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  1. #1
    SitePoint Zealot Digital Portrait's Avatar
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    Tax on paypal income?

    I have a question, I am pretty naive about this. Do we pay tax on any money we make through paypal? Or is it automatically deducted through their fees (I'm not sure how it would work)?

    Sorry to be ignorant, once again, I am sure this may be a silly question. How many percent is it usually?

    And if so, does it only apply to the money made after the transaction fees?

  2. #2
    SitePoint Wizard silver trophy Bleys's Avatar
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    You pay tax on all of your income. PayPal does not remove any taxes, so you are responsible for reporting of all that income yourself.

    You should speak to a tax advisor to get advice specific to your situation.
    Josh is a ghost
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  3. #3
    SitePoint Zealot Digital Portrait's Avatar
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    Thank you The only thing I am unsure of now, is that,

    Is the income after the transaction fees taxable or whatever the price is before paypal transaction fees?

  4. #4
    SitePoint Wizard gold trophysilver trophybronze trophy dc dalton's Avatar
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    Quote Originally Posted by Digital Portrait
    Thank you The only thing I am unsure of now, is that,

    Is the income after the transaction fees taxable or whatever the price is before paypal transaction fees?
    The Paypal fee is a business deduction ....... what's left afterwards id taxable as it is NET income

  5. #5
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    Yea, what dc dalton said!

  6. #6
    SitePoint Zealot Digital Portrait's Avatar
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    thank you How much percent of the net income should I leave aside to pay for taxes (this would be my first paying taxes).

  7. #7
    SitePoint Wizard silver trophy
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    It depends. If you make under a certain amount, you won't have to pay taxes at all (though you will probably be required to file). If you do have to pay, there are a million variables that determine how much.

    For instance, you can deduct legitimate business expenses, and thus could lower your taxable income (decreasing your taxes). You should talk to a tax professional about this.

    Even someone at a tax preparation service (i.e. H&R Block, J. Hewett) could help you better understand what you need to set aside.

  8. #8
    SitePoint Zealot Digital Portrait's Avatar
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    Thanks Beley, you're right, there's no way to determine just a set figure. I will probably have to talk to tax professional about this. Assuming it's not free, do you have any idea how much they charge usually?

  9. #9
    SitePoint Wizard silver trophy Bleys's Avatar
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    The woman who prepares my taxes charges between $200-300, I think. It's worth it, though, I give her all my info (earnings info, pay stubs, bank statements, reciepts, etc.) and she does all the grunt work and files for me -- error free.

    If you just want to talk to someone, but do your own taxes, it'll probably be less... but the market will be different depending on where you live, so it might not be exactly in the range I pay here. Also, big firms like H&R Block might charge less.
    Josh is a ghost
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  10. #10
    SitePoint Zealot Digital Portrait's Avatar
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    Quote Originally Posted by Bleys
    The woman who prepares my taxes charges between $200-300, I think. It's worth it, though, I give her all my info (earnings info, pay stubs, bank statements, reciepts, etc.) and she does all the grunt work and files for me -- error free.

    If you just want to talk to someone, but do your own taxes, it'll probably be less... but the market will be different depending on where you live, so it might not be exactly in the range I pay here. Also, big firms like H&R Block might charge less.
    thank you wow, yes, that is alot, but eventually I will have to do this!


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