Paying Taxes on Money Stuck in Neteller

[ncray]

I'm pretty sure that we are required to pay taxes on all earned income, even if it's currently frozen on Neteller. I just spoke with someone from the tax law department at the IRS, and he likened the situation to 'cashing in your salary check and losing the money' (you still have to pay income taxes on the lost money).

Due to various expenses I've had, I don't have much cash on hand, and the majority of my money is locked up on Neteller. I owe probably around $50k in combined taxes this year and was planning on paying that off with the money I have in Neteller. Since I don't have access to that money yet, I'll probably figure out some sort of a payment plan with the IRS. I'm curious as to what everyone else is doing in my situation.

[ollie5050]

I may be extremely wrong on this.... but because u havent received it yet, you havent accrued the income. i think it is because of it being overseas doese that occur.

any direction on this is welcome.

J.A.T.
Ollie

[Poker CPA]

Please take time to read the IRS installment plan requirements, you may not qualify. Extension is really your only option and after April 17th, you will need a very very very good tax man for this situation. A good one will keep you out of serious trouble., if this situation is not resolved by October 17th.

[yahboohoo]

[ QUOTE ]
I owe probably around $50k in combined taxes this year and was planning on paying that off with the money I have in Neteller...

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My dad always said (quite wryly) that everyone's goal should be to pay as much in taxes as you can, not less.

[DavidNB]

I would think no because you don't have control of the money.

[SuperWhale]

You should have said to the IRS man that you didn't lose the money, the government came and is holding it for you. Indefinitely.

[FatalError]

you don't have to pay taxes on money that you don't have access to, the cash in your neteller is not profit until you are able to withdraw it, it becomes income during that tax year

[Reliant444]

too bad it could have been withdrawn in 2006, thus making it 2006 taxable income?

[Sniper]

[ QUOTE ]
too bad it could have been withdrawn in 2006, thus making it 2006 taxable income?

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Correct... The portion of money stuck in Neteller that represents poker profits was earned and taxable in 2006.

Not to mention the fact that you demonstrated constructive receipt by being able to move it off a poker site into Neteller, in the first place.

Should your regular bank account be frozen by an IRS levy for example, you could not claim that your paychecks weren't constructively received either...

That said, if you can't cover your tax bill, you should review your situation with a competant Tax Professional.

[famousanus03]

this is definately a special circumstance...no way ur going to get in serious trouble for not reporting this esp if u r up to date with all ur taxes for this yr and have been in the past.