Hello, When can i get into trouble with tax while using paypal ? do they calculate tax on the amounts that are withdrawn to the bank account ? can i avoid this ? A friend is doing paypal for me and i don't want to get him into troubles with tax guys because of me
I am very certain that you must keep track of your withdrawals, and report the withdrawals as earnings to be taxed. In fact, I can almost tell you 100% that this is true. What I do, is withdraw only when I get to $500, that way it is easy to keep track of how many times I withdrew $500. It sucks, but it is something you can't avoid if you want to stay legal and out of jail. Try putting your tax money in the money market or in a savings plan so that you can earn a little return on it.
By right, tax is not based on what you have withdrawn but how much you have made. If you are in your country when you conducted the business then it would be deemed that the deal was done with the expertises in your country and thus you will be taxed on that and not just what you withdraw.
Use all transactions generated with invoice, Click Here https://www.paypal.com/cgi-bin/webscr?cmd=_request-money-invoice apply correct TAX, and your OK. the actual TAX you Pay should be the same as you reveal in PayPal so everything matches and the TAXATION is all fluent , without amonalies or discrepancies.