Well, I am hosed. Personal payments were supposed to be excluded from the new IRS mafia paypal form, but they were included anyway and that made me go over some IRS threshold for 2012 where my info gets sent automatically. I called them and they said the IRS requires them to add up everything going into the account even though their website clearly states personal payments aren't supposed to be included.
I met with my tax person today and everything coming into my paypal account is basically treated like income and now I have a nightmare of having to calculate what I paid for everything spanning years, shipping receipts for all of 2012 and resales and then an assload of taxes to pay when I'm done. There is some hobby option I am going to attempt but it's unclear how much it will help. The value recycling system I set up in 2009 worked beautifully for 4 years and now has crashed and burned in a day because of the IRS strongarming of paypal. I'm not ever going to go through this again so as of now I can no longer accept paypal donations for boards, but feel free to send some now to help me pay the taxes involved in DU activities but I don't know how much they will be yet. I'm trying to sell off all the DU boards to help too along with some from my own collection but that can take forever.
The way the system worked was say I got $500 in a donation drive and bought a game and dumped it and resold it for $350. Then I dumped and resold that for $200, dumped and resold that for $100. That's now $1150 of "income" I have to account for in this crap when I never saw 1 penny of actual profit. When taxes weren't involved it was no problem. Now it's shit. That's an extreme example and what usually happens is they simply make things happen. If you look on the donations page and see names by games, most of the time those donations only paid for maybe 40-80% and available recycle funds covered the rest. Recycle funds have gone into virtually every game I've bought. That's one of the reasons it worked so well. Other times I just get stuck with the pcb in a box because nobody will pay anywhere near what it cost us or I bought something broken that nobody else would ever buy so we could dump the roms.
I can figure out another way to do drives in the future like having money sent to people in Japan or whatever but that is not my top priority at the moment obviously. People can buy boards and ship them to me to dump too if they want but I can't get donations for them or resell for recycle funds anymore and I can't keep up with donator names, amounts or credits anymore if the money doesn't come to me. If you can help me with this tax nightmare click below and I'll credit you on the boards I still have coming in. If for some reason there is any left over after the taxes are paid I'll buy undumped boards with it but there won't be and I couldn't resell them for recycle money. Thanks for your support over the past 4 years.
Thanks for help so far from: Tormod dfrance letoram krick N.Francfort gregf M. Ponweiser Rockman J. Walsh
Alas, I've had my own woes with the IRS. Credit card companies and banks loathe PayPal, so it was only a matter of time before they brought the IRS into it. I have a feeling that VISA gift cards are next on the IRS hit list, because to them any money that's untrackable is a problem.
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I have officially retired from sucking at everything I do. Life is much easier now.
If you treat the dumping project as a business, the purchase of the boards should be an expense counted against your "income". If there is legitimately zero profit involved then income - expenses = zero and you shouldn't be on the hook for any taxes. You'd just be on the hook to pay the CPA fee to do the paperwork at tax time.
> If you treat the dumping project as a business, the purchase of the boards should be > an expense counted against your "income". If there is legitimately zero profit > involved then income - expenses = zero and you shouldn't be on the hook for any > taxes. You'd just be on the hook to pay the CPA fee to do the paperwork at tax time.
What he said. The problem with that though is the boards. They could be considered an asset.
Otherwise you need to go through the hassle of setting up DU as a non-profit organization, similar to a museum.
If you look at the paypal account as a whole the expenses are not greater than income in 2012 because I don't use it just for DU stuff, I use it for totally unrelated stuff as well. It doesn't make any difference if donations were set as that (going into a business account) as far as paypal is concerned though, any account in my name (SSN) is simply combined and added up whatever was sent there and if the total is over the threshold it gets sent to the IRS as one number under my SSN, from what I can tell from reading their site. From what I've gathered I can't say X part of it was a business and the rest wasn't. It's not registered as a business and I'm not going to register it as a non-profit (would be too late to do it now anyway as far as these taxes are concerned) but if another member wants to go through all that and the yearly tax filing they can and of course the legal risks that might come up. You would still have to do the meticulous accounting work involved which frankly is not hobby work and I'm not willing to do it again.
> There is some hobby option I am > going to attempt but it's unclear how much it will help.
Yeah, I noticed about two or three years ago, they added a section for "hobby income" which you can offset by "hobby losses", though I don't know if there are any dollar limits on that.
I've been sticking income from google ads on my website in the "hobby income" box on my taxes to cover my ass just in case.
