Agency Based Discussion > Envato
Another Envato Tax question....
Gel-O Shooter:
--- Quote from: sgoodwin4813 on March 28, 2017, 21:15 ---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.
--- End quote ---
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".
sgoodwin4813:
--- Quote from: Gel-O Shooter on March 29, 2017, 09:32 ---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".
--- End quote ---
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:
--- Quote from: Gel-O Shooter on March 29, 2017, 09:32 ---
--- Quote from: sgoodwin4813 on March 28, 2017, 21:15 ---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.
--- End quote ---
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".
--- End quote ---
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.
sgoodwin4813:
--- Quote from: SpaceStockFootage on March 29, 2017, 11:23 ---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.
--- End quote ---
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:
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.
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