3 posts shown.
urbanwalker72 said:Since you are a full-time student, the most logical approach would be to report this as foreign income. You would be responsible for federal income tax and state taxes. Much of what you pay initially is often recouped during the annual filing process the following year.
I would suggest leaving 2018 alone, as those tax liabilities have already been finalized. Attempting to revisit that year doesn't make much sense; you would essentially just be paying more money upfront only to wait for a refund later. Given how the bureaucracy typically functions, it is unlikely anyone will ever come knocking regarding that specific year again.
Essentially, since you checked with the IRS and saw no debt, it is because the responsibility lies entirely with you. You must calculate your own liability, submit the necessary paperwork, and handle the payments yourself.
Once you have navigated this once, it will become second nature. You can streamline the workflow by setting up Excel spreadsheets for calculations and creating templates for your payments. If this makes sense to you, I can provide some links with examples to guide you through the process.
Thanks for the explanation!
Alright, so I need to head down to the local IRS office to report this as secondary income. I don't think I'll have to worry about local surcharges since I'm living in a designated rural area
where the local tax rate is zero percent. Regarding the monthly filings, what exactly am I reporting? Is it my total earnings through the end of the month? And how do I settle the entirety of 2019? Do I need to calculate each month individually from the start of the year
and submit separate payments every month, or can I just take the cumulative amount I've earned since January and settle everything in one single payment? I am also curious about the timeline for filing and paying—will I be stuck running errands at government offices for weeks, or is it a relatively quick fix? One last thing: do I need to contribute to both social security funds or just the first one?
urbanwalker72 said:Well..
Quavo:| It only recently dawned on me that I might actually be liable for taxes on this, and based on all the threads I've been reading during my research over the last few days, it looks like I definitely am. |
You certainly should.
Quavo:| From what I can gather, I'll probably have to deal with interest charges and maybe even some penalties since I'm behind on my filings. |
Just more work on your plate. Let's not overcomplicate things; you'll likely find a way to navigate this without any major issues.
Quavo: Here is the breakdown of my situation:
• I am a full-time student
• I've been earning money online through gaming since April 2018
• This is my only source of income
• I make an average of roughly $1667 per month
• Funds go to PayPal, then I transfer them to my bank account |
That all sounds fine.
Quavo: My questions are:
• Do I need to pay taxes? (yes, you do)
• If so, what is the simplest way to handle this?
• How can I calculate exactly how much I owe (taxes plus interest)?
• Am I responsible for Social Security, Medicare, or sales tax, etc.?
I'm feeling quite lost and a little anxious. It's incredibly overwhelming, and I don't see how someone with zero knowledge of the IRS or accounting is supposed to wrap their head around all of this. |
I will walk you through the details once I have a moment to sit down. There are many moving parts to consider in a scenario like yours. In short, you need to pay taxes; the best approach for your situation would be to report it as foreign earned income. While the rate isn't ideal, you should recover a significant portion of what you pay through your annual tax return.
Thanks for the response!
But how exactly do I go about paying it, and where? How am I supposed to figure out the total amount owed? Is there any way to automate this process, or am I stuck doing all the math and manual payments myself?
Hello there.
I am looking for some guidance regarding tax obligations for income earned online. I have spent the last few days digging into this topic, scrolling through various threads on this forum, but it seems that even since 2017, a great deal has changed.
For the past 15 months—ever since I turned 18—I have been earning money through the internet. Specifically, I provide services in video games, essentially boosting players' ranks. My payments come directly via PayPal from clients located abroad; it isn't tied to any one specific country. Since I started, I have been averaging about $1667 per month. To be perfectly honest, when I first began, I never anticipated the income would be this significant, nor did I expect it to persist for this long.
It was only relatively recently that the realization dawned on me that I might actually be liable for taxes on these earnings. Based on my research over the last couple of days, it appears that I most certainly am.
From what I can gather, I will likely be facing interest charges and perhaps even penalties because of my delay in reporting this.
To summarize the situation:
• I am a full-time student.
• I have been earning money online through gaming since April 2018.
• This is my sole source of income.
• I earn an average of approximately $1667 per month.
• Payments arrive via PayPal, which I then transfer to my local bank account.
I logged into my IRS account to check for any outstanding debts, and the system indicated that I owe nothing. However, I assume this is simply because I haven't reported any income yet. Apparently, I am required to declare these earnings, but when I accessed the filing forms on the IRS website, I found myself staring at an overwhelming number of fields and technical jargon that I have never encountered before. Quite frankly, I am at a total loss as to how to proceed.
My questions are as follows:
• Am I legally required to pay taxes on this? (Yes, you are.)
• If I am, what is the most straightforward way to handle this?
• How can I calculate exactly what I owe, including the back taxes and interest?
• Will I also be responsible for Social Security, Medicare, or other specific payroll/sales taxes?
I feel genuinely lost and, admittedly, a bit anxious. The entire process is incredibly convoluted; it feels nearly impossible for someone with zero background in taxation or accounting to navigate this without assistance.