Question about IRL Taxes

[ANBU]

I'm new to the game and this forum so I don't know if I'm posting in the right area, but I was looking to inquire about IRL taxes for people who make any sort of profit on the game. I live in the US and so I'm sure tax implications are different than from where other people play? Does anybody have any experience with claiming taxes from earnings in Entropia?

 

[Mega]

Care to comment Mercury?

 

[Strash]

Well Yes Your suppose to claim anything that is pulled out of the game...... cept for initial investment.. if that is correct

 

[ANBU]

I suppose I'll practice the usual tax claiming procedure. I think there is a threshold in which you claim taxes after you have made a certain amount of profit, I'll do the research on that one. I trade stocks IRL and I assume the same thing can be done with CLDs in that regard. Thanks for the prompt reply guys. This game is definitely up to my speed and I enjoy the community it encompasses.

 

[Raven Lunchbox]

I suppose I'll practice the usual tax claiming procedure. I think there is a threshold in which you claim taxes after you have made a certain amount of profit, I'll do the research on that one. I trade stocks IRL and I assume the same thing can be done with CLDs in that regard. Thanks for the prompt reply guys. This game is definitely up to my speed and I enjoy the community it encompasses.

It would be profit taxable after your initial is passed so for example.

if you deposit 100k dollars,

everything you withdraw up to 100k would be just taking back your initial investment so not taxed but anything after that would be considered profit and taxable.

for CLD's they wouldn't work as a convientional dividend yielding vehicle because they are not considered a stock with NYSE or NASDAQ.

I think some other players could expand more on this.

 

[ANBU]

It would be profit taxable after your initial is passed so for example.

if you deposit 100k dollars,

everything you withdraw up to 100k would be just taking back your initial investment so not taxed but anything after that would be considered profit and taxable.

for CLD's they wouldn't work as a convientional dividend yielding vehicle because they are not considered a stock with NYSE or NASDAQ.

I think some other players could expand more on this.

I guess the tax rate is different in comparison to traditional dividends on any of the markets; to my understanding dividend rate is anywhere from 15-20% where as capital gains range depending on whether you've held your shares for more than a year or not. I also know that income tax is a different rate and only incurs without a W-2 once you have passed a certain threshold. Let's say for theoretically, by law, you must report income once you've reached $100 in profit, does that then mean I must report my profit once I've earned 1000 PED in game? or do I report it after I have transferred 1000 PED into my irl bank account? Again it's all a theoretical threshold and I'm sure I'll be able to figure that out with a little research on my own. I guess it's just confusing where I would categorize it, but I hope to clear it up at some point.

I hope to iron out any kinks of information and thanks for your reply! There are still so many questions I have, not only about this, but about the game as well. I'm sure they'll get posted in due time.

 

[Few Scars]

Only a few ubers get more than they put in. EU doesnt register on most tax agencies and you can just state that the money you have withdrawn is what you have put in. There is no way to calculate your exact losses/ profits over the years. Don't bother reporting ingame income. Also if you don't withdraw it it's technically earnings in Sweden, and you are not a resident there. Virtual worlds are to hard to regulate.

 

[ANBU]

Only a few ubers get more than they put in. EU doesnt register on most tax agencies and you can just state that the money you have withdrawn is what you have put in. There is no way to calculate your exact losses/ profits over the years. Don't bother reporting ingame income. Also if you don't withdraw it it's technically earnings in Sweden, and you are not a resident there. Virtual worlds are to hard to regulate.

I did a little bit of math and at 3 PED per week at the price I purchased the CLDs at, it would take 9 years and 5 months to make my money back for the original cost of the deed, in addition to the MU of the deed itself. (Assuming I spent money on nothing else, mind you.) I hope this game continues to thrive for years to come.

But as long as I've made any amount of money and sell the deed for at least the price I've bought it at, I've turned a profit. You're right about the earnings being in Sweden though. I've gone through articles about WoW, Everquest, and even EVE, seems that there is a lot of gray area everywhere. Thanks for your input! I'm glad I've discovered this game, simply allows me to diversify into other parts of the nightosphere

 

[Raven Lunchbox]

I did a little bit of math and at 3 PED per week at the price I purchased the CLDs at, it would take 9 years and 5 months to make my money back for the original cost of the deed, in addition to the MU of the deed itself. (Assuming I spent money on nothing else, mind you.) I hope this game continues to thrive for years to come.

