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Author Topic: Another Envato Tax question....  (Read 8400 times)

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« on: March 28, 2017, 09:20 »
+2
Doing my 2016 taxes. :(  I got a 10-99 from Envato saying I made $16 in royalties.  I cancelled my account before I ever got a payoff just to avoid tax problems.  So do I really have to pay taxes on $16 that I never received and never will, which was in effect, a gift to them?  >:(


Chichikov

« Reply #1 on: March 28, 2017, 10:10 »
+3
Denounce them to the tax office for fraud!
« Last Edit: March 28, 2017, 11:38 by Chichikov »

Noedelhap

  • www.colincramm.com

« Reply #2 on: March 28, 2017, 11:21 »
+1
Doing my 2016 taxes. :(  I got a 10-99 from Envato saying I made $16 in royalties.  I cancelled my account before I ever got a payoff just to avoid tax problems.  So do I really have to pay taxes on $16 that I never received and never will, which was in effect, a gift to them?  >:(

You did earn it, just because they hold onto it doesn't mean it's not your money. So yes, that $16 belongs to your taxable income.

Although I pay income tax on sales revenue after it appears in my bank account, because with some agencies it's impossible to track the actual transaction date.
Not sure if that's the correct way to do it, but it prevents me from paying "virtual" taxes.
« Last Edit: March 28, 2017, 11:26 by Noedelhap »

« Reply #3 on: March 28, 2017, 14:33 »
+3
Denounce them to the tax office for fraud!

I think I will. 

My love note to Envato:

"You sent me 10-99 saying that you paid me $16.00 in 2016.  That is not true.  I closed my account before I was ever paid anything by you.  Since you kept $16.00, which I'm sure you didn't pay taxes on (since you shifted the tax burden to me), that would probably be considered tax evasion on your part under US law.
So you can either pay me the $16 or I will be reporting you to the IRS for US tax evasion.
Your choice"

To anyone from Envato reading this:  I'm not kidding, I've already downloaded the form from IRS.gov.
« Last Edit: March 28, 2017, 14:46 by Gel-O Shooter »

« Reply #4 on: March 28, 2017, 21:15 »
0
Envato and FT both provide the amount earned during a calendar year to the IRS, regardless of whether it was paid (like all the other agencies do).  Very annoying.  For Envato that is the total sales price not the amount you earned - you need to deduct their seller fees off as a cost.

Since they reported the amount to the IRS I would include it in your income just to avoid any possible hassles.  However, once you deduct off the 60% or whatever it is they keep it isn't going to add a lot to your taxes.

« Reply #5 on: March 29, 2017, 09:32 »
+1
Envato and FT both provide the amount earned during a calendar year to the IRS, regardless of whether it was paid (like all the other agencies do).  Very annoying.  For Envato that is the total sales price not the amount you earned - you need to deduct their seller fees off as a cost.

Since they reported the amount to the IRS I would include it in your income just to avoid any possible hassles.  However, once you deduct off the 60% or whatever it is they keep it isn't going to add a lot to your taxes.

I knew they were going to keep my earnings when they closed my account.  My problem is that they  are trying to make me pay taxes on THEIR income.
I know that neither the IRS nor Envato is going to be concerned with my little $16.  But I'm sure they do this to everyone who closes their accounts and that could add up to thousands.  The IRS might be interested in that scenario. 
Am I missing something here?  I always thought that if you send a 10-99 to the IRS with a total amount on it that you were saying in effect "I paid this person X amount of money and they are responsible for tax on it". 

« Reply #6 on: March 29, 2017, 09:46 »
0
I always thought that if you send a 10-99 to the IRS with a total amount on it that you were saying in effect "I paid this person X amount of money and they are responsible for tax on it".

I think that's exactly what they are saying, and they really need to pay you the money.  I suppose you could report them as lying to the IRS - not sure if they would do anything, but if anyone else is in this situation and they report them as well then maybe the IRS would take notice.  It would be interesting to get them in trouble with the IRS, especially since they fired most of us.  I have had to pay tax because of them as well even though they haven't paid me the money, which I assume is coming this year once they terminate my account.  However, if they don't pay me then I will report them myself!

SpaceStockFootage

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« Reply #7 on: March 29, 2017, 11:23 »
0
Envato and FT both provide the amount earned during a calendar year to the IRS, regardless of whether it was paid (like all the other agencies do).  Very annoying.  For Envato that is the total sales price not the amount you earned - you need to deduct their seller fees off as a cost.

Since they reported the amount to the IRS I would include it in your income just to avoid any possible hassles.  However, once you deduct off the 60% or whatever it is they keep it isn't going to add a lot to your taxes.

I knew they were going to keep my earnings when they closed my account.  My problem is that they  are trying to make me pay taxes on THEIR income.
I know that neither the IRS nor Envato is going to be concerned with my little $16.  But I'm sure they do this to everyone who closes their accounts and that could add up to thousands.  The IRS might be interested in that scenario. 
Am I missing something here?  I always thought that if you send a 10-99 to the IRS with a total amount on it that you were saying in effect "I paid this person X amount of money and they are responsible for tax on it".

It's a valid point... but I'm assuming it's also a bit of a gray area. I can understand your point, as your example is more clear cut, there's a reason why you haven't been paid the money... but, if earnings were only reported at the point of withdrawal, then somebody earning tens of thousands of dollars a year, could just choose not to withdraw it and then not have to pay any taxes... as nothing would have been reported. And just for withdrawals in general... the earnings might be reported in the wrong tax year if it's at the point of withdrawal, rather than the point of sale... especially if there's a $100 minimum withdrawal and somebody makes less than that per month. 

