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?
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.
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