Tax Question

I was wondering if anybody here could share some of there experiences or knowledge of filing for taxes with income made from the selling/trading of Runescape gold. Particularly people in the United States, how do you deal with it, what do you declare the income as such as business,etc. and have you run into any issues? Whether you're a goldfarmer or a reseller I'd like to hear anything anyone has to say about the topic!

 

Just some clarification, not looking for anybody to spill the beans on their tax information or anything just wondering what it is you would file runescape gold under for taxes?

 

Hello,
I am not a CPA but I am very close to getting my BBA in Accounting.

Regarding your question what you would have to do is declare all income (money received) from these sales
However, you can deduct every single expense that you had to generate that income.

So if you run a bot farm and you pay $100 a month for servers, you can deduct that $1200 a year as an expense.

IMO it's basically running a sole proprietorship, or at least treated very similarly.
All you have to do is keep track of your income and deduct all expenses and submit the "Net Income For Tax Purposes" to the government at the end of the year.

You can probably either fill it out as Business income or Self-employed income, I doubt either would get questioned.
They'd just be happy that you're claiming the income.

In case you're curious what the "books" would look like, it's something like this. This is my personal stuff, I've censored out the amounts

 

Thanks a lot for the response seriously appreciate it! I believe you addressed about every aspect of my question and then some. I think you meant to provide an example at the end but for some reason it's not showing up for me?

 

Could be adblock or something, I posted an image of my books but I removed the amounts

 

Thank you, I'll try opening it in a new browser! Also in terms of filing under business income versus self-employed income does on get taxed at a lower bracket? And finally I noticed that you said they probably wouldn't question it, but if they were to question it at all would I face legal issues for selling gold as an income? Or is this completely legal? Thank you so much for your professional help by the way! Side note: I might make an inquiry of your private scripts.

 

Nope, you wouldn't be taxed any differently because it'll all be going on your personal tax return. You'd get taxed as per your brackets.

The only difference that I believe you're thinking of is regarding personal tax returns and corporate tax returns because corporations are generally taxed at a lower rate

 

Awesome, and about the questions that you mentioned earlier, if they were to question me would there be potential of me getting into legal trouble selling rsgp as an income? Or is it completely legal? Sorry to pester you, but you've been a great help!

 

As far as the American government are concerned I'd say it's 100% legal.

RWT is against Jagex rules, not illegal at all.

I can't see you getting in any sort of legal trouble for it. You also don't really have to declare how you made the money, you're just supposed to declare the money.
Of course you'd have to prove it in the case of an audit but generally audits look at your expenses to determine if you can prove reducing your net income.

But odds of that happening are beyond extremely slim