Have Tax Information questions? Post here!

[PayPal_Adrian]

Welcome to the Tax Information thread!

Should I post my question here?

Starting in 2011, all U.S. payment providers, including PayPal will be required by the IRS to report sales information about merchants who exceed $20,000 and 200 transactions to the IRS. If your question is related to this topic, please reply with a question or to assist another member.

We will  be merging existing questions in the Community into this board.  More information will be made available later.  Until an update is provided, please check out the previous IRS Workshop and www.paypal.com/irs. 

What questions don't go here?

All other tax-related questions, such as Profile settings for Tax, adding tax to invoices, adding tax to payments, whether or not you should charge your buyers tax, what tax rates to charge, are considered Off Topic and will be moved.  These questions are better placed in the About Business board instead.

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[naseller]

well according to one poster, yes. according to the law, no. the law is 20k AND 200 transactions. go to your Profile in PP, click under History, tax history and if you were issued a 1099 for 2011 it will be there. hope that helps.

[Disposable_Hero]

You have no 2011 tax documents.

I dont have any tax documents.  I really dont want to run this as a business either, I'm more of a social club leader.  I talk to my aunt who is a CPA and she says she thinks I should report it.  I'm just wondering if this is really by law that I have to if its DONATIONS (note I'm not trying to make a profit, but did and im not selling any service or items, tangible or not)

[naseller]

google reporting eBay sales to IRS. and don't forget all the deductions. there is good info online when u google. my tax person told me not to claim monies that can be completely written off and are not reported to the IRS by third parties.

[brewhardware]

You keep saying "law" but I don't think you read anything about it. I don't encourage you to listen to me but make a simple call to the IRS and ask whether money you received needs to be reported. Tax fraud isn't a game. If you dont' want to call the IRS, go on their website and read the FAQs.

The only thing Paypal knows is that they send a 1099 when you meet the transaction and amount thresholds. Those thresholds have nothing to do with your personal tax liability for income. This isn't my opinion, it is fact. Call any tax accountant in the phone book and ask. Make it real simple. I sold some stuff on eBay and made $15,000, do I have to report that income? The answer is yes. Whether it incurs tax liability depends on your personal tax situation, deductions, and most of all what it cost you to make that income.

On the donations thing, I'm strongly recommending that you use some of that money to hire a tax accountant for an hour of consultation. If you're going to continue to solicit donations to run that site, go legit and form a non profit organization. If you think the site will continue to generate more donation money than the site requires for upkeep, just form an LLC and take teh excess as income. Yes, you'll pay taxes on it but it will still yield net income.

[naseller]

I just re read this. if you made a profit, theoretically I am sure u need to report profits. but like I said, don't forget all deductions. gas, office space in your home, office supplies, a whole slew of stuff. your aunt can help with all this. but, it is a matter of conscience. the right thing is to at least find out if you have taxable income after all deductions.

[Disposable_Hero]

Yeah it may be best that I just let her handle it... I have a crazy amount of statements and CC stuff I can show her.  

My thing is - these were PERSONAL payments, paypal says that they wont/cant report that to teh IRs heh.

[naseller]

NOTHING was reported to IRS. see my previous post regarding whether or not you need to claim anything. ask your aunt, but nothing was reported to IRS. that does not remove your potential tax liabity though.

[brewhardware]

Technically the IRS wants to see gross income and makes allowances for expense deductions for what it took to earn that money. In Disposable's case, yes, all the money spent on the site, servers, computers, etc is deductable.

"not reported" is good if you're trying to hide some income. The problem is that if you got caught up in a random audit, triggered by nothing in particular, they will find that money. Odds? Who knows.

[Disposable_Hero]

I see... I know you guys arent CPA's .... but if we made 20k and had about 9-10K on expenses.. it'd be 10k as 'net profit' .... but if I already did my tax return (but havent filed) and for my job I made 40K and did a straight line deduction ... I only get back $42 ... so would that be 10K extra income on top of that 40k? 

I'm just confused haha

[StickerSWAG]

Thank you for taking your time to read my post!

So I got a few payments from my friend as a gift since he owed me money and he's not in the states now due to college.

At the end of the year when PayPal sends me the tax forms and such, will those gift payments be in the taxes?

Meaning, will I have to pay for taxes for those few gift payments?

Or are gift payments not related to any tax issues at the end of the year?

Please let me know if you know anything about gift payment and taxes, thanks!