PayPal & Income Tax Question

[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"?

[irishdenny]

Originally Posted by 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"?

My 2 Cents... If You are a Collector, than this would be part of your "Hobby" Report on Your 1040A. It's no different than reporting Art, Coins & Stamps.

If You have a "Business", than You'll need to Separate Your "Hobby" from Your "Business" transactions. Over the years I have found that it's Only difficult if I make it So!

I just report it All... As it is!

[Eric72]

Originally Posted by 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"?

Along with Denny Walsh's comment, please allow me to add this:

In the scenario mentioned above, the $200 is gross revenue and the $150 is an expense. Both of these numbers should be reported (and source documents for both transactions would be very helpful.)

The net income of $50 will show on the line item for which the IRS Form instructs you to deduct one particular line from another particular line. So, all three numbers would be reported.

Hope this helps.

Best regards

Eric

[savedfrommyspokes]

Originally Posted by 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"?

Since I have been buying and selling cards, the best investment I have ever made was to secure the services of an accountant who's knowledgeable and focused on self employed individuals. All of my questions I had concerning how to report my activities, such as what can be considered expenses, deductions, etc, were answered very easily by my accountant. My cost for his services (answer my questions, help me to establish a system I maintain to account for my transactions, and prepare my taxes) are about $300/year. Best money I spend all year long.