically earning less than the taxable level wont they? If you earn below a certain amount then you dont pay tax or rather should I say usually the tax gets refunded to you or you deduct it from your return. Yes, there are fines for evading taxes and yes you can go to prison, I think usually it depends on how severe your tax dodging is. For $400, I dont think you will get locked up. **forgot to mention*** Unless you have a suitable offshore setup then you dont have to declare income. For example, if you have are a european company with a US LLC (not regarded as offshore btw) and ONLY bill clients outside of the US, say europe or china, and DONT bill anyone in the US then you dont actually have to declare any income or file any income tax returns becasue you are not charging any tax on any income so its of no interest to the US Tax office. The second you bill someone in the US you have to submit paperwork to the Federal Government though. Having a good setup cost money but is worth it you do a substantial amount of business.
A fine. IR would dedide the amount and if you can't pay they issue CCJ Prision only comes for consistant ignoring of CCJ
In the US you need to report your income if your self-employment income is over $400 in a year. You are allowed to take deductions against the income and at $400 the tax would be small. Report income and deductions on Schedule C and compute self-employment tax on Schedule SE.