Never thought about it, not really sure either. I would think that you can just keep on making money until someone says something about it...
Hmm... me too underage.
And well atleast what happens in india is that a minor's income is ussually counted under the income of his guardian who is major ...thats what I think.
So it is like if u'r father earn 1000$(it is just an eg.) a year and you 600$ then.
The actual thing is that u'r father earns 1600$$ and he will be taxable....
I think that is what happens out here.
The assets of a minor are regarded as a major's unless they have sum trust or sumthing so as to look that the minor gets his $ when he becomes 18 +.
I know that here in Canada (or at least the Province of Manitoba, Canada), minors aren't taxed. Of course, dealing with an incorporated American company such as Google may or may not complicate things a whole lot... I'd suggest talking to a lawyer familiar with the laws of your region...
When you get over $600 in payout from any US based company, expect to get a 1099 reporting it. If all you make is $600, you probably won't own any federal income taxes, but should still file a return. You might owe self employment taxes (Social Security and Medicare) regardless of income level. Parents can choose to report income of dependent minors on their own return.
Note: the above is NOT professional tax advice...
When I was under 18, I worked and had to pay taxes in canada, I dont think this is true..
Here in the US, I have been filing returns since the age of 13. Taxes are not age bias.
I think you still have to file because the 1099 (or equivelent form) uses your social or TIN or whatever ID number to show they paid you (or at least they should have)...
You are violating the Adsense terms of agreement and could get your account suspended.
ALL income must be reported to the IRS. At the end of the year, Google sends them a form telling them how much they paid you and how much you owe the IRS.
Having done my own taxes before, let me and you a question before I start dishing advice:.
What state do you reside in?.
Most US based sites have to start reporting payments to you once you reach $600 in payouts. They will require a W-9 form from you and issue you a 1099 at the end of the year reporting the income. If they don't report on a 1099, the IRS doesn't know, but that doesn't mean it's not taxable or you don't have to report it. From just doing my daughter's taxes, in the US it appears you can make up to $850 and owe no income tax if claimed as a deduction by your parents. My daughter earned under that and Turbotax said she didn't have to file a return since there was no tax withholding except SS/MC. However, if you work for yourself, you may still owe self employment taxes (Social Security and Medicare totaling 15.3%) from the first dollar.
Note: This is NOT professional tax advice. just observations I've made recently...
Taxing minors has always been a sore spot to me. I haven't been one for awhile, but the whole idea of taxation without representation just seems a bit unAmerican to me... You're not old enough to vote and have a say, yet they can still tax you?.
But yes, if you make over a certain amount, you have to report it and pay taxes on it...
Under no circumstances follow the advice posted by coreymanshack. If you do not pay taxes due and do not bother submitting tax returns you could land yourself in serious legal problems...
The reason I ask your state is because if you don't make over a certain amount throughout the year, you don't have to file at all. This is the rule for Kansas: http://www.ksrevenue.org/pdf/forms/geninst05.pdf.
Anyone under 65, who doesn't make over $5,250, does not have to file.
Yes, anytime you fill out a W9 and have revenue above $600, a 1099 is sent to you and a COPY is sent to the IRS.
It is one thing when you forget to file taxes for some transactions you did when buying/selling domains, but another when you don't file taxes when the IRS has a 1099.
Once they get 1099, you are forced to pay your taxes. And if you don't, you will get a letter from IRS with a late fee...
Here is what will happen. Trust me, I know. Just completed an audit from last year, not domain related. An omitted form.
As mentioned, when you reach a certain amount of revenue (in this case, anything above $600.00 you have to fill out a W-9 form) you AND the IRS are both sent a 1099-misc. You can choose to do whatever you want to do with the one you receive...paper airplane, toilet paper, target practice...but guess what the IRS does with theirs? They keep it nice and clean and handy to see if you claimed it as income.
I just got audited on March 1st of 2007 for tax year 2005. 11 months after filing and while I am trying to finish up this years taxes, they drop that BS on me. It was a paper audit meaning forms and such to go through and fill out.
In 2005, we sold a bunch of stock through eTrade and turned around a month or so later and repurchased stock with those proceeds. In the meantime, eTrade sent to me and my Uncle Sam a 1099-misc for each sale of the stock. There were different companies and sales so each one gets it's own seperate 1099.
