Any tax savvy people here?

[wired]

My youngest son is 15 and is doing the stupid online gaming crap where they buy and sell virtual items. Whatever that is. Anyway I found out around 6 months ago that he had a couple of grand deposited in his account in real money. So not knowing why really I shut his gaming down. I got a 1099 yesterday from paypal for $50k that he had grossed prior to July. Now according to him he had spent money to make that money and actual net was the $2k. I know, I'm going to have to get tax help on this one from a professional . Anyone have any idea where I'm going to end up on this?

And yes. If it takes until the end of time he'll be paying whatever I have to pay and medievil punished otherwise

Read More

 

[Ramjet12]

Uh, your kid is in deep bubblegum... He owes about $8100 in taxes and FICA. There may be penalties since he didn't pay quarterly taxes.

You need a CPA.

On a side note...$50k in 7 months...damn....I must be doing something wrong.

 

[wired]

The 50 grand was gross sales. He spent 47 grand making that 50K so profit was $3000. Still boggles my mind but I think its going to be treated like gambling winnings where the losses offset the winnings. Yeah, going to a tax accountant this year first time ever. He'll be paying. I did discover $600 worth of Doordash deliveries he failed to mention during his Covid school lockdown.

He's a 27 year old nerd caught in a 15 year olds body. It could be worse. He could be a massive stoner like I was.

 

[Member 34319]

My younger brother does these things. I have zero knowledge on the workings. Pretty nuts how the internet works!

Id be curious if he ever filled out a W2?

 

[Ramjet12]

The 50 grand was gross sales. He spent 47 grand making that 50K so profit was $3000. Still boggles my mind but I think its going to be treated like gambling winnings where the losses offset the winnings. Yeah, going to a tax accountant this year first time ever. He'll be paying. I did discover $600 worth of Doordash deliveries he failed to mention during his Covid school lockdown.

He's a 27 year old nerd caught in a 15 year olds body. It could be worse. He could be a massive stoner like I was.

He'll need to show his cost of business to get the net down to $3k. If he can prove it cost $47k to get $50k then it should work out.

-RJ

 

[ma96782]

He'll need to show his cost of business to get the net down to $3k. If he can prove it cost $47k to get $50k then it should work out.

-RJ

Yup....maybe it will be treated as a "business". But what do I know about this "gaming buying and selling".

To me internet gaming = gambling. And, gambling profits are on a different line of your tax form.

But then......
Yup.....
Even to some.....stock investing = gambling. LOL.

Anyway.....
Maybe/perhaps he should trade stocks instead.

Of course, I do NOT suggest stock trading to any adult or minor (especially w/o a job) until they have learned a thing or two. But that's just ME.

So then.....IF you and he, want to go further.....may I suggest, the use of a reputable brokerage site (like: Schwab or TD Ameritrade, etc...). At least the brokerage will at the end of the year, send a complete 1099 which will show buy and sell prices (as well as interest and dividends, etc...) of the trades. And it can also be electronically filled into a (for example) H&R Block tax filing form.

Aloha, Mark

PS.....my son started stock trading in 2020. He was unaware that his tax filing would become more complicated and more expensive as a result. I don't know if it was worth it for him. Yeah....I think he uses Robin Hood.

 

[Certaindeaf]

Uh, your kid is in deep bubblegum... He owes about $8100 in taxes and FICA. There may be penalties since he didn't pay quarterly taxes.

You need a CPA.

On a side note...$50k in 7 months...damn....I must be doing something wrong.

A minor was financially exploited without parental knowledge and a lawsuit should be filed.

 

[TTSX]

Somewhat off topic, I did day trading for a few months a couple years back and when I got the forms from my broker, I learned the hard way that I had to record every. damn. transaction. I thought it would be a simple 2 line gain/loss kind of thing. A few hours later I was alphabetically to "E" and now I don't day trade. I think this is an excellent, though possibly expensive lesson for your son to be able to learn this early in life. Many people I know in their 30s don't even seem to know they need to file every year.

 

[Member 5605]

Sadly unless he can show all expenses.... he may be in trouble.

Better get a CPA quick.

 

[wired]

The good thing is all money in and out went though paypal and I have all the invoices. r

 

[wired]

So now my son , who is now 16 and who I have been pressuring to leave the house sometime and get a damn job asked me if he could just make money his way doing online virtual item and character development. Like I know what that is. OK, whatever but I set it all up so he's paying taxes so I dont get a surprise bill. Little bastards made 10 grand in two weeks so far and he hasnt flipped a single burger..

 

[Alexx1401]

So now my son , who is now 16 and who I have been pressuring to leave the house sometime and get a damn job asked me if he could just make money his way doing online virtual item and character development. Like I know what that is. OK, whatever but I set it all up so he's paying taxes so I dont get a surprise bill. Little bastards made 10 grand in two weeks so far and he hasnt flipped a single burger..

WOW! I know squat about what you describe but sure sounds like your kid does. If he can turn that into a steady deal he may be able to hire you in "retirement" to head his security team.
Seriously though there is a lot of ways to make a living that involve brain power instead of old style work now days. Certainly nothing wrong with those smart enough to take advantage of it doing so. Impressive someone his age already has the moxie to do this, congrats !

 

[Member 34319]

So now my son , who is now 16 and who I have been pressuring to leave the house sometime and get a damn job asked me if he could just make money his way doing online virtual item and character development. Like I know what that is. OK, whatever but I set it all up so he's paying taxes so I dont get a surprise bill. Little bastards made 10 grand in two weeks so far and he hasnt flipped a single burger..

 

[RicInOR]

So now my son , who is now 16 and who I have been pressuring to leave the house sometime and get a damn job asked me if he could just make money his way doing online virtual item and character development. Like I know what that is. OK, whatever but I set it all up so he's paying taxes so I dont get a surprise bill. Little bastards made 10 grand in two weeks so far and he hasnt flipped a single burger..

When I was in high school and had a job (Container Clerk - a union job no less - sorting the returned cans and bottles at the grocery) I got the privilege of paying rent.

Dad should get a 'taste'


Also, with a user name of Wired - like Wired Magazine - I'd of thought you were an expert in all things on-line.




And I am not advising any shenanigans - but look into the Panamanian Banking laws. Get a Non-Profit set up, or a corp of some kind where dad, mom, bro's sis' can be on the board of directors and then have your annual meetings in Central America - Costa Rica for example, the Caribian Islands etc.





My kid, in their 30's still has some of those Dad I hate to ask, but ....

 

[wired]

When I was in high school and had a job (Container Clerk - a union job no less - sorting the returned cans and bottles at the grocery) I got the privilege of paying rent.

Dad should get a 'taste'


Also, with a user name of Wired - like Wired Magazine - I'd of thought you were an expert in all things on-line.




And I am not advising any shenanigans - but look into the Panamanian Banking laws. Get a Non-Profit set up, or a corp of some kind where dad, mom, bro's sis' can be on the board of directors and then have your annual meetings in Central America - Costa Rica for example, the Caribian Islands etc.





My kid, in their 30's still has some of those Dad I hate to ask, but ....

I was the engineering manager at a coffee factory. ...wired.