tier payments & taxes paid through Tilia

[Blaze Nielsen]

As many merchants have land in sl paid for by their Tilia accounts, Im wondering if a Tilia payment for this can be used as a tax deduction for a small business. We have a record of these payments in US$ in our second life accounts that could be provided on tax forms.  If you make tier payments through paypal that can certainly be used as a deduction. Anybody have experience with Tilia payments?

[Chic Aeon]

This was discussed before and you might be able to find that thread. I as understand it once your linden dollars are sold and become USD they are "real money" and considered income. You get a receipt from Tilia via email for your files.  That in theory is "income" no matter what you do with it.  You do not need for it to be sent to PayPal before it has that status. 

 

So paying any bills that are part of your business would normally be tax deductible.   On the OTHER hand if you pay RENT in LINDEN DOLLARS that is a business expense before you turn your "game tokens" into USD.   

If you are making enough USD profit that this matters then obviously getting some advice from a tax person would be a good idea.  

Good luck.  

[Blaze Nielsen]

Linden lab will only file a 1029 reporting your income for US citizens based on your gross process credit transactions for the year. this is the amount you remove from tilia to Paypal or Skrill. (new rules are set for $600 or more income) So, if you have $1,000 sitting in your Tilia account, unless it is transferred out of that financial institution it wont be considered income. there are essentially two ways to remove funds from tilia. through Paypal/Skrill transfers OR paying recurring fees in sl through your Tilia account. (Premium account fees may be included in this now, not sure). For tax purposes this creates an interesting dilemna, your funds sitting in Tilia are not taxed as income, however as a business person in SL you may be paying real usd from your Tilia account to linden lab for tier AND local taxes for their service. My question still is unanswered. Can I take a Tilia receipt for usd spent on tier and claim a business deduction? Without claiming income into Tilia?

[LittleMe Jewell]

21 minutes ago, Blaze Nielsen said:

Can I take a Tilia receipt for usd spent on tier and claim a business deduction? Without claiming income into Tilia?

Anyone here is just guessing.  Consult a tax attorney.

[Jaylinbridges]

10 hours ago, Blaze Nielsen said:

Linden lab will only file a 1029 reporting your income for US citizens based on your gross process credit transactions for the year. this is the amount you remove from tilia to Paypal or Skrill. (new rules are set for $600 or more income) So, if you have $1,000 sitting in your Tilia account, unless it is transferred out of that financial institution it wont be considered income.

True about what is considered income.  It is a 1099K that Tilia will send to the IRS, and for TY 2024 the minimum is $5000 or more income for the year.  The $600/yr was delayed another year, and may be moved to a more reasonable minimum this year, if Congress ever gets off their azz.

This was all covered in a prior thread a few months ago.