First of all, I'm not knowledgeable in this area. My question is would charging money for my game be legal? (Of course it would have to be your own creation.) In the U.S. there's taxes which are automatically deducted from your pay check and selling Lemonade on a street is illegal without a business license. So would I need business license to make money from my game legally? Or is it handled more so like casually giving someone money?
-Thanks
ID:181093
 Aug 20 2011, 1:50 pm
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Albro1 wrote:
Gaining income from services such as PayPal are perfectly legal. I myself do not have a PayPal, but if any taxes are required(I do not think there are), they would be taken during the transfer. Thanks for the info. I suppose a business license only comes into play when there's physical items being sold. Is there a particular reason you don't use Paypal Albro? | |
No business license required, unless you're going to be out on a street selling it.
Assuming you're in the U.S.: your state may or may not expect you to try to collect sales tax for purely electronic sales over the internet; most don't, and any that do aren't going to be terribly interested in pursuing a young person selling access to stuff in a game on a hobby site. The money you make from the game is income, though, and income is taxable. Buuuuuuuut if you're not already filing income taxes for other reasons and your game makes the sort of money a typical BYOND game can expect to make you can probably get away with calling it a hobby. Despite what the poster below said, don't count on PayPal to know or deduct applicable taxes to your situation. The most they'll do is report your income to the IRS if it meets there "Hey, we're talking serious money here" threshold (don't ask me what that is, they don't publicize their criteria)... it's your responsibility to include that income when filing your tax return, and to settle up what you owe on it. If you find yourself making so much money that any of this might be an issue, use some of it to seek a professional opinion about your tax obligations. | |
Why can't we go back to a system where the only real taxes are Sales Tax and Property Tax, neither of which these Silver Spoon bastards can loophole around like they do with other BS taxes. Maybe we wouldn't need 45 thousand made up taxing excuses if the US government wasn't full of rich idiots.
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"Silver spoon bastards" and "rich idiots" would love you for suggesting this. You're basically arguing for their dream come true: a world where they can avoid taxes completely, and everything is paid for by the little people who can afford it the least.
The phrase "silver spoon" is a shortening of the saying "born with a silver spoon in [their] mouth"... think about it, if sales tax is the only tax that means the people born with "silver spoons" get them for free and people who work hard and buy "silver spoons" are taxed. Is that really fair, or what you want? To put it another way: if you inherit your house, if you inherit your furniture and your jewelry, if your family has enough possessions that you never have to buy anything, and another family starts out with nothing and has to buy everything from the ground up, which one of them is going to pay more sales tax... the one with everything or the one with nothing? Sales tax are effectively an income tax on the portion of your income that you are forced to spend locally. If you're living paycheck to paycheck, then basically 100% of your money will be subject to sales tax. If you're making so much money that 90% of it gets socked away somewhere, and you can afford to order things from overseas or travel on shopping trips then you're only paying taxes on the dollar you spend buying a candy bar on an impulse when you decide to stop in a convenience store to see how "the other half lives". The rich don't need anyone to write loopholes if their money only gets taxed when they spend it. They just have to make sure they do their spending outside the jurisdiction with the authority to tax them. | |
Albro1 wrote:
Gaining income from services such as PayPal are perfectly legal. I myself do not have a PayPal, but if any taxes are required(I do not think there are), they would be taken during the transfer. You must pay income tax if you are earning above the tax-free threshold in the US. Paypal does not do this for you. | |
AlexandraErin wrote:
"Silver spoon bastards" and "rich idiots" would love you for suggesting this. You're basically arguing for their dream come true: a world where they can avoid taxes completely, and everything is paid for by the little people who can afford it the least. Eh no, the reason these should be the only two taxes is because they are unavoidable, no matter your class ranking or such. If you buy a Ferrari, you're still going to have to pay the tax that comes with buying anything(Unless it was purchased from another non-commercial owner). The phrase "silver spoon" is a shortening of the saying "born with a silver spoon in [their] mouth"... think about it, if sales tax is the only tax that means the people born with "silver spoons" get them for free and people who work hard and buy "silver spoons" are taxed. Is that really fair, or what you want? Eh, only very rare occasions does anyone get anything "free" and even then someone had to pay for that "free" item before it can be passed into your hands. The lower class are paying the tax for themselves, and the upper class are paying for themselves. No one is carrying the other. To put it another way: if you inherit your house, if you inherit your furniture and your jewelry, if your family has enough possessions that you never have to buy anything, and another family starts out with nothing and has to buy everything from the ground up, which one of them is going to pay more sales tax... the one with everything or the one with nothing? What's the point of having money if you're not going to spend it? If someone doesn't want to buy anything and just keep his money to himself, well then it's pretty much become no more valuable than random scraps of paper with pretty pictured on them. If you were born to a poor life but you want to spend your money to enrich your life, that's your god given right. Sales tax are effectively an income tax on the portion of your income that you are forced to spend locally. If you're living paycheck to paycheck, then basically 100% of your money will be subject to sales tax. If you're making so much money that 90% of it gets socked away somewhere, and you can afford to order things from overseas or travel on shopping trips then you're only paying taxes on the dollar you spend buying a candy bar on an impulse when you decide to stop in a convenience store to see how "the other half lives". That's the thing, if you're buying something in this country, IT'S BEING TAXED. If you're buying something from another country, IT'S BEING TAXED FROM THE PORT TO THE STORE AND FINALLY TO YOU. I'm just saying that if our retarded government would stop making up taxes to line their own pockets, we wouldn't be $14 Trillion+ in dept to the very communists we were trying to kill 40 years ago. Actually on the topic of the National Dept that our fantastic government has put us in. I say we just tell China to(And I quote) "Fuck off". If they want they're money back, come take it back, I promise that they'll fail harder than Hitlers invasion of Soviet Russia :). In the end we'll just carpet bomb the whole damn place and reduce China from being a World Power to being a World Piss Bucket, not that it already isn't. | |
The 1992 US Supreme Court decision, Quill v. North Dakota, determined a transaction is not subject to sales tax unless the seller has what is called a nexus in the taxing jurisdiction. Nexus is a complicated topic, but it roughly means a significant physical presence. In other words, you could not be liable for sales tax anywhere, as your business would not have any physical presence (as a disclaimer, I am not a tax professional and this should not be construed as tax advice).
As for income tax, as others have noted, your profit from the game is indeed income. You should file that under Schedule C of your tax return. All income is to be reported, but you should also deduct all expenses, which would be anything that you pay to other people on the project. Of course, that means those other people must also report this pay as income, but that's their problem, not yours. As has been noted, you do not need to do this if you are not required to file a tax return (because, most likely, your income is too low). If the foregoing is mysterious to you, either tax software such as TurboTax can do it for you, or ask for help. Note that although your game income is considered business income for tax purposes, as others have commented, you are not required to have a business license. | |
...you've really got no idea how any of this works, so I'm going to quietly back out of the conversation. The very idea that income tax caused the deficit and that repealing income taxes would solve it should have tipped me off there.
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Earning income from a game is perfectly legal. It has been done for years, and no intervention has occured unless the game has violated the copyright of any company's IP(Intellectual property).