PayPal & Income Tax Question

[GehrigFan]

Thanks pawpaw. I'm still trying to figure out primarily:

1) what they include as revenue for that $20K. If I deposit $1K from my bank account intpo PayPal to buy something, do they just include that $1K deposit as "revenue"?

2) If they have a place online to figure out where you stand in regards to the $20K limit for the year?

Thanks!
Mark

[ATP]

I am fairly certain you need to have 20k in revenue AND 200 plus transactions. Funding of your own money from your bank account to paypal do not count, they are not revenue. There should be a report, under the history section, reports, called annual financial summary, which would give you a total. Hope this helps.
Best,
Jeff

[ibuysportsephemera]

Originally Posted by ATP

I am fairly certain you need to have 20k in revenue AND 200 plus transactions.

This is correct.

Jeff

[drcy]

I use my PayPal $$ in my taxes. I go through and itemize what counts and what doesn't as income. You report and individualize what is income and what is not. Obviously, I don't report on my annual taxes a transfer to PayPal from my own bank as profit.

Duly note that I have a state business license and already report quarterly for state sales taxes, so that itemizing is largely already done anyway when Federal taxes role around.

No, rarely would all of someone's money deposits in one's personal PayPal count as income. As I said, many people regularly transfer their own bank funds into PayPal. The IRS would understand that.

Also note that PayPal does specifically identify direct bank account transfers as its own thing in the listings-- after all, you do the transfer via PayPal on the PayPal site--, so might not even count that towards the $20,000 anyway. My bet is they don't count personal bank transfers towards the $20,000.

[GehrigFan]

Thanks all. I was finally able to find a place for reports, and although a pain (you have to do each month at a time and manually add), there is a place where they add up each month's "revenue" separately. I still don't see where they are putting Friends and Family payments, but deposits are counted separately.

[drcy]

I do mine by hand. Itemize on a print out and do the own calculations on a calculator.

[GregMitch34]

Let's say you by a card for $150 and sell it the next week for $200. Does that mean your "income" was $200? Or $50? Or separately you'd list $50 in a profit line? Or $150 as an "expense"? And would this apply to casual dealing, not a "business"?

[Runscott]

I would just always keep in mind that the IRS has the Paypal information to use if they decide to audit you. Then you might have to explain how the Paypal income matches up against the income you reported.

I'm curious if anyone has had to explain Paypal information to the IRS during an audit. Especially curious about how they view the 'Paypal gift' thing, which is why I avoid it completely.

[GregMitch34]

And then the question that may apply to more: If you do NOT have an online card site or eBay store and are not really in business; and just buy and sell a handful of cards each month (here, at ebay, or auctions) for your collection...certainly under 200 and 20,000 for paypal...how do taxes work for this lower-level approach?

[pawpawdiv9]

i assume its just like playing the lottery. Does anyone report their scratch-offs?