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Another kick in the junk for US based PayPal users

Walrus
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So is using friends and family tax evasion? Just curious maybe I can black mail some sellers for some goods. Sure I guess I’m guilty to if I paid that way but if I told the IRS agent I really wanted the watch and it was the only way the seller would accept payment maybe I could get additional bonuses for being a rat. Oh well something tells me no one is going to sell me watches anymore
 
Dan S
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Walrus Walrus
So is using friends and family tax evasion? Just curious maybe I can black mail some sellers for some goods. Sure I guess I’m guilty to if I paid that way but if I told the IRS agent I really wanted the watch and it was the only way the seller would accept payment maybe I could get additional bonuses for being a rat. Oh well something tells me no one is going to sell me watches anymore

You can pay taxes on funds that you receive by F&F.
 
kkt
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gemini4 gemini4
Which would you choose?
PayPal reports sales income to the IRS.
PayPal reports purchase expenditures to your wife.
😁

I don't have a wife 😉
 
lexieb007
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Like DanS says - everyone is totally overthinking this (unless you flip for a business)
Oh...just one more thing.. this is what happens when you elect socialist governments, who just love to spend other people's money
Real easy to promise stuff and never actually have to pay for it yourself...
Yep that's right boys and girls someone else will pay for it... in this case, watch flippers....
IMO!
 
cvalue13
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lexieb007 lexieb007
Oh...just one more thing.. this is what happens when you elect socialist governments, who just love to spend other people's money

upload_2021-1-25_18-19-55.gif
 
JwRosenthal
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Do you hear that?? It’s the sound of this thread slamming shut any time now
 
lexieb007
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cvalue13 cvalue13
upload_2021-1-25_18-19-55.gif
well how else do you think governments pay for all their social spending programs...?
You can rest assured all the senators and congressman and those sitting in the European parliament etc making all the decisions aren't paying for it.... so like I said.. this time it's watch flippers, next it will be BTC hddlrs, then on and on to the next asset that people think they can flip "for free"......money's got to come from somewhere... IMO!
Edited:
 
Walrus
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Walrus Walrus
Sure, everybody does
Dans just nervous cause I bought the Ferraris and Daytona’s from him using FF but don’t worry mums the word
 
lexieb007
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Walrus Walrus
Dans just nervous cause I bought the Ferraris and Daytona’s from him using FF but don’t worry mums the word
LOL. yep...ya'll would have been traced for sure.. and using digital blockchain "currency"?.. well only going to make it worse..
BTC via paypal anyone? 🤔
 
gatorcpa
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lexieb007 lexieb007
Oh...just one more thing.. this is what happens when you elect socialist governments, who just love to spend other people's money

johnkennethgalbraith1-2x.jpg

Ain’t no difference folks. At least most of us live in democracies that can change with the times.
gatorcpa
 
noelekal
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At the end of the day ...

"Meet the new boss. Same as the ol' boss."

 
cvalue13
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lexieb007 lexieb007
well how else do you think governments pay for all their social spending programs...?

Well, it started as assistance to Union Civil War veterans and their families; toward the middle it was mostly hospitals, dams, and highways; toward the end, though, it’s mostly paying the healthcare tabs of old, overweight, ex-smoking boomers who want to live an extra six months no matter the cost to society (while complaining of a false definition socialism with their dying breaths).

upload_2021-1-25_20-58-31.gif
 
asrnj77
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I contacted PayPal and was told that my state required a 1099K for any PayPal monies received in excess of $600. Even though it was only required by the state, the 1099K is sent to the IRS and is considered federal business income. It appears that according to the IRS if you receive a 1099K you’re a business. The options are now to file as a separate business entity and itemize to offset untaxed income or you can just eat it (for me it equates to almost 30% taxes on the money I received).

My parents recently told me they were selling their Pelaton exercise bike and somebody wanted to pay via PayPal. I immediately put a stop to that as my parents would suddenly become “business owners” for making a single sale of an exercise bike to their neighbors. I realize that F&F payments would be exempt but the whole experience makes Venmo and other platforms more appealing.
 
cvalue13
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asrnj77 asrnj77
I immediately put a stop to that as my parents would suddenly become “business owners” for making a single sale of an exercise bike to their neighbors.

