A question to the bigger traders on sythe

well in malaysia, as long as you're under 18, you can earn as much as you want without paying taxes or any other charges. unless of course you are referring to adults

 

As long as it's done from paypal or WU it's VERY unlikely that the government would ever find out that you're making that much.

 

Wrong. You have to pay taxes on everything you earn. If you make $600 without filing taxes, you'll end up owing the IRS more than you made. No matter what, whatever you earn you should report to the IRS. No matter how much it is, you're supposed to inform the IRS every year of what you made.

With subcontracting (1099)s you don't have to do it every year, but at least once every 3 years I believe it is.

The only thing the IRS doesn't keep a solid track on is paper money. Anything in your name, however, with your SS# and such, is audit-able and WILL be audited every few years. When that happens, be careful.

Just remember that when you turn 18, in the U.S., and go to apply for anything, they're going to ask you how much money you keep in your bank accounts, on hand, etc. This will allow them to know how much in taxes you're expected to pay, and how much you have earned which allows them to work out payment plans and such.

The IRS keeps track of everything you earn and own, and all bank accounts and financial institutions track this. If you do not report it there, but instead report it on some paperwork later on, or they find out you lied, then you will face a fine PLUS the amount you would originally have to pay. Most of the time, resulting in debt to the IRS... which is not fun.

 

Well, I didn't enter my Social Security # into Paypal, and the only thing linking my Paypal to me is my bank account that I used to verify my Paypal. But that can't be 100% solid proof, right? Hypothetically, I could always say I used a friend's bank account to verify my Paypal. Okay, never mind, that's not going to work, I'm pretty sure that's against Paypal's ToS.

So, if all I have is my bank account linked to my Paypal, can the IRS still track the money I'm earning? My plan is to get a check drawn up by PP every time I'm at a couple hundred, and then cash that check for $, as opposed to transferring the money to my bank account. Good/bad idea?

Would it be worth it to make a new Paypal, not verify it, and then go through with my previous idea? That way there's NOTHING tracing that money to me, except the check, which will get cashed at the nearest convenience store.

 

If I live in Canada do I have anything to worry about?

 

When the IRS audits, they first find the individual they're auditing, then all financial institutions have to report information on you. If your bank account is linked to another account... that WILL show up. Remember those 3 little deposits Paypal made into your account? Yeah, those are traceable. Not only that, but Paypal is a well-enough known financial institution, and I'm pretty sure the fellas at the IRS have heard of it. So, generally, they'll trace it just because it's common for people to have them.

vWorker (a freelancer board) pays through paypal, and they require you to fill out a 1099. Which I'd imagine means they've had issues in the past with contractors getting paid more than they reported, and the IRS tracking it to vWorker.

There's 2 great work arounds that you can do. Cash is, obviously, your best bet. You can do trades with Cash, they just take longer to complete, and involve more indepth information about you and the person you're trading with. Honestly, though, it'd be safer to do it that way because a return address is required, and scams would be a lot less common .

The other way that is pretty efficient is money laundering. I won't tell you how to do that because it's illegal, but if done right, you'll receive completely untraceable money. The IRS doesn't work with foreign financial institutions in regards to taxes.

I don't know Canadian law =/. Sry.

 

Yes and no, they do check but not nearly as stringently as our neighbours down south. If you're making a decent amount regularly ($1000+ /month) I'd definitely consult someone on proper filing. I'll ask a close friend who's very knowledgeable in this field (as it's his job) and post when I get the answer.

A quick google search will change that.

 

Wow, thank you for the extremely detailed and helpful post, I appreciate it .

So basically.. If I'm deadset on using Paypal, my only option is to declare the money I'm making while I file, correct? As a rough estimate, how much should I be expecting to pay, tax wise, on the money I'm making? Say I'm bringing in 500 dollars a month, what kind of damages am I looking at?

Sorry for all the questions. You seem to be pretty knowledgeable about US tax laws, and I'm completely clueless so I figured I'd ask. What would be the best case scenario for me, and worst case scenario, as in how much of the money I made would be going to the IRS. I'm sure I can file it as different things (For example, file a portion of it as gifts and not income, right?).

I'll take as much knowledge about this subject as you can feed my ignorant mind .

 

you cant really claim what is illegal in the eyes of government so just cut your losses and go.

 

I'm pretty sure saying "I made 5 grand last year selling stuff online" is MUCH better than not saying anything, the IRS finding out about it, and then telling them "Well, I was gonna tell you, but what I was doing was illegal so I figured I shouldn't".

 

if you dont do over 20k a year in paypal they cant do anything to you, period.

I am wondering what the WU limit is though

 

WU deletes all transaction details 15 days after a transaction is sent/received.

I have heard of fraud alerts going off at WU if you send/receive a certain amount within 3-5 days, but other than that WU is completely untraceable

Paypal's going to wreck me though mark my words.

 

that's good to hear. I doubt I'll be using paypal again because I got downed for 1.8k usd :s

 

Just called paypal and having my account put back in for an internal investigation. Ought to be interesting. Good to hear no limit for WU thank goodness.

 

What do you mean by internal investigation?

And it's a shame the fees for WU are so high, or else more people would use it.. Which would mean more untraceable money lol.

 

Called the mitigation specialists and customer support and they are going to fully review my paypal account to see if they can remove the limitation. Now I got an email saying my brothers account needs fixed, he owes $10 to paypal, which he is on the phone with collections doing right now before my case can be looked at any farther.


EDIT - Brother paid off his $10.50 and his account will be unlocked and good to go tomorrow then they can continue to move on mine.

 

what happend to your paypal exactly?

 

Ah yeah, I forgot your Paypal got limited, that was some pretty stupid shit.

Hopefully you can get that resolved .

 

Can't tax an online trade unless through a company. It's like a garage sale. People don't come to your house to collect a tax after you sell $50 worth of items.

 

Wrong, it's very taxable if you read through the thread you'd see why.