As other people have said, the bottom line is net "gain". If your outgoing is higher than your incoming, then you don't owe any taxes. The problem, as you point out, is that you probably need to come up with some sort of numbers for your tax guy and if you get audited, the IRS will probably want you to come up with receipts or something. Which could be a problem.
I know you said you don't want to do it, in case you change your mind, registering a business as a sole proprietorship isn't that hard. I did it in NJ about 10 years ago. I registered a business name (with the county, I think) and got a tax number from the state (which I think was my SSN plus some extra digits on the end or something). Then I opened a business checking account using that tax number. I think I eventually opened a paypal account using that tax number. Initially, I kept track of purchases (inventory) and sales on a spreadsheet, but later I got a copy of Quickbooks, since you don't really do any volume, you could probably stick to a spreadsheet. The biggest pain was quarterly sales tax payments on in-state sales. That sucked.
I just sent you some cash. Hopefully, it will help.
> > There is some hobby option I am > > going to attempt but it's unclear how much it will help. > > Yeah, I noticed about two or three years ago, they added a section for "hobby income" > which you can offset by "hobby losses", though I don't know if there are any dollar > limits on that.
I just found out today from my tax specialist that it exists.
> I've been sticking income from google ads on my website in the "hobby income" box on > my taxes to cover my ass just in case. > > As other people have said, the bottom line is net "gain". If your outgoing is higher > than your incoming, then you don't owe any taxes. The problem, as you point out, is > that you probably need to come up with some sort of numbers for your tax guy and if > you get audited, the IRS will probably want you to come up with receipts or > something. Which could be a problem.
I had extra expendable money in 2011 and blew a large amount on things not exactly DU related and then resold most of it in 2012 to get most of the money back. That alone made it show more incoming than outgoing for 2012, the problem is that most of the stuff, I bought in groups like 10 boards for $1,000 or whatever then sold some and some unsold and don't have exact records per board. It's a mess and I don't know how to divide it "according to the law".
> I know you said you don't want to do it, in case you change your mind, registering a > business as a sole proprietorship isn't that hard. I did it in NJ about 10 years ago. > I registered a business name (with the county, I think) and got a tax number from the > state (which I think was my SSN plus some extra digits on the end or something). Then > I opened a business checking account using that tax number. I think I eventually > opened a paypal account using that tax number. Initially, I kept track of purchases > (inventory) and sales on a spreadsheet, but later I got a copy of Quickbooks, since > you don't really do any volume, you could probably stick to a spreadsheet. The > biggest pain was quarterly sales tax payments on in-state sales. That sucked.
It's sole p that I'm getting taxed under. I'll see if there is an option for getting paypal under something not other than my SSN but I've never heard of such a thing. They seem preoccupied with avoidance of the IRS as much as the rest of us. It's fucked. I'm not so sure how the whole thing is even standing up.
> I just sent you some cash. Hopefully, it will help.
> > I had extra expendable money in 2011 and blew a large amount on things not exactly DU > related and then resold most of it in 2012 to get most of the money back. That alone > made it show more incoming than outgoing for 2012,
Sorry to hear about all of your problems. I imagine accounting for hobby income can at least reduce your tax burden, but getting the records together is bound to be a pain in the ass. I'm not sure how it works if you buy something one year and sell it the next. Can you still subtract the purchase price from the sale price to figure out profits/losses? Do you need to file an amended return for the previous year? I'm obviously not a tax specialist, but I'm sure sure your's will know the answers.
I like the idea of a non-profit in theory, but I'm not sure how difficult it is, or even if the DU would qualify. On the plus side, people could take a deduction on future donations.
Would it be easier if someone outside of the USA were the one taking donations?
> Would it be easier if someone outside of the USA were the one taking donations?
I'm guessing that could be possible, but would likely also introduce a whole bunch of other problems. (I'm not a tax/financial expert myself). The IRS will do whatever they can to get as much money from you as possible. Last year, I got laid-off and received a nice severance check which was taxed as "supplemental income" meaning a LOT of money was taken out. On my W2, it was added in as my "normal" income for the year. I'm not sure if that is a good thing, or a bad thing, but my refund for the year is nowhere close to what I thought it was.
Now for your situation Smitty, how were the boards you bought last year acquired? If you purchased them off of e-bay, or some other auction site, I'm sure you would be able to get that information from those sites for the past year. The sales would be tough, but I don't think those would be of any concern for you since it's the losses that you will need to account for. Yes, this will be time consuming, but the extra effort needed to record this information is likely worth it considering the situation you are in.