But as long as I've made any amount of money and sell the deed for at least the price I've bought it at, I've turned a profit. You're right about the earnings being in Sweden though. I've gone through articles about WoW, Everquest, and even EVE, seems that there is a lot of gray area everywhere. Thanks for your input! I'm glad I've discovered this game, simply allows me to diversify into other parts of the nightosphere

I agree with few scars in the fact that very very few actually profit in game and probably even fewer would report any of that to any type of tax agency, as neither we nor the company keep all that great a tracker on it AND nothing in game has value until it has actually gotten back into your IRL account.

MU is only what it is today, tomorrow could be completely different. I guess similar to unrealized and realized gains in stock market, u could say. u don't claim unrealized gains.

 

[ANBU]

I agree with few scars in the fact that very very few actually profit in game and probably even fewer would report any of that to any type of tax agency, as neither we nor the company keep all that great a tracker on it AND nothing in game has value until it has actually gotten back into your IRL account.

MU is only what it is today, tomorrow could be completely different. I guess similar to unrealized and realized gains in stock market, u could say. u don't claim unrealized gains.

Yeah, I suppose I'll wait until it lands in my pocket before even thinking about finances. Time and patience have always been my friend, and anything above 9% annual return I'm happy with. I'm only 23 and the power of compounding works wonders, although I wish it worked wonders a little quicker lol. Guess that defeats the purpose

I can only assume by how long it's been since you guys joined the forums that you're the vets. It's an honor

I'm Nikki btw, thanks for all your help guys, I plan on being an active member of this community and I appreciate all the help I've received and at the speed it has come to me. Maybe I'll see you in game some time

 

[Raven Lunchbox]

nice to meet you, if you have questions shoot away... peeps on the forum tend to like to answer questions unless the info is already available on the forum by using search or on

entropiawiki.com

its kinda the EU bible or farmers almanac

 

[ANBU]

Thanks for the advice, I'll keep it on a post-it next to my computer

 

[ANBU]

Lol or have it on my favorites, what year is it the 80s

 

[Divinity]

Pretty important question and while i cant speak for usa but here's how it worked in India..

a. If you are a company and u deposit , you can claim it to be an investment in which case the deposit amount if u withdraw is non taxable and anything above that gets taxed. There are a few complications here as to how u describe your investment into EU, though it was derived after extensive research that we unlike land/house etc in india we cannot gain the same tax free long term investment profile from EU. Of course u can adjust ur numbers if you are a company ( pvt ltd in india and llc in usa) and thats what ur accountant is there for.

b. If you are an individual in india , then the entire amount including the amount u deposit is subject to taxation. A lot of research in the topic did not give any clear reason as to why an individual cannot book it as an investment as there is no explicit rule/legislation that this comes under. Pretty grey area as far as the laws in here are considered. I would believe u would have more stringent rules out there.


Divinity

 

[Tepes]

Don't bother reporting ingame income. Also if you don't withdraw it it's technically earnings in Sweden, and you are not a resident there. Virtual worlds are to hard to regulate.

Sadly US government thinks otherwise, and requires US citizens to declare all their income abroad even if they do not live in US for years. I only know this because of the news of people with Dual citizenship giving up on their US one (Tina Turner would be an example) or planning to do.

Non-withdrawn PED though is not income, I cannot possibly see how gained PED in game can be, seeing all is MA property.

The don't bother part is the way to go, especially for a new player as OP.

 

[Futurama]

In my country I was told by a friend who works in an auditing company (with taxes and stuff) that I could declare it as lottery winnings (which aren't taxed over here). Although he did not say it 100%, he said that in the end it depends on the taxation institution interpretation which might be different.

Imho it all depends on how you position it and how the taxation institutions see it and how much they want to dwell into it. So I think it depends on a lot on how you make your statement and how much they want to investigate it. The question if they ask you something, will you be able to convince them that it should consider as X. If they aren't convinced and they aren't lazy enough, they will start digging, write a letter to MA etc. and make their own interpretation which will be the "correct one".