« Reply #8 on: March 29, 2017, 22:01 »
0
but, if earnings were only reported at the point of withdrawal, then somebody earning tens of thousands of dollars a year, could just choose not to withdraw it and then not have to pay any taxes... as nothing would have been reported. 

Yes, that is correct - they would not pay any taxes because they haven't received any income.  If they want to spend the money they will have to withdraw it and pay their taxes.  I prefer to pay taxes only on money that was withdrawn, as it isn't really earned if it isn't in your pocket.  However, either way works as long as you know about it.  I try to request a payout around the middle of December every year to minimize the difference for those agencies that don't pay out automatically.

SpaceStockFootage

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« Reply #9 on: March 30, 2017, 04:59 »
0
Not sure if that would wash with the IRS. The money has been deposited in your Envato account (or any other stock account where you can decide when to withdraw), and you have the ability to withdraw that money whenever you want (although, once a month and over $50) so could it be classed as you not having been paid?

If a client pays $10,000 into my bank... could I avoid paying taxes on it if I don't withdraw that money or spend it? I think that would be a definite no... but there's not that much difference between having $10,000 in my bank and $10,000 in my Envato account. Yes, I can't set up direct debits, or transfer that money directly to other people, and I don't have an Envato ATM card or check book... but you get the point! It is still money that I have made, in an account under my name, which I have access to and can do with as I please, pretty much.

I really can't see the IRS buying that if it came down to it. I mean, none of the stock companies report income at the point of withdraw (unless I'm mistaken) so I'm assuming there's a reason for that. I'm sure they've looked into it.

I know this doesn't really apply to the OP and the money that couldn't be withdrawn under the $50 minimum rule, but I still think it's an important consideration.

« Reply #10 on: March 30, 2017, 07:53 »
0
I see what you're saying but there's a big difference between money in the account of a stock agency and your bank account.  Let's take DT for an example.  They don't pay out until you request it.  Usually I just let the money there accumulate and request a big payout once a year in December.  One year it took them a while to process the request and they didn't actually make the payout until January.  So I had zero income from them for the year before but had to report that money during the next year.  The IRS only knows what is reported on the 1099 so it makes no difference to them either way.  I'm not an accountant, but I assume companies have categories for money earned and not paid out, which probably complicates the books.  I assume that is why many agencies go to automatic payouts above a limit to minimize the amounts in limbo.  The money has been credited, but not earned for tax purposes until it has been paid, except at FT and Envato.  To be safe I go with the 1099 because that is what the IRS knows about.  It certainly is confusing though.

niktol

« Reply #11 on: March 30, 2017, 08:56 »
0
As far as I know (and if I understand it correctly), there is cash based accounting and accrual based accounting. Cash based accounting works with money received (on your bank account) and works better with small businesses and individuals. Accrual based accounting accounts for "work done and services performed" and should account for money that agencies owe you. This is what large corporations typically use. I don't know how it works in the US and with IRS, but I thought it was fairly universal.

That's probably why these unfortunate $16 dollars are on the books as "paid", at least for tax purposes. Just because noone "came to collect" does not change the accounting protocol.  It has nothing to do with "tax evasion", get serious.
« Last Edit: March 30, 2017, 09:11 by niktol »

« Reply #12 on: March 30, 2017, 09:32 »
0

The account was closed and that $16 went right back into Envato's bank account.  It is not in "my" account and I do not have access to it, nor did I ever have access to it.  So that is $16 in income to Envato that they have falsely claimed was paid to someone else and they evidently will not pay taxes on, since the tax bill was sent to me.
I think that failure to report all income and falsely claiming that it was paid to someone else is tax evasion.  And yes, I am serious.
We'll see what the IRS has to say about it.

niktol

« Reply #13 on: March 30, 2017, 09:43 »
0

The account was closed and that $16 went right back into Envato's bank account.  It is not in "my" account and I do not have access to it, nor did I ever have access to it.  So that is $16 in income to Envato that they have falsely claimed was paid to someone else and they evidently will not pay taxes on, since the tax bill was sent to me.
I think that failure to report all income and falsely claiming that it was paid to someone else is tax evasion.  And yes, I am serious.
We'll see what the IRS has to say about it.

I doubt it can be considered tax evasion. I think they are clean before IRS hence the 1099. Just because an account/balance wasn't paid does not make them tax evaders, otherwise millions of people who did not pay their balance on time would automatically become tax evaders because the companies may still have to report those balances as income. I doubt IRS cares about who owes who what, just as long as they get their cut. Evading taxes is not the same as shifting the burden to someone else, to you in this case. The income isn't unreported, it is reported as earned by you. Technically I think it's a matter of a small claims court, so if you wanna fight windmills, there is your destination.

But hey, prove me wrong, I don't mind at all.
« Last Edit: March 30, 2017, 09:56 by niktol »

« Reply #14 on: March 30, 2017, 10:04 »
0
Denounce them for what?
They are probably doing this legally, they are not stupid.

But why make it so complicated????
A phone to the IRS can quickly give you the right answer.
Yeah, a phone call.

Believe it or not, the IRS folks are really nice on the phone, and you could explain the situation and I'm sure they can transfer you to the right deparment.


Denounce them to the tax office for fraud!

niktol

« Reply #15 on: March 30, 2017, 10:13 »
0
why not simply resolve it with the company? the balance is on the books, write them a letter asking to send you a check? 

« Reply #16 on: March 30, 2017, 10:45 »
+2
why not simply resolve it with the company? the balance is on the books, write them a letter asking to send you a check?

I did.  No answer.


 

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