1099 Confusion Cash Received as a Gift
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I was approcahing the 20K IRS threshhold. I had a family member who wanted to send me some cash as a gift for my son. They transferred the money to my account and now my summary shows I have exceeded the threshold in the "payments received" summary. I am really confused. I thought money received that was not sales oriented would not count against me as a "sale". So, just to clarify if anyone can help...you cannot accept a gift from a family member without being taxed on it if you have sold near the threshhold?
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Hi @cgjawz,
That is a great question. You are correct. Transactions received as personal payments from friends/family do not count towards the $20,000.00 threshold. In this situation, you want to ensure that the funds were sent and received as a personal payment. You may contact PayPal customer support for account specific assistance for further information.
- Krysitn
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Same thing here. I sell a lot, but my mother just sent me $400.00 to go towards my son's tuition. I keep up with my sales, and as soon as that posted I looked at my financial report and it was clearly included. How do we deal with this in the end when we get that 1099-K that includes amounts other than sales? Frustrating considering Paypal says these "Friends and Family" monies are NOT included.
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@johngin wrote:Same thing here. I sell a lot, but my mother just sent me $400.00 to go towards my son's tuition. I keep up with my sales, and as soon as that posted I looked at my financial report and it was clearly included. How do we deal with this in the end when we get that 1099-K that includes amounts other than sales? Frustrating considering Paypal says these "Friends and Family" monies are NOT included.
when you receive a 1099 from Paypal next year,and use it to file income tax return.
You can deduct anything which is not sales related.with an explanation.
It is always a good idea to keep business and personal separate,have another account.
If you are audited,the agent could go thru your paypal transactions,your records ,bank statements month by month,when they see deposits in your bank account and you cant prove it is wage/salary/SS ,inheritance etc,they figure it could be your income from selling on and off internet and they should get a piece of your action.
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