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How is tax paid in the US fora service agreed aand paid between two independent persons?
I know that the US has a free economy, which means no closed professions etc. If yopu don't hire someone as an employee and you don't have a business, but you want to make a private deal between two individuals. For example you find someone who will walk your dog or someone who will babysit or someone who will teach your kids a foreign language, but is not a professional. It may be the neighbour's daughter or a foreign person whom you want your kids to learn her native language from. Is it legal? And if so, is tax due? And how is it paid?
Thanks all, I just wanted to know, can you declare this money simply on your tax form? Because for example in my country, you declare salaries, income from freelance profession that must be a standard profession with income-expenses books and invoices taken to the tax office, income from other specific declared activities. But if I decide that I want to walk people's dogs, this is not my normal profession, so there is no code on the tax declaration to put it even if I wanted to.
3 Answers
- NosehairLv 76 years ago
Stoo is correct but if the question may be "How does the government know if these transactions take place". Tax payers are required to make honest declarations on their tax forms regarding taxable money they earn. The examples given ARE taxable. As Stoo indicated, a small amount of these transactions are not likely to cause the government to take any action to find out if money was earned and not declared on tax forms. A small number of tax payers are audited because of being randomly chosen or they demonstrates suspicious financial activity. If one is audited they might have to pay penalties or possibly even go to jail for earned income was not reported on tax forms. For most people that is not too likely.
- SlickterpLv 76 years ago
Legal. The person earning the money is responsible for any income tax, and yes, it is taxable income.
- StooLv 76 years ago
This happens all the time. If it's a few bucks here and there for occasional work, no one cares. A regular part time or full time job, that's a different question - it would be the same as any legal employment situation, you'd have to withhold income tax, pay payroll taxes, etc.