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I am just a worthless liar.
I am just an imbecile.
I will only complicate you.
Trust in me and fall as well.
Quote: $500 in a donation drive and bought a game and dumped it and resold it for $350.
Is it possible someone knows you are bidding on a board and inflates the price?
Why are you buying boards and selling them at a loss in the first place?
You should be keeping the boards, as you are backing up the dump via DMCA i.e. you are creating an archive. I thought the MAME devs use these boards to learn how to emulate the hardware.
Selling the boards just trashes that ideology.
Can you see the implications of what you are doing?
It was all sent through paypal to Japan or wherever. Most of it anyway. But when I send $1,000 to Japan for a pile of boards and my xml is just a rough estimate of how much was paid per board because recycle funds and my own funds being part of it, there is often no way for me to really know how much exactly I paid for a board unless it was something bought by itself, so I'm going to have to do some estimates, I guess.
> I like the idea of a non-profit in theory, but I'm not sure how difficult it is, or > even if the DU would qualify. On the plus side, people could take a deduction on > future donations.
The American Classic Arcade Museum (aka Funspot) is a registered non-profit, so I'd have to think that the DU could qualify as well. It might even be worth contacting them, if someone were willing to undertake setting it up. They might be willing to share some pointers on navigating the process.
The good news is you are not nearly as hosed as you think. The bad news is you need a new tax person. If, as you say, you never saw 1 penny of actual profit, then you really have little to worry about.
In your example you do not have $1150 of "income" because you forgot to subtract what you paid for the boards. If you paid more than you received, then you will take a loss (which is a good thing in your case).
You do not need to figure out how much you paid for each individual board, or even how much you received for each. Just add up the total you paid for everything and put it on line 36 of Schedule C. The total amount you sold the boards for goes on line 1. If line 36 is greater than line 1, no taxes!
I'm oversimplifying a bit, but the bottom line is get a good tax person and don't let it worry you too much.
I do(did) unrelated sales that go through the same account where I did make money. I also have dozens of boards I bought with DU funds that nobody will buy in boxes here where there is no resale. For sales I have to account for it's the price I paid for them specifically to subtract against them so my back is covered if the IRS tries to call me on them. For donations coming in it's just "income". I'm not going to get into a situation where I explain this crap to the IRS, like getting 10 payments from people around the world is somehow payment for 1 item.
> I assumed you had a dedicated account for the DU. In any case, without any > dispensation or special set-up, I don't see a way around things.
It doesn't matter; PayPal started making people add their social security numbers for tax purposes. Even if you have one or ten accounts, if the amount you get exceeds 20,000, then you have to pay taxes.
I wish I could help, Smitty. I can only offer you support and donuts.
> I'm not going to get > into a situation where I explain this crap to the IRS, like getting 10 payments from > people around the world is somehow payment for 1 item.
Isn't that... what Kickstarter is like? Maybe a Kickstarter program of sorts where everyone can donate towards goals and rewards would be like.. T-Shirts or something? I dunno. Totally random batshit insane idea... but depending on how it's done.. it could work. I mean I've seen stranger Kickstarter's
Kickstarters aren't based around "gray" (at best) areas of copyright infringement. If anyone else wants to pick up where I left off and explain your case to the government agencies, be my guest. I've taken the situation with donations coming to me as far as I'm ever going to. We already have started using alternate methods for fundraising.
> I didn't send you money or PCB's so I guess when the IRS is reaming your butt you'll remember me fondly. You won't have to pay for me...
TINGOES YOU ARE A FUCKING ASSHOLE. ALL YOU EVER DO IS NARC ON PEOPLE'S ASS. YOU DON'T FUCKING LIVE IN THE US SO THE IRS THING IS NONE OF YOUR FUCKING BUSINESS!!! YOU OWE YOURSELF BY STICKING YOUR HEAD UP YOUR FUCKING ASS AND TIE SOME DUCT TAPE AROUND YOUR FUCKING MOUTH!!! THAT WILL FUCKING TEACH A LESSON!!!
>Mameworld is full of smart arse leeches.
HEY TINGOES AS YOU QUOTED SAYING, IF YOU THINK ALL OF US HERE ARE FULL OF ASSHOLES, THEN GET THE FUCK OUT!!!
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