The Tax Man Cometh
The good news is that if you’re reading this post, you’ve hopefully earned lots of money taking online surveys. The bad news is that you may have to pay taxes on that money. Everyone is in agreement; you’re not going to get filthy, stinking rich taking surveys online, but you will earn some decent supplemental income that will help you achieve many of your financial goals. Whether you want to save up and splurge on a luxury item or are just trying to pay the monthly bills, money earned from paid surveys will get you part of the way there. However, you do need to be aware of your tax obligations created by taking online surveys before you go ahead and spend all your newly found loot.
I’m not at tax accountant, nor do I play one on TV. So, remember to take these comments for what they are, friendly advice. For the most part, when you take surveys, participate in focus groups, complete mystery shopping assignments or help out in other market research studies you are considered an Independent Contractor . This means that, although you are being compensated for your services, you are not an employee of any specific survey site or marketing firm you do business with. If you earn more than $600 from any one company, they will be obligated to report your earnings to the Federal Government from that company– which means you will owe your fair share of taxes on that amount (which of course varies by your income level). Now, say if you earn $100 from five different surveys sites, totally $500, you would not be responsible for paying any taxes.
In addition to paying federal income taxes on any money you earn by taking surveys, you will also have to do the same for any merchandise that you receive as compensation for your services or prizes won. On the W-10 form, you will need to declare those prizes and products with an estimated retail value over $600. A good rule of thumb is to follow the lead of the survey site, if they ask for your social security number and contact information for a W-10 form, this means they are planning on reporting your earnings and you should too! On the positive side, as an independent contractor, you can deduct business expenses from you annual tax return such as stamps, envelopes, even part of your Internet service fee. Please, please consult with the person who files your taxes for further elaboration of your tax burden and benefits.