How Many Pay Tax for Online Earnings ?

Discussion in 'Accounting and Legal Advice' started by samda, Feb 16, 2009.

  1. samda

    samda Member

    Hi Guys,

    I am just wondering how many people here are paying tax for the earnings that we get in internet. No one will know your earnings until you reveal it.

    Please post your honest views.

    P.S: I am not from Income Tax Department [​IMG] [​IMG] [​IMG] [​IMG]
  2. Vishal P. Rao

    Vishal P. Rao Administrator Staff Member

    If it's few dollars here and there, then you may evade them. If its high enough, you'll have to pay now or later. You have to deposit checks in your bank account and for checks greater than Rs 50,000, you have to quote your PAN number. For every loophole there is a plug by the IT department. Better pay and relax than evade and worry about getting caught.
  3. samda

    samda Member

    Vishal I have a few questions. I think you are the right person to answer this.

    1) Yes for checks we need PAN. But if it is online transaction like paypal withdrawal is it necessary.
    2) Consider this condition: I get a google Check for more than INR 50K. But to make that 50K I have spent 30K on advertising. How can I pay tax now. How will I show my expenses.
    3) If I sell a service or product, how is the tax system in India calculated.

    Is there any online method to calculate and pay tax in India..

  4. samda

    samda Member

    BTW, the site's new logo is nice...
  5. Newbie Shield

    Newbie Shield Gold Member

    Hi Sam,

    I've been paying taxes on my online earnings since I first started back in 1997.

    I don't know how taxes work in India, but in the USA you'd get write-offs for expenses. In your example - provided there are no more details - you'd be taxed on $20k provided you've set up your business correctly.

    In the USA, that is known as taxable income, which is income minus write-offs.

    In the USA the same would be true for services. For hard goods sold (usually means you've shipped them yourself), there would be an additional sales tax.

    You'll have to ask Vishal or someone else from India what your local laws would require.

    ~Newbie Shield~
  6. genius

    genius New Member

    In our country, online earning is tax holiday which means it is tax free until 2016. I dont know what will be the next policy of out govt but until then, i am happy [​IMG]. Btw I do pay taxes for other things.
  7. garygoh

    garygoh New Member

    genius: In our country, online earning is tax holiday which means it is tax free until 2016.
    By the way, which country are you from? It's so kind of your government policy.

    I would think if your income reaches taxable threshold, it would be a good idea to register your business, so that more expenses (business related) can be deducted from your taxable income and hence lower tax payable.

    I suppose the above can be applied in most of the country.

    This is an interesting question, hope to learn more about the tax treatment from other countries. [​IMG]
  8. Michele Pittman

    Michele Pittman New Member

    Wow Genius...I want to move to your country! LOL....I've been concerned about this too, but my earnings are so minimal right now. I do have a healthy fear of the IRS though so I'll be paying those taxes![​IMG]
  9. mommybeth2007

    mommybeth2007 New Member

    That's a very healthy fear to have. I'm with you on the minimal earnings part (for now), but I've been sticking away what the taxes would be in savings, just in case I do reach that taxable level. I figure that is kind of the goal of working online, so I'm planning as if it IS going to happen. Of course, if I start making any real money online, I'll probably go see a CPA to figure out how to do quarterly tax estimates and avoid any penalties for underpayment.
  10. joanpeterson

    joanpeterson New Member

    I would always advise everyone to pay taxes on their online earnings unless your government says you do NOT have to. Why play with the taxman? It won't be a pleasant encounter if they find you have evaded your taxes on online income.

    In Canada, some EBay sellers will be seeing the taxman and hit with massive penalties if they have not declared their income. The taxman wants all the records from EBay on those that were powersellers. If you were a powerseller and Canadian - you must pay the taxman now who face criminal charges and fines.