When it came time to do taxes in early 2006, when the computer program I use was doing the calculations, apparently when it came time to do the Schedule D for stock capital gains/losses the program must have felt it was an even swap (sold stock/stock purchase) and decided a Schedule D was not necessary to file when I did file electronically.
So, lo and behold, on March 1, 2007 I get a package from the IRS saying I have XX,XXX unclaimed income on my 2005 return and I owe them X,XXX unless I can show where it was claimed.
Yes, time to FREAK OUT! I started going back through last years receipts but I also began to notice the amount they were saying was unclaimed could only be from one source...the sale of the stock.
Sure enough, when I pulled out all those receipts and totalled them up, that was the exact amount.
I called the IRS office in Philadelphia. I was on hold for 42 minutes listening to classical music. Why were they playing Nutcracker Suite? Was this a cruel joke or left over Christmas music? Anyways, the robot on the other end (a real person but I felt like she was reading from a script) told me what I needed to do.
So a week or two of aggrivation. The final amount of unclaimed income was $14.53, the total remaining from the stock purchase.
To point to all of this is the 1099 you get from Google AdSense, Sedo, or any other source is filed with the IRS. It is claimed and taxable income.
If you treat domains like a business, it has it's pluses. You may have to pay taxes on sales and parked income, but you also get to write off a ton of business expenses.
For those that think the sale of a domain name does not have to be reported, most of the time you are right. But if you sell one for XXXX or XXXXX, chances are the other party is claiming that as a business expense and has records.
Plus, if you piss someone off or they are simply anal about all records, someone can easily file a 1099 on you.
I have been doing my own taxes for over 30 years. I play by the rules. That keeps me out of trouble. This is the first time I have ever been audited. This was a case where the computer program thought it was smarter than me or the IRS.
Bottom line, if you have a 1099, guess who also has a 1099? they will contact you. You should still treat this as a business as obviously this is making money. Therefore, you can also have some deductions. The info up top is for those who think they can get away with not claiming income as income.
Doubtful you will have enough income to claim as taxable income. But you may still need to file a form 1040ez to show the amounts received on the 1099. Great possibility that you will not need to pay any taxes if you are under the minimum.
But seeing that the IRS also gets the same info from the same 1099, they may want to know at some point why you are not filing. Sure, they could look up in the database your age, etc. But, it's easier just to send you a letter when their bells and whistles go off.
Keep good records. Consider establishing yourself as an S Corporation or an LLC. May need to include you parents as partners (on paper) and may need their sigs.
Great questions, great insight you have, and possibly a great future. Play by the rules and stay out of the sights of the IRS and tax man. Check the internet on rules for age limits on S Corps and LLC.
Also, check the IRS site on minimun tax and age restrictions. You are not too young to have a business therefore you are not too young to potentially have to claim an income or minimally account for the 1099's you receive...
Google contacted me once my rep found out I was underage (from my personal myspace! bummer!)- But she just asked to change the name. For this coming year, I would recommend putting it in your parents name. I make $30,000-$60,000 monthly with adsense, so they called and told me...I would think and hope they would do the same for you. Just to be safe because you ARE earning money, I would just switch it over now. And if they didn't send you a W-2 this year in Jan/FEB you should be fine...
Lol no secrets really. It's all about having a passion, targetting and receiving the audience that YOU WANT. I only own one site that makes revenue- I plan on expanding but it's all about having fun and not just making money. I didn't get a paycheck and I had been running the site for over a year. Patience and being kind to your visitors..
Share that site URL with us. I'd like to see that happening...
September 2006 - Top teen sites with vistors in the 12-17 year old range..
One True Media 55.3%.
Great achievement Ash, good luck for the future...
Sorry to hear that circa1850..The IRS can suck sometimes. Let that be a lesson to keep all of your receipts handy or in one place so you know where to look!..
Dang..you beat me by one year.
Yes you are suppose to file. It's fairly easy. I recommend you use turbotax for home business and it's as easy as filling in a questionaire. I suggest you file just so you learn how and begin the process. You most likely won't owe a dime. You can even still allow your parents to claim you as a dependent...
If I was under 14 and in Canada, I wouldn't even bother filing. The sentences we give to children that murder are so lame (like 6 months community service here in Manitoba), might as well just evade the taxes and save a few bucks. Not a good idea to continue that through life but I sure as hell wouldn't pay taxes if under 14 here...
And the sad part is my freakish weird dad kept filing the long form so I could itemize my 20 per yar church donations...