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Taxes on WU money?

Discussion in 'Business & Tax Advice' started by Aaric, Mar 11, 2011.

  1. Aaric

    Aaric Elite Member

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    Hey pros.

    Do we have to pay taxes on WU money that we receive from friends?

    actually i am going to pay normal tax amount on my wu transactions.

    Any suggestion from experienced members is appreciable.;)
     
  2. -Jericho-

    -Jericho- Jr. Executive VIP Jr. VIP Premium Member

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    If it's considered earnings then yes you are supposed to pay taxes on the earnings after expenses. Whether you want to claim it or not is a different story.
     
  3. eyerish

    eyerish Regular Member

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    Legally the IRS requires you to pay taxes on EVERYTHING you get that is not a loan. This includes earnings, gifts and even forviveness of debts or receipt of an item at way below fair market value.

    Now the reality is that the IRS probably can't easily find out about the sums that are not earned from a normal job. Unless you are making huge money and can't really fly under the radar...i wouldn't sweat about the IRS unless you are hiding/lying about a significant amount of income.

    I went over 7 years without filing....never an audit. Some of those years I made 6 figures...some I made jack shit.
     
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  4. teeniegenie

    teeniegenie Supreme Member

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    Forgive my ignorance - what is "WU"?

    EDIT: does that mean Western Union? If so - you would only be liable for income taxes on any interest/revenue the Western Union money generates after you have received it and "put it to use" (such as earning interest while it sits in a savings account at the bank). You do not pay taxes per se just because your friend gave you a lump sum of cash. If you are in the United States and your friend is in the United States your friend can give you up to $13,000 per year without any gift taxes or the requirement of filing a gift tax return. Above $13,000 he'll have to file a gift tax return but won't owe any taxes until he gives more than $5,000,000 during his lifetime. Keep in mind these laws change from year to year, but that's the current status of the law for 2011.

    Hope that helps...
     
    Last edited: Mar 11, 2011
  5. Aaric

    Aaric Elite Member

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    It's ok . Western union
     
  6. teeniegenie

    teeniegenie Supreme Member

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    You better pray you never get audited my friend. Because you never filed a return the statute of limitations is unlimited for those years, meaning they can go after you for back taxes, interest and penalties years from now (and the interest will keep adding up). The statute of limitations only begins to run when you file a return. It is a criminal offense to not file the return. I understand that the chances of being audited or thrown in jail are slim, but why risk it? I'd talk with an accountant sooner than later about resolving your situation.
     
  7. eyerish

    eyerish Regular Member

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    I have filed many since then...I'm alright :)
     
  8. coderjeff

    coderjeff Junior Member

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    That's not quite true. Gifts are taxable to the giver, not the person who receives the gift, and the first $13,000 is excluded ($26,000 if a couple is giving the gift.)
    http://www.irs.gov/businesses/small/article/0,,id=108139,00.html
     
  9. eyerish

    eyerish Regular Member

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    You are right...I was thinking in terms of employers.