This doesn’t seem quite right, does it?

asrnj77 asrnj77
It appears that according to the IRS if you receive a 1099K you’re a business.

But, I think while your state law has now put you into that Federal box, requiring you to file Schedule C to report that 1099-MISC income - you can on Schedule C simply report and offset all expenses? This is true for anyone receiving taxi or non-employee income (consultants, landscapers, etc.). I suspect a used Pelaton is not a profit center.

asrnj77 asrnj77
I realize that F&F payments would be exempt but the whole experience makes Venmo and other platforms more appealing.

To be fair, it appears PayPal is merely doing what your state laws require; that means if Venmo or other platforms are not, it is not because the law has changed but instead because you’re choosing to not follow the law (a choice PayPal has taken away from you). Same goes for F&F: it’s not actually “exempt” unless it’s actually transferring ~gifts to actual F&F, it would instead be choosing to skirt the law.

Which is all to say that if in your shoes I would also tell my parents to use Venmo (because the tax damages to the Fed would be $0 assuming a net loss on the Pelaton sale), but it would be on a heads-up basis that there is a risk factor involved that using PayPal would avoid.

*this is not tax advice* 😁
 
Dan S
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asrnj77 asrnj77
I contacted PayPal and was told that my state required a 1099K for any PayPal monies received in excess of $600. Even though it was only required by the state, the 1099K is sent to the IRS and is considered federal business income. It appears that according to the IRS if you receive a 1099K you’re a business. The options are now to file as a separate business entity and itemize to offset untaxed income or you can just eat it (for me it equates to almost 30% taxes on the money I received).

My parents recently told me they were selling their Pelaton exercise bike and somebody wanted to pay via PayPal. I immediately put a stop to that as my parents would suddenly become “business owners” for making a single sale of an exercise bike to their neighbors. I realize that F&F payments would be exempt but the whole experience makes Venmo and other platforms more appealing.

I wonder what @gatorcpa says about this. Previously in this thread we were talking about these profits as capital gains on personal-use items, and I think it would generally be advantageous to pay capital gains tax instead of adding the net profits from a Schedule C into your income. Of course, if you had a "watch business", your expenses would multiply dramatically, but I would be hesitant to do that since it's not really legitimate.
 
asrnj77
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cvalue13 cvalue13
This doesn’t seem quite right, does it?
😁

no it doesn’t....but they would receive a 1099k because the sale is over $600. In the end they could offset it because they sold the bike for less than they paid for it but they’ll have to make additional reporting to itemize the loss to their “business”. An accountant can handle these issues easily but then my parents go from paying TurboTax $40 to paying an accountant $400.

Besides the obvious deduction of selling watches for less than the purchase price ($5300 Speedmaster sold for $3600) I believe the PayPal and eBay fees themselves are deductible.
 
cvalue13
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asrnj77 asrnj77
Besides the obvious deduction of selling watches for less than the purchase price ($5300 Speedmaster sold for $3600) I believe the PayPal and eBay fees themselves are deductible.

I believe the gasoline you expended driving to FedEx is deductible... pile it on!
 
gatorcpa
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Dan S Dan S
I wonder what @gatorcpa says about this.
I say that you should deduct the cost of whatever you sold against the proceeds on Sch. C (if a business) or Sch. D if not a business. Make sure you keep your records in case you are examined.

If you ended up with a net loss, it could offset other income, but bear in mind that “hobby loss” rules could, over time, disallow these losses.
gatorcpa
 
CajunTiger
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asrnj77 asrnj77
My parents recently told me they were selling their Pelaton exercise bike and somebody wanted to pay via PayPal. I immediately put a stop to that as my parents would suddenly become “business owners” for making a single sale of an exercise bike to their neighbors. I realize that F&F payments would be exempt but the whole experience makes Venmo and other platforms more appealing.

I think you are blowing this out of proportion. Are they selling the Pelaton for a profit? Do you do this frequently?
Guy buys new Pelaton for $5000...uses it for a year and sells it to his neighbor for $2500.
He didn't make $2500 in income...he lost $2500. Unless he depreciated the Pelaton in previous years...there is nothing to be concerned with here. Just because you received a 1099 doesnt mean you have to report a profit on your tax return...or report anything for that matter. The only guy that should be concerned is the one that gets a hundred 1099's yet he reports no income.
 
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