Tax time again I have a quick question though, I am self-employed and don't receive any tax papers (1099, 1080, ect) from any companies. I do have a merchant account which I received most of my money from and I do a lot of deals through PayPal. My question is do merchant accounts and paypal report my earnings to the IRS? If not, why should I and then pay the IRS (did my taxes and owe over $35k if i report)? I know avoiding taxes is bad but I owe much more than I can afford to pay.
This is for starters: http://news.com.com/IRS+to+search+PayPal+records+for+tax+evaders/2100-1030_3-6060920.html Hope that helps...
The point is that it is a huge risk you would be taking, and even if they don't find out right away, you know at some point they will. And then it's worse because you'd have to pay with huge interest + huge penalties (up to 50%) etc... You know all about taxes & death....
Why don't you ask them? Most companies will include this in their FAQ. However they may be obligated by law to turn up all information about you if IRD audits you.
I think you definitely need to get advice from tax specialist since you would be saving so much money. You can also write off money as wages paid to your wife/kids/etc. What you need is "Creative Accounting". Good luck!
Well, the issue of tax is going to be something which will stay with you for a very long time and it is not something you pay one or two years and that's the end of it, it might be possible to get under the radar for several years but probably not the 40 to 50 years in which you will be actively working. From what I understand, the US tax system does not exempt you from specific earnings unlike here in Singapore where capital gain, lottery winnings and trading in the stock market or other financial institutions are tax exempted. What I am getting at is that the tax system may check your lifestyle, your banking records and expenditures and if that does not tally with your reported tax, you might be in for a tax audit. Once that happen, everything would be reveal.
i claim my pp earnings plus any other income..I also claim any expenses i have as well..might as well be legit,just to cover your ass.The IRS doesnt play
My freedom is worth more than anything. I had to report my paypal earnings along with all my other income whether I got a 1099 or not. No it was not fun owing taxes this year (usually we get a nice refund) but on the other hand it was like getting a smaller tax refund every month with my web income. My accountant was great, and even set me up to pay quarterly taxes for this year so I won't owe so much. Talk to an accountant ASAP
PayPal and banks etc. have your SS#. Even if they don't report to the IRS, if you were audited - which is apparently a big risk for self-employed vs. other business - they could find all accounts opened under your SS#, EIN, etc. Then you'd have some 'splainin to do... The bigger risk is that you get audited, owe back tax plus penalties, interest, fees.. and they'd be big penalties since failure to report would be clearly intentional and not accidental.
This is an easy one... $35K is nothing... I'm sure the IRS will let you pay payments on that money. The really bad thing to do is not pay what you owe. The IRS doesn't F&%# around... avoid them and you could face jail time. Take your medicine like the rest of us.
smileydog is right, they can find out, if you gave the company your SSN. Think of yourself as UPS parcel and SSN as your tracking number. You might avoid reporting if you open a Paypal account not linked to your bank accout and misplace a digit or two in your SSN, if they require it (I don't advocate doing it, but it would do the work). For the same reason, it's better to get paid by check because you can cash it without giving your SSN If you can't afford to pay taxes, you can download Offer in Compromise form from irs.gov, they'll forgive you (assuming you actually don't have money in the bank or house/car under your name that you can sell to pay them). It only works once every 6 years. (I don't advocate tax avoidance, but you can probably spend the money better than Federal Reserve and Dick Cheney would, I wouldn't feel too bad about it.)