Disclaimer: This information is for reference ONLY. It should NOT be construed as legal advice. You should consult a tax professional for any questions you may have.
Once you have made approximately $600, you will need to file a W-9. This form can be found at http://www.irs.gov/pub/irs-pdf/fw9.pdf?portlet=103 . The instructions for this form can be found with the form.
You will receive a 1099K form at the end of the year for all money paid to you by ZNZ/IR from Paypal if you earn over $600. Once you fill out the W-9, you will need to send it to ZNZ/IR
You will not be getting a W-2 because you are not an employee. You are considered an independent agent, and will receive a 1099.
The question has been raised about filing estimated taxes quarterly. Here is what the IRS says on the subject:
In most cases, you must pay estimated tax for 2013 if both of the following apply:
1. You expect to owe at least $1,000 in tax for 2013, after subtracting your withholding and refundable credits.
2. You expect your withholding and refundable credits to be less than the smaller of:
a. 90% of the tax to be shown on your 2013 tax return, or
b. 100% of the tax shown on your 2012 tax return.
Your 2012 tax return must cover all 12 months.
You must use form 1040-ES to file estimated taxes if you are required to do so. The instructions are included with the form, which can be found here http://www.irs.gov/pub/irs-pdf/f1040es.pdf . It also includes a worksheet to see if you are required to file estimated taxes.
You may also want to check out this publication which covers estimated taxes and withholding, http://www.irs.gov/publications/p505/index.html .
If you are required to file estimated taxes, and you fail to do so, you could be fined. Here is what the IRS has to say about it:
In some cases, you may owe a penalty when you file your return. The penalty is imposed on each underpayment for the number of days it remains unpaid. A penalty may be applied if you did not pay enough estimated tax for the year or you did not make the payments on time or in the required amount. A penalty may apply even if you have an overpayment on your tax return.
It is up to you to decide if your particular situation requires you to file estimated taxes. We will NOT offer any advice in this manner. To do so would be ILLEGAL, so DO NOT ASK!
If you have further questions, consult a tax professional, or go to www.irs.gov.
As far as taxes, every monday I take 20% out of what I made for the prior week (Monday-Sunday) and I put it in a savings account that I have set up specifically for my ZNZ taxes! Then, come tax time, all the $$ I need to pay Uncle Sam is right there ready to go AND it has been accruing interest! And most likely 20% is MORE than what I need to put aside, but better safe than sorry!
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