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Report earnings and pay taxes or not?

kurt
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Report earnings and pay taxes or not?

Two part question:
1. I've heard that a lot of affiliate marketers don't report their earnings so that they don't have pay taxes on it. Just wonder how they get around paying taxes like that? I mean, you can give fake names and information about yourself online so you don't leave a paper trail sort of speak, but when it comes to getting paid I would think you would have to give them (Clickbank or whatever) your real information. If your earnings go to a bank account, you would have had to show some idea when you created that bank account. So how do affiliate marketers get by without paying taxes?

2. Is neglecting to report earnings and pay taxes a smart or stupid thing to do? I'm just checking out my options. I'm sure the Affilorama staff will be here soon to discourage this. That's understandable, they are a business so i don't think they would recommend anything that is considered illegal. But, for the rest of you, what's your opinion?

Thanks
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chidi11
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Another one trying to. Beat the taxman. See you in jail. for the rest pay your tax
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swordsedge89
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chidi11 wrote:Another one trying to. Beat the taxman. See you in jail. for the rest pay your tax


There is a difference between paying less taxes legally, but on the other hand trying to get away with it. If you got a good accountant, In New Zealand, we get GST returns if the business is running in loss. It is same with paying taxes if your income is not enough to support you. I don't recommend beating the tax man because we need to pay taxes to keep the country going healthy. But some rich people somehow get away with the help of their accountants, and sending through donations etc. but they do it legally and a very very solid bullet proof accounting practice which the tax man cannot break it through.

In conclusion you cannot escape the tax man, but you can win him through loop holes and end up paying less. We need to pay taxes though to keep our country going strong. I would recommend please pay the taxes, like chidi11 said to avoid going to jail :)
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jonathan_l
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Hello Kurt,

As you expected, we strongly discourage 'dodging the taxman', primarily because it's illegal :)

As a rule, affiliate marketing income, like most alternative income sources (ie anything that doesn't pay a wage/salary directly) needs to be declared explicitly to the IRS/IRD/local tax body.

If you don't declare it, you may get away with not paying tax for several years. However if you get audited [which can happen randomly] you *will* be caught out - the taxman does not like losing his dollar :).

Sometimes it doesn't even need to be a random audit on your own records - if someone who does business with you gets audited [e.g. a customer, merchant, etc], and anything leads back to you, the taxman may just audit your records as a matter of course... so dodge taxes at your peril!

Remember: Al Capone never got busted for the many (many) crimes he committed... until the IRS took him down for tax evasion!

Just my two cents :) [sorry, 1 cent, the taxman took the other one]
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kurt
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Would they send you to jail, or would they just fine you? And if they'd just fine you, how much would they fine you? Who knows, maybe it's worth the risk.
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swordsedge89
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kurt wrote:Would they send you to jail, or would they just fine you? And if they'd just fine you, how much would they fine you? Who knows, maybe it's worth the risk.


I would say clear that poisonous and venomous idea "to cheat the government and get away with" form your head. Find who planted that idea in your head and give him a beating. It is the stupidest thing I have ever heard, next to jumping off a cliff :(.

There are millions of way to increase your income and be happy and peaceful and fulfilled doing that :)

Good Luck :)
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chidi11
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I,m guessing you are not serious after all the above advise you come back with a silly question like that. For the rest of you take note what swordseger and jonathon said. Pay a account to show you loopholes. But pay your tax. Not sure what powers the taxman has in other countries but in uk they have more power then the police. Me personally do not like the. Idea of spending time in jail for trying to cheat the system. One last thing everybody who trys to beat the system thinks they are smart(you may be) but only takes saying something to a bitter Ex or wrong person and one phoe call later you are toast. So for the rest if you remember you are only as strong as your weakest link
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kurt
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I don't think it's a silly question at all. Like I said, I'm just checking out my options. You guys might be right, it might not be a good idea. But, since I don't know for sure, I have to ask.
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chidi11
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You dont know its wrong not to pay your tax. Ok. And then you start asking people on a forum should I pay my tax or not. Ok. If you do not want to pay your tax thats up to you. But dont expect people on here to give you ideas on how to do it. There are no options you earn money you pay tax.
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kurt
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When I said “you guys might be right, it might not be a good idea” I was talking about the risk aspect of not paying taxes, not as to whether it is right or wrong. That's another matter. Does everyone agree that we should have to pay as much taxes as we do? Probably not. Does everyone agree that the government should spend income tax on all of the things that it does? Probably not. So, who's to say whether it's right or wrong. I'm sure there's varied opinions on that. Obviously, you think it's wrong. Your opinion is noted. Thanks.

