What is a W9 Form?

[Conceded]

I had to fill out a W9 form to be able to continue cashing out my lindens to USD, I've done everything they told me, but I still do not understand what that is. Does it mean I have to pay taxes at the end of the year or something? They sent me a link and it said " For U.S. residents with 200 or more L$ sale transactions with a total amount of gross proceeds in excess of $20,000 in a calendar year, we are required to file a Form 1099-K with the IRS reporting those transactions for that year." Does that mean that I will only have to pay taxes at the end of the year if I made 20k that year?

 I'm so confused about all this tax stuff... i'm still in high school so I don't really know much about that stuff... What is the W9 form? and why did I have to fill it out? Will it change anything for me? Will I be in debt or anything? I'm so scared... Please tell me as much as you can about this form... because Idk anything about it. Also... SL is really my only source of income right now... i've never had a job before because my parents just want me to focus on school.

[Amethyst Jetaime]

You will need to declare any money that you take out of SL as income on your return. This is nothing new, you have always been required to do that.  What is new in SL is that the IRS requires LL to report income to them.  The W-9 is the information LL will need to report the total amount paid to you if the total for the year is over 20K.

If you make less than 20K then they will not be required to report it, however you must still show it on your taxes as income.  You may be able to offset the amount with business deductions.  You should speak to your own tax advisor about what is deductible. 

[Conceded]

I'm only 16.... I don't know anything about these things... I haven't had any tax returns my whole life. I haven't had to do any of this so idk what to do... I do not make more than 20k a year. So... does that mean I don't have to pay taxes? I'm confused at what the 20k a year thing they said is about.

[Amethyst Jetaime]

Welcome to the real world. lol.  I do my own taxes, but I am not a CPA or lawyer.  Being 16 makes no difference, if you earn money you have to report it to the IRS if you make more than a certain amount.  If  you earn enough you will have to pay taxes on it.  I have had to file taxes since my first job at age 15 1/2 when I was a lifeguard at the local pool under a special work permit.  I didn't owe taxes but the IRS owed me a refund for taxes that were deducted from my pay.

To see if you will have to pay or not, estimate your income from all sources, except gifts, and total it.  Then go to the IRS website and look up the most current tax tables.  Find your estimated income on it and see what it says you might owe.  Your parents probably claim you as a dependent, so you won't be able to do that on your taxes.  However, unless you have a part time job or money earning interest or stocks etc or are a very successful SL merchant, I doubt you will need to report or pay taxes.   Keep in mind that this is just estimated income and the tax tables may change for the current tax year.  So you'll need to check again at the end of the year when you have exact figures and the final tax tables are published.  You should also file if you owe no taxes but had a job where taxes were deducted from your paycheck.  You will get a refund of that amount.

Talk to your parents about it all.  If it turns out you need to file a tax return, then I am sure they can help you or can get you the help you need to do it.  At your age, a EZ form is probably all you need to do and if so, you can literally phone it in or file electronically yourself on your PC.  The IRS site has the information you need to do either.

[DoteDote Edison]

Basically, a new IRS tax code went into effect at the beginning of 2013.  The US$20,000 is gross income, not net income. So even if you lose money or break even, Linden Lab reports it to the IRS for tax purposes.  After 200 transactions - but less than US$20,000 - Linden Lab should only collect your tax information, but shouldn't report your earnings to the IRS.  The link is gibberish, but here if you want to read it.

http://www.irs.gov/irb/2011-46_IRB/ar08.html

 

If you're a member of Steam, the same scenario went into effect when Valve created the Steam Community Market. There are many discussions on the Steam forums, but here's a link that explains it from their FAQ.

https://support.steampowered.com/kb_article.php?ref=6088-UDXM-7214#addldocsemail

 

As suggested above, ask your parents, or a teacher for help.

[Celestiall Nightfire]

Hello, Conceded, and congrats on making money in SL!  

I had my first 'tax paying" job when I was 16 (had other jobs before that since age 11!)  and it's normal.    Also, if you're smart enough (and you are! : )   to figure out things in SL you can figure out the tax stuff.  

Here's a good description of the W9 form:

https://turbotax.intuit.com/tax-tools/tax-tips/Jobs-and-Career/What-is-the-Purpose-of-an-IRS-W-9-Form-/INF19259.html

Here's the important part that applies to you:

"If you have your own business or work as an independent contractor, a client may request that you provide a W-9 so they can accurately report the payments they make to you."