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According to the IRS you are a private contractor employed by Google

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Re: According to the IRS you are a private contractor employed by Google

#11

Post by grandalf »

Most of this kind of things probably slips under the IRS's radar. Similarly, when's the last time anyone here declared the value of gifts they received as income?

The problem with this sort of thing (and the new 1099 rules) are that they criminalize a large swath of the population. Sure, the violations are minor, but the fact is if you break the rules you are guilty of a crime.

The problem with this is that if we're all already guilty then it gives enforcement officials too much power over us.

Re: According to the IRS you are a private contractor employed by Google

#12

Post by tomjen3 »

larsberg wrote: post #2

It wasn't entirely clear from this article, but it looks like he was paying normal income tax on the money coming in, but failed to pay self-employment taxes. I have talked to more than a few iPhone developers whom this happened to as well -- forgetting about that extra 15.3% can really hurt. But, did he remember to track and deduct all of his expenses? The flipside to that income is that the server costs are all ded…

I don't understand the US tax system, but are you supposed to pay more money when you don't have a job than when you do have a job?

Re: According to the IRS you are a private contractor employed by Google

#13

Post by mikecane »

My question is this: What about Amazon and other affiliate links? And why do I see the spectre of IRS declaring free services as some kind of "in-kind" taxable thing, liable to a "use tax" or somesuch? I think this can all snowball pretty quickly given how hard up budgets are on all levels of government.

Re: According to the IRS you are a private contractor employed by Google

#14

Post by DanI-S »

I moved to the US last year and work a regular full-time job. I haven't had to file taxes before, since I only started work in May. I'm about to launch my first 'weekend project' to potentially involve some advertising and Amazon-affiliate revenue. I'm not really clear on what I should be doing and what is necessary with regards to tax, registering as a business, etc.

Can anybody recommend any good resources for information to help me avoid situations like this chap has got himself into?

Re: According to the IRS you are a private contractor employed by Google

#15

Post by cullenking »

cullenking wrote: post #9

Where is that camz guy that was offering free tax advice for startups a couple weeks back? He may be the person to quickly consult, at least as far as what the next step is: http://news.ycombinator.com/item?id=1837299

I just sent him an email with this post, hopefully he'll have ten minutes to add some wisdom to the conversation.

Re: According to the IRS you are a private contractor employed by Google

#16

Post by 100k »

tomjen3 wrote: post #12
larsberg wrote: post #2

It wasn't entirely clear from this article, but it looks like he was paying normal income tax on the money coming in, but failed to pay self-employment taxes. I have talked to more than a few iPhone developers whom this happened to as well -- forgetting about that extra 15.3% can really hurt. But, did he remember to track and deduct all of his expenses? The flipside to that income is that the server costs are all ded…

I don't understand the US tax system, but are you supposed to pay more money when you don't have a job than when you do have a job?

Theoretically, your employer pays half the employment taxes and you pay the other half. When you are self-employed you must pay all of them. Of course, this simply equates to W2 employees being paid less income.

Re: According to the IRS you are a private contractor employed by Google

#17

Post by ScottBurson »

DanI-S wrote: post #14

I moved to the US last year and work a regular full-time job. I haven't had to file taxes before, since I only started work in May. I'm about to launch my first 'weekend project' to potentially involve some advertising and Amazon-affiliate revenue. I'm not really clear on what I should be doing and what is necessary with regards to tax, registering as a business, etc. Can anybody recommend any good resources for info…

Try Nolo Press: http://www.nolo.com

They have a lot of good, basic information explained well.

Re: According to the IRS you are a private contractor employed by Google

#18

Post by enjo »

DanielBMarkham wrote: post #10

I'm always amazed, when the-tax-system-sucks posts come up on HN, how quickly most commenters are to trash the author and/or lecture the complainer on how wrong they are. There is a impedance mismatch at work in our system of governance that's not going away any time soon. The government makes laws by sticking people into little boxes and making rules for those boxes. This system of boxes and rules -- the tax code --…

You make 10K a year at a yard sell or selling pot, you owe the IRS money on that income. Just because you're less likely to get caught doesn't make it any less illegal.

Probably the closest "real world" example would be a flea market. Those large flea markets are the google, and the vendors are the independent folks putting ads on their sites. You sell $10k worth of goods at a flea market, you bet your ass that market will have the mechanisms in place to ensure that the IRS knows.

It's the same thing here.

Re: According to the IRS you are a private contractor employed by Google

#19

Post by pinksoda »

You can get a free consultation from just about any tax professional. They would have noticed your mistake within a few minutes of talking to you.

The IRS usually takes 3 years to find a mistake like yours. It sounds like you've been filing wrong since 2005. The penalties suck but you got to keep that extra 15% for a really long time.

Most importantly, you have a really long time(6-12 months) from your initial notice from the IRS, before they start trying to collect. You couldn't pay right now even if you had the money, that was my experience anyways. I received a different letter from them, months later, and was finally able to pay.

Everyone knows you don't mess with the IRS. I don't get how you did this wrong for 6 years, never researched it, asked someone, or talked to an accountant. My gut tells me you probably knew what you were doing.

Re: According to the IRS you are a private contractor employed by Google

#20

Post by pinksoda »

enjo wrote: post #18
DanielBMarkham wrote: post #10

I'm always amazed, when the-tax-system-sucks posts come up on HN, how quickly most commenters are to trash the author and/or lecture the complainer on how wrong they are. There is a impedance mismatch at work in our system of governance that's not going away any time soon. The government makes laws by sticking people into little boxes and making rules for those boxes. This system of boxes and rules -- the tax code --…

You make 10K a year at a yard sell or selling pot, you owe the IRS money on that income. Just because you're less likely to get caught doesn't make it any less illegal. Probably the closest "real world" example would be a flea market. Those large flea markets are the google, and the vendors are the independent folks putting ads on their sites. You sell $10k worth of goods at a flea market, you bet your ass that marke…

There was a guy who got caught selling a lot of marijuana and didn't get in much trouble because he was paying taxes on it since day 1.
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