But if you want to apply logic - I think it should be considered as income (difference between withdraws and deposits) and thus taxed accordingly. Because in the end - if you withdraw more than you have deposited it is an income generated ingame by your actions.

 

[Wollongong]

In Holland, it would most likely be deemed box 3 income (as it is speculative), so you'd not pay income tax.

 

[forgo]

I had a large amount 15k usd+ withdrawn in 2007, there was never a tax issue over it. But I am tax exempt, I havn't paid taxes since 2006, I don't make enough. At the time of the withdrawal the accountant said I still fell under the taxable threshold for the year, but barely, so in my case a couple k more might have made a tax issue. But according to my earnings and my threshold, I could make 15k a year from EU and still not have to file.

This is not a typical situation though. In America, taxes and incomes are such a broad legal subject it took me 5 years and taking on a Judge to understand my situation and that there are actual rights/protections citizens have if we look hard enough and fight for em. The Judge was very unhappy to find out she had no authority related to my income. I can never be garnished, never be levied, and am tax free indefinitely. (unless I started earning alot more). Its a shame most Americans take the word of honor from lawyers and judges and politicians to the degree we do.

 

[ANBU]

Thanks for all your help guys! I plan on keeping close track of the money that goes in and out of my game.

As for what is deemed to be considered income, I'll apply that once I have withdrawn the PED into my account. I don't see how it could be seen as income otherwise if I'm not using it for any other service but MA's.

I'd rather not have the IRS knocking on my door.


On a different note, is there a free member signature? And where can we update that? I tried looking in user profile and settings, maybe I'm just blind.

 

[das]

clickuser cp, then on the left under 'my settings'

 

[ANBU]

clickuser cp, then on the left under 'my settings'

Does the "My Settings" actually say "signature" or is it a different title? Sorry I don't usually post on forums, but thanks for your help!

 

[Mega]

Does the "My Settings" actually say "signature" or is it a different title? Sorry I don't usually post on forums, but thanks for your help!

On the left hand side there will be "My Messages" "My Subscriptions" "My Settings"

Under "My Settings" will be:

Edit Profile
Edit Profile Picture
Edit Avatar
Edit Signature
Profile Privacy


I think you'll be ok now, and you can upload a forum avatar picture whilst you are at it.

 

[ANBU]

On the left hand side there will be "My Messages" "My Subscriptions" "My Settings"

Under "My Settings" will be:

Edit Profile
Edit Profile Picture
Edit Avatar
Edit Signature
Profile Privacy


I think you'll be ok now, and you can upload a forum avatar picture whilst you are at it.

For some reason this is all it says for me

Under "My Settings"

Edit Profile
Edit Profile Picture
Edit Avatar

After that it's "Gallery Settings" which have:

Your Photos & Albums

(And so on and so forth)

I don't seem to have the other two options (
Do only paid subscriptions get that ability? Or is it just because I'm a new member and it takes some time for me to be able to edit?

 

[das]

This is what it looks like for me after clicking user cp in the top of the forum

Edit : never paid anything to use this forum

 

[ANBU]

This is what it looks like for me after clicking user cp in the top of the forum

I'm actually at my second job right now so I can't take a screenshot, but I get off in about 4 hours and I'll take one then. I don't have those two options and I can only assume it's because I just joined a couple days ago.

Maybe those options will be there when I get home that's how life works right? haha

Thanks for your help guys!

 

[ANBU]

Oh and in addition

I also don't have

"Change Profile Options"
and
"Edit Images"
under "Gallery Settings"

but I assume it's because I don't have any images to begin with.

 

[ANBU]

Lol

Now I have them...
Great! Now you guys will never believe me lol.

 

[Serica]

I think you need a certain number of posts to be able to add a signature - from memory it's more than 25 (or perhaps it was 50).

It's probably set up by 711 to go some way toward reducing the likelihood of spambots getting through to the forum.

 

[das]

Now I have them...
Great! Now you guys will never believe me lol.

Great, just remember that all images you use, sigs included should be uploaded to pcf & used from there.
Sucks if they are stored somewhere else & taken offline

 

[ANBU]

Great, just remember that all images you use, sigs included should be uploaded to pcf & used from there.
Sucks if they are stored somewhere else & taken offline

Can they be taken straight from my husband's PC? That's where I play from. Or do I have to host them here?