Reporting RMAH Sales on Income Taxes

[spruzz]

I have been using the RMAH quite frequently and I was wondering how I can report this income when I file my taxes next year. How is this income reported on the return and how do we provide supporting documentation? Perhaps a screenshot of my completed auctions?

[Acemac]

Separate spreadsheet would also work just need to tell your tax guy how much came in from it. FYI be ready to pay dearly for this.... Hope your not making to much.


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[mxyzptlk]

I think the amount for self employed income was $400 or $600 (cant remember)... so basically if you do make sales above that amount you have to report it

I doubt blizzard will hand out 1099s since they dont have our ssn..

In the tax forms you just write the amount that you made.. Later on if the IRS asks for more info, you could ask Paypal to give you some statements

and set aside about 25-30% of your total sales to pay for taxes



EDIT: Btw this is just a suggestion and a general idea of how it is.. If you need more detailed info please seek a accountant/cpa

[Vanadin]

I think the amount for self employed income was $400 or $600 (cant remember)... so basically if you do make sales above that amount you have to report it

I doubt blizzard will hand out 1099s since they dont have our ssn..

In the tax forms you just write the amount that you made.. Later on if the IRS asks for more info, you could ask Paypal to give you some statements

and set aside about 25-30% of your total sales to pay for taxes

Don't forget the self-employment taxes. . . . OTOH, you can deduct business expenses (e.g., the cost of the game and any reasonable expense related to earning that money).

[darkrealm]

Has to be $600 or higher in monies to report on taxes.

[spruzz]

Does it have to be reported if it stays in the Battle.net balance? Is this different than cash since it can only be used for Blizzard transactions?

[edistotiger]

and set aside about 25-30% of your total sales to pay for taxes

Yes, this is very important to remember. Nothing is being withheld from your RMAH profits, so you are going to have to foot the entire bill come tax time.

I really expect to see some younger players running into trouble with this. Either by not reporting the income, or the realization that, rather than getting their accustomed tax refund, they actually owe hundreds of dollars and haven't set aside the money to pay it.

[mxyzptlk]

Does it have to be reported if it stays in the Battle.net balance? Is this different than cash since it can only be used for Blizzard transactions?

hmm tricky question, but i dont think so.. my opinion is that you don't have to report it until you withdraw the money to your paypal account for this reasons:

- even though u sell ur items in the year 2012, and you have lets say $1,000 in your blizzard balance, that money is still subjected to paypal's fee..
- the official statement that you are using is paypal's. when it comes to the IRS, its a tranasaction between you and paypal, not blizzard.. now that i think about it.. maybe paypal can send you a 1099? someone may have to check on that..

btw. I work in finance, and although i do have some basic knowledge, i'm not a accountant or specialist in this kind of stuff

gl~!!