I’ve been online freelancing (web development) for a few years now, since the age of 14. I just turned 18 (on April). My ssn is not associated with my Paypal acc; although, it is associated with my parents bank account.
Will I be in trouble in anyway ? I’m unemployed and sadly know nothing about tax.
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The longer they don’t know the worse it gets. They may never find out. But let’s fast forward when maybe you have to tell IR of your earnings. Will you lie about your past? Best to come clean now, maybe there is no tax to pay. Any earnings with an audit trail can be discovered quite easily by IR.
The IRS has a form 1099 that is required to be filed by paypal. There are several conditions that must be met before they are required to issue a 1099 on you. If they do issue you one they will probably send you a W-9 form which request you name, address, and SS number that goes on the 1099 form. If they issue a 1099 to the IRS on you they will also send you a copy of it.
Source(s): I’m an Enrolled Agent with over 20 years experience. i.e. I make a living preparing tax returns and dealing with the IRS for my clients.
oh boy! do your parents know about their use of SSNs on he paypal account
it would appear that you have never reported this income since age 14 on sch C and you should be doing for self employment
new this year will be the 1099 K from Paypal, that’s how IRS will know
Usually either they stumble on your business, or someone who knows about it turns you in. Or maybe the follow up on people who admit on a public forum to the crime of tax evasion.
If you make over $4 in the year from freelancing, you’re required by law to report it on a tax return and pay whatever tax you owe. So you’re 4 years behind. Would you get in trouble like prison? Not likely. In trouble like owe lots of money, the original tax plus interest and penalties (fines) that continue to grow every month? Yes.
Your age is irrelevant.
If you were making over $4 per year, you were legally required to file a tax return and pay taxes.
Beginning this year, PayPal is issuing 1099s to account holders who meet certain requirements.
You will report it, or if the businesses you freelance with are legit, they will send you and the IRS a 1099.
You not reporting it is tax evasion. You can get in trouble in the form of owing interest and penalties, or in the form of jail.
A paid study is a type of survey that allows you to share your ideas and viewpoints about brand names and their items in exchange for a reward, such as a reward or cash.
When they decide to send the1099-K to the address that they have for your account number that has you parents SSN showing on it and then the IRS will also have a copy with the same Information being available to the IRS also at that time in your life.
And then iF the IRS should happen to want and need some more information or if they should happen to decide to send your parents a bill for some past due tax amounts then you wil know that you have really messed things up pretty bad for your parents by operating your own business in your past life time incorrectly and illegally for this situation that you will be in at that time.
You would be a self employed independent contractor with your own business operation and your ORDINARY and NECESSARY business expenses that you NEED to have GOOD very good detailed daily written records of for this purpose will HAVE to be reported on each separate LINE of the schedule C of the 1040 tax form for this purpose and it is would be called your itemized business expenses if that is what you want to call the business expense.
And here you go using the below information should help you get started for your first year as a self employed independent contractor and as you progress and your business starts to grow you may even need some good professional assistance with it for your future.
Schedule C and the SE of the 1040 federal income tax return read each line when you start at the top of the page on the schedule C for your self employed independent contractor business operation your name is fine your social security number is fine and your present home address can all be used for this purpose just do NOT try to make it complicated and read each line and word and understand what it says and do what it says and then you should NOT have any problem.
You can also find the line by line instructions for the schedule C by using the www.irs.gov website and using the search box for the schedule C 2010 Instructions for Schedule C (2010) 2010 Table of Contents Profit or Loss from Business
http://www.irs.gov/instructions/i1040sc/%E2%80%A6
Specific Instructions
http://www.irs.gov/instructions/i1040sc/%E2%80%A6
BUT GOOD detailed records are really necessary for your business operation to succeed.
For your 1040 Federal income tax reporting you would use the below enclosed information for this purpose.
Use the search box at www.irs.gov for Publications and Forms for the Self-Employed
http://www.irs.gov/businesses/small/arti%E2%80%A6
All of your gross income from all sources of worldwide income will be reported on your correctly completed 1040 federal income tax return.
Using a receipt book to make a receipt for each time that any one pays you in any way or item or trade for the amount of $$ value that is received at that time and totaling the gross self employed income for the tax year with any other 1099-MISC income that is received after the end of the tax year and entering the total gross $$$ value amount on the schedule C line 1 GROSS receipts from your trade or business
In general, taxpayers may deduct the ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.
You would have to be sure that you handle your business deductions correctly for your business operation.
For instructions and forms go to the IRS.gov website and use the search box for publication 334 a very good place to start with examples.
Publication 463 Travel, Entertainment, Gift, and Car Expenses
Use the search box at the www.irs.gov website for Small Business and Self-Employed Tax Center
Filing Season Central is your one stop assistance center for filing your business returns. This includes Highlights of Tax Law Changes, Tax Tips, and more.
Go to the IRS gov website and use the search box for the below referenced material
*Publication 4591, Small Business Federal Tax Responsibilities (PDF 470.1K)
http://access.wa.gov/business/taxes.aspx
Hope that you find the above enclosed information useful for your situation and good luck to you. 10/31/2011
Your parents could end up getting in trouble for not claiming their income there (its connected to them so it’s their income). You are under 18 and unless u are making more than 7k, just file taxes on it, you are a minor.