I'm just curious how people are getting around it. Even if I don't ever try it myself, it would still be nice to know how they're doing it and how big the risk is. I don't expect anyone to give me ideas on how to do it on this forum. I don't have any expectations. But, if someone does knows and they'd like to share then I welcome them to it. :)
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jonathan_l
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Kurt,

With regards to the "fine":

If you are audited and owe tax, then several things can happen:
- If it's determined the tax omission was accidental (e.g. paying a certain income tax rate, only to get a new payrate which puts you in a different tax bracket halfway through the year), you will usually just be required to pay the outstanding tax, plus interest

- If you are notified you have tax to pay but still wilfully withhold tax, or if you file your tax details late, you will usually be charged an extra penalty interest and/or be hit with a penalty fine. Interest can be in excess of 20%, so I'd consider this a *really* expensive loan.

- If you are determined to have wilfully evaded tax or otherwise committed tax fraud the IRS can (and probably will):
-- Actively claim any assets related to the tax fraud
-- Jail you


As the others have said, you can try to find legal loopholes to minimize the tax you pay. But if there was one thing I learned when I did accounting and commerce, it was never, ever, try to mess with the tax man. Ever. Seriously, don't even bother.
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chidi11
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Thanks jonathan for your reply. I found the whole artice strange. Did kurt think he would post a article on here and then people on here are going to show him how to cheat the system(does not matter how you try and word it) I dont like paying tax you dont like paying tax nobody likes paying tax but if you dont want to pay keep it to yourself and DO not expect people on here to show you how.
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cecille.l
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I'm just curious how people are getting around it. Even if I don't ever try it myself, it would still be nice to know how they're doing it and how big the risk is. I don't expect anyone to give me ideas on how to do it on this forum. I don't have any expectations. But, if someone does knows and they'd like to share then I welcome them to it. :)


I'm sorry Kurt. I'm afraid there's not a lot here who can answer your question. We do not recommend that, and I do not think any affiliate marketer would respond to your inquiry and show you exactly how he can *not* pay taxes. I understand that you are wondering how this is possible, how some can do this. I think it's best if you focus on researching on current tax laws on your area, and how it applies to you as a marketer.

Hope that helps. Have a good day!
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Cecille


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tankctrlr
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I got around it (somewhat) by moving from California to Idaho. (Vote with your feet.)

Also I will vote for candidates that are for smaller Government, lower taxes and fiscal responsibility here in the U.S.

Until that happens we have to pay up.

"If you have been voting for politicians who promise to give you goodies at someone else’s expense, then you have no right to complain when they take your money and give it to someone else, including themselves." - Thomas Sowell
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rmsabo
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Here's one thing that can happen if you don't pay all your taxes. I have a regular job and I own farmland which I rent out. The money I received from both all gets reported and I pay my taxes every year.
There was a time, however, when I was deep, DEEP in debt and went through debt settlement. My last settlement was for $5000 less than my total debt (I owed $10,000, paid the company $5000 and they said "You're debt free now. We're good."
That $5000 I didn't pay is taxable, however, I didn't pay it.
2 years later, I got a letter from the IRS saying, "Hey! You owe us $1500 in taxes for that $5000 settlement. Pay us or if you disagree with this, blah blah blah..."
I paid up straight away.
2 years after that, I got a letter from the state of Minnesota (where I live) saying, "Hey! You owe us $500 in taxes for that $5000 settlement. Pay us or if you disagree with this, blah blah blah..."
Once again, I paid up straight away.
The takeaway point of this is, if you don't pay your taxes (and you live in the USA) and you get caught, the scenario above is the very LEAST that will happen. You'll get a letter saying: Pay your taxes now, KTHX!
And it can happen 2 years and even 4 years down the road, I'm sure even longer.
I'd hate to imagine what would happen if that was something I had decided to turn into a yearly habit!
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