Oh man, the IRS is getting creative these days! They’ve noticed that MMORPGs (Massively Multi-player Online Role Playing Games) have extremely intricate monetary systems, and they’re thinking of taxing those systems. Um… what?

I can somewhat understand the move to tax Linden dollars, the currency in the game Second Life, which is the main topic of the CNN Money article. Linden dollars actually have a conversion into cold, hard, American currency. But what bothers me is the mention of taxing the money in World of Warcraft. The logic being that because there’s an exchange of goods, there should be a tax (just as you can tax bartering in the real world). From the article:

Tax law is murky, however, when it comes to dealings that occur solely within Second Life or other computer-simulated environments. For instance, is a transaction that occurs only in Linden dollars and doesn’t involve any real-world, dollar exchange taxable?

and

But there is a valid argument that even profits that come from, and stay in, the virtual world are taxable, according to Bryan Camp, a professor at Texas Tech University School of Law. “As soon as you start looking at what’s going on in these worlds, they look a lot like real economic transactions,” he said.

Even if profit isn’t realized in real dollars, there’s still an exchange of items of economic value. In the real world, if someone trades goods or services without the exchange of real money – also known as bartering – that’s a taxable event, Camp noted.

Now, I’ve never played World of Warcraft (although many people have tried to convince me!), but I have played Everquest and Guild Wars (oh man, my geek is showing!), so I feel qualified enough to comment on this.

Basically, it’s a giant crock. Sure, you’re exchanging goods and services… in the game. And yeah, some people do sell game money on eBay. But you have to, have to, have to remember that it’s still a game. Unless the IRS is prepared to tax my Monopoly winnings, they should really stay out of this.

That is, of course, unless they’re going to allow you to pay your entire tax bill in game money. After all, if they’re taxing you for both your day job income and your game income, you should be able to pay your taxes entirely in either currency.

And I’m really not that opposed to paying my taxes entirely in Guild Wars gold. You know, provided I can still get my refund checks in gold ole American dollars! ;o)

I guess I can lightly glow with some amount of pride- I just finished my 2006 tax returns.

I would have liked to do my taxes for free, and I probably could have, by e-filing my federal return, and then doing my state returns by hand and mailing them in. But I was a tad worried about doing my state taxes right, because I worked in two states during 2006. Also, I’m lazy. So I paid for the whole she-bang.

Last year with TurboTax*, my taxes (one federal and one state) cost me $48.05 to e-file. Did I manage to do any better this year? Yes, yes, I did. The big thing this year is “free federal filing!” but then everybody catches you by making you pay for your state returns. Fooey! Like I said, I didn’t actually manage to work around this – I just shelled out my money and grimaced.

On a tip from Flexo, I checked out TaxACT. I was drawn in by their Online Deluxe + State deal for $15.95. What I really liked about this was that it offered to give me a nice worksheet to use when I fill out my financial aid paperwork. I didn’t bother to look at how much it would cost me for the second state’s return, which ended up being $12.95.

So…

I Could Have:
Used TaxACT’s Standard edition and done my federal return for free.
Paid $12.95 for each state return.
For a total of: $25.90

But Instead, I:
Used TaxACT’s Deluxe + State edition for federal and one state: $15.95
Paid $12.95 to file the other state’s return.
For a total of $28.90

So was the financial aid worksheet worth the extra $3? In hindsight, no, not really. It won’t save me more than a few minutes on my paperwork, especially considering my mother likely won’t use TaxACT, so I won’t get a nice worksheet like it for her half of the paperwork.

The good news? I’m done with my taxes, and it cost me over $20 less than last year. I call that a win!

*Affiliate link. Because I can.