Tax requirement questions

[jlevin]

Hello all, the end of the year is coming and I am having some floating thoughts if I will be paying taxes for the money I have earned through paypal.

- I have made under $20,000

- I have received more than 200 payments

- I make over $20,000 outside of paypal (job revenue)

Thank you and I hope I get some quick and direct answers!

Thanks,

jlevin.

[snowshoe]

This info may be of help:

https://cms.paypal.com/us/cgi-bin/marketingweb?cmd=_render-content&content_ID=marketing_us/IRS6050W

[jlevin]

That still doesn't seem to answer my question directly. Does my job revenue add onto my paypal revenue or is it seperate?

[jlevin]

Bump ^.^

[jlevin]

Someone please answer my simple questions.

[Labeshops]

You really need to consult a tax consultant or cpa, but in general, if it's income you made during the year, you need to report it whether its income from a job, a hobby, or sales somewhere.

[brewhardware]

The 200 transaction + $20,000 trigger is more about whether paypal is required to send a 1099 to the IRS or not.

By tax law (and this doesn't require being a CPA to understand), any income must be reported by the person making the income. If you make $20,000 at your day job and sell baseball cards on the weekends and make another $15,000, you must report 35,000 in income on your tax returns. The first 20 goes into the W2 earnings and the 15 would be additional income.

Of course, you're able to deduct expenses as a part of the tax return so you don't pay tax on the gross amount.

Now, people cheat the IRS every year by hiding income such as cash transactions or say income through paypal under the threshold we talked about. I think what you're asking is whether you need to report income processed through paypal even though they won't be 1099'ing you. By law yes you do. Will you get caught if you don't? Who knows.. random audits do happen.

[LIDannyBoy]

You are prob not getting quick & direct answers bc ur not asking a quick & direct question.  You said u have some floating thoughts if u will be paying taxes for money earned thru Paypal. Ok, so u have some floating thoughts. What exactly is your question??? Can't expect others to read ur mind or give u a direct answer when u dont ask a direct ques.

First off, as others stated, u must consult a tax professional if u want to be assured any answer u receive is correct. We can provide guidance/assistance, but that should not replace advice of a tax pro. Second, I'm glad to try & help but pls understand that since ur ques isn't clear I hafta assume what u mean and are trying to ask.

You are required by law to pay tax on all income, whether it is reported or not. Just bc u dont get a 1099, W2, etc. doesn't mean that you're not responsible (i.e. Paypal sends a 1099 for over $20K in payments and over 200 transactions. If you do $19,999 and dont get a 1099, you still have to pay taxes on that "income*", it just wont be reported to the IRS by Paypal. (*Income in quotes bc ur not responsible for tax on all ur sales, just net income after expenses, deductions, etc.

Yes, many people try to cheat the IRS. If a 1099 is reported to them and its not on ur return, it will eventually be caught by computer and u will get notice that u owe the taxes on it.  If it is not reported to the IRS and u dont report the income, the chance of you being caught is extremely slim.  Chance of a random audit on low-median incomes is miniscule...although is possible.

Again, I think what ur asking is whether it will be REPORTED to the IRS, not whether u will have to pay taxes on it. If you did not have over $20,000 in gross payments received AND over 200 transactions, then it will NOT be reported by Paypal to the IRS. For REPORTING purposes it does not matter what u earned at ur job. Paypal only REPORTS if u receive over $20k THRU PAYPAL with over 200 transactions.  If Paypal does not report it then the only way the IRS would know about it is if you tell them about it or if they do an audit and uncover it.

Once more, to be clear and direct:  based on the scenario u presented, Paypal will NOT report ur sales to the IRS. However, you are still legally REQUIRED to pay taxes on any INCOME u earn. Many will cheat the IRS and get away with it because the likelihood of getting caught is so small and USUALLY the only penalty would be to pay the taxes that u owe. If that doesn't answer ur ques or u have more, lmk.