    No one likes to pay taxes but they are what provides funds to our governments and services. So my advice is pay your taxes on all income earned, regardless of how or where it is earned.
    drknlvly6781 likes this.
  11. pcwork

    pcwork New Member

    samueldarwin: 1) Yes for checks we need PAN. But if it is online transaction like paypal withdrawal is it necessary.
    2) Consider this condition: I get a google Check for more than INR 50K. But to make that 50K I have spent 30K on advertising. How can I pay tax now. How will I show my expenses.
    3) If I sell a service or product, how is the tax system in India calculated.
    Contact a good CA or tax consultant, if you have a lot of business expenses, you can reduce your taxes significantly.
  12. Ann Williams

    Ann Williams New Member

    I been paying taxes for online earnings since 2003. It has given me a lot of tax deductions, which especially for advertising costs.
  13. TyBrown

    TyBrown New Member

    I pay my taxes of course.
  14. TwrPowerTeam

    TwrPowerTeam New Member

    The best way to do all this is to set up a business for all your online earning.

    That way you can Write off, a percentage of your off exspenses for having a home based business. Dedicate a room for it and you can write off your computer, ink, paper, advertising costs etc.

    You can ever Write off a % of your home utilities as well.

    Home Based business are the best for that.
  15. Jim Gillum

    Jim Gillum New Member

    I know this is an old thread but I can't resist......

    Do you think that the IRS, here in the US, is monitoring forums to find anyone dumb enough to admit that they are not paying taxes????[​IMG]
  16. weebitty

    weebitty Member

    I think Big Brother is everywhere. They monitor the web looking for pedifiles and terriorist etc. What do you think??? I wouldn't put it past them[​IMG]
  17. Judi and Mark

    Judi and Mark New Member

    We keep detailed receipts for all expenses and gross income> At the end of the year we have our "pit bull" tax man, who knows tax law, both federal and state, like the "back of his hand" submit our completed tax returns as a LLC flow through entity with every known legal write off available. It's just not worth trying do do anything "sleazy"with the IRS that could draw an audit. You don't want that, trust me!
  18. TJamMoneyMan

    TJamMoneyMan Well-Known Member

    Someone told me that for the first year, businesses - brick and mortar types, don't have to pay sales taxes in Philadelphia, PA.

    He told me he charged his customers that sales tax though!

    Philly has an 8% sales tax right now.

    Anyone living somewhere where this is the case?
  19. TJamMoneyMan

    TJamMoneyMan Well-Known Member

    SALES tax yes, that's what I was told.

    In Philadelphia PA, there is apparently a fee for setting up a blog!

    From this link :
    For the past three years, Marilyn Bess has operated MS Philly Organic, a small, low-traffic blog that features occasional posts about green living, out of her Manayunk home. Between her blog and infrequent contributions to, over the last few years she says she's made about $50. To Bess, her website is a hobby. To the city of Philadelphia, it's a potential moneymaker, and the city wants its cut.

    In May, the city sent Bess a letter demanding that she pay for a business privilege license ??” which cost $50 per year or $300 per lifetime...

    ...The city says that it is not targeting bloggers; rather, anyone who reported business income to the IRS, from a blog or freelance writing or anything else, should have received the same form letter as Bess.

    The notion that even the smallest of businesses is supposed to fork over money ??” potentially more than they earned ??” for a privilege license has generated some controversy. In June, City Council members Bill Green and Maria Qui?±ones-S??nchez unveiled a proposal to reform the city's business privilege tax in an effort to make Philly a more attractive place for small businesses. If their bill passes, bloggers will still have to get a privilege license if their sites are designed to make money, but they would no longer have to pay taxes on their first $100,000 in profit. (If bloggers don't want to fork over $300 for a lifetime license, Green suggests they take the city's $50-a-year plan.) __________________________________

    Councilman BILL GREEN here was recently fired for a host of typical political financial/sexual/abuse of power scandals, but I digress.

    At least here you see they are trying to setup a 'no tax time period' if nothing else.
  20. John_Moore

    John_Moore Member

    For me it's more a question about what the tax money goes to.. If I lived in a country where our "collective money" went to helpin those who needed it most, I would love to pay my part.. But when the money goes to irrelevant things, when the money goes to the people who already have the most amount of money.. Then i'm not going to participate any more

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