How earnings are reported to tax authorities?

[melastmohican]

Money earned in given tax year or money paid in this period of time? Some money might never be paid because contributor will not reach payout limit. Is is counted as income?

[m@m]

Some money might never be paid because contributor will not reach payout limit. Is is counted as income?

I would think so, you earn that money and I guess it's no ones fault that the agency suck, and the contributor got tired of waiting for a payout...unfortunately that's what happens when we support flight by night or low earning agencies, regardless UNCLE SAM WANT HIS CUT
(then again I could be wrong, if anyone know about taxes please correct me)

[cthoman]

Money earned in given tax year or money paid in this period of time? Some money might never be paid because contributor will not reach payout limit. Is is counted as income?

Typically on the 1099's you receive, it is money paid out. So my payout for December that I will probably request on Jan 1st will be on next year's taxes and last year's December will be on this year's taxes.

[madelaide]

Rules in Brazil require us to report income received, and that's what I report. But I don't know if somewhere deep in some small print they require us to report presumed income. It isn't for sure like that for salary, but it is for some of the payments when you have shares from a company.  In this case, the company may declare "profits to be paid in 2011" and it counts as a 2010 earnings that is actually a future credit, but in the end you will only pay taxes for them in 2011.  I don't know why they make it so complicate, but...

[michaeldb]

Money earned in given tax year or money paid in this period of time? Some money might never be paid because contributor will not reach payout limit. Is is counted as income?

Typically on the 1099's you receive, it is money paid out. So my payout for December that I will probably request on Jan 1st will be on next year's taxes and last year's December will be on this year's taxes.

I believe this is correct. US people at least (I don't know about other countries) would be taxed on the money when it is paid to them. If it is never paid to them, then they never owe taxes on it.

The part about December is correct. if you defer asking for your December, 2010 earnings until January, 2011, you would not have to pay taxes on them until April, 2012. Personally, I haven't been requesting payouts since October. However, some agencies have a limit on how much you can earn without requesting payment. I believe on SS that amount is $2000. I.e. if you have earned more than $2000 at payment time, SS will pay you whether you want it or not.

[lisafx]

Totally OT - Love your new avatar picture Mariusz!

[louoates]

Similarly, if the agency collects money in 2010 and does not pay out commissions on those sales until 2011 they can't claim that commission as an expense in 2010 and thus must pay more in taxes for 2010.

[melastmohican]

Totally OT - Love your new avatar picture Mariusz!

I am just reading myself for being Santa on Christmas Eve for my 29-month old daughter :-) Still I think i need glasses because I feel she might recognize me.