heads up with paypal transfers

just a heads up with use of paypal for transferring money to family and friends
the thread about hiring all these new irs agents spurred this thread here
i replied in it that taxing unrealized profit/gains might no longer be a rumor
brings me to this as a topic here

for those who use paypal to transfer money to family and friends
are you aware
currently paypal is regarding such as taxable sales that you will be tax responsible for

to check if simple money transferts are being recorded as taxable sales
go to help and search 1099
you'll see a link to "What if the amount reported on my Form 1099-K is incorrect?"
then hit the blue highlighted "reconciliation report"...click that
then you'll see...."sales insights" set that search parameter for 2022
you've finally arrived at what paypal amount they regard as taxable sales

myself
it was brought to my attention and it checks out
as it is
paypal is regarding simple money transfers between friends and family are being recorded as taxable sales

just a heads up people for those like me who have used paypal as a money transfer vehicle
stay on top of this
as with all the new irs agents surely you need to be on top of all the irs is being sent in your name

of note
i've sold nothing online this year but show i'm responsible for $1700 in taxable sales simply for the transferring money back n forth
between my sister and a friend

that's all
carry on and have a good night

a reply to: lasvegasteddy

Well that's ridiculous! Giving someone money is NOT purchasing something. Is this just Paypal doing this on its own, or due to some new (criminal) government rule?

a reply to: lasvegasteddy

My daughter is needing a PayPal acc't to get paid for a job, but can't do it right now for a technical reason. I was thinking about letting her use mine but wasn't sure if that'd not be a problem. This certainly gives me pause. Thanks.

Its called gift tax.

a reply to: new_here
paypal claims it's an issue they intend to work on....going on 3 months since i was made aware
so it's not a govt thing

the govt thing is any sales online over $600 in a calendar year is now taxable though
this includes etsy-ebay-amazon most all online sales web venues
are now to issue 1099's on cumulative amounts totaling $600

a reply to: incoserv
i'd have her check into that very carefully as she could have withholding tax then get socked with a 1099 from paypal too

best to know and be ready for it

the really sad part is e.g.
i've borrowed from my sis and paid her back via paypal

now get this
when i borrowed from her....it shows as being taxable as my "sales"
when i paid her back..........it shows as her sales

as one can see money that is taxed to death to begin with being transferred back n forth
they're trying/hoping to collect twice as it's being counted as 2 sales from different parties is all

a reply to: lasvegasteddy

bump
very important.
SnF

originally posted by: eManym
Its called gift tax.

lending money between family n friends
better not be considered to be a gift ....and taxed

imagine sitting in front of a newly hired refugee irs agent
while trying to explain paypal screwed up on that 1099

a reply to: lasvegasteddy

Thanks for the heads-up.



Cheers

oner last note here
i only use paypal between family n friends
other money transfer vehicles are used noting zelle
i don't use zelle or any other
but one might investigate if such others like zelle
are currently building a 1099 that will be reported to the irs

maybe a mod would keep this pinned or something for awhile to get this heads up out there
thanks in advance if so

I would be very careful about using Paypal in general.

They can lock you out of your account and keep all your money for months. They don't need to give you notice or tell you why.

Happened to me last year. I rarely used paypal but they had some really good coupons at Christmas if you used it at check out and I also started using it to pay the guy who shovels my driveway (that was a few $25 transactions). Nothing else. The only thing I could think of is my bank was going through a merger and I got a pop-up to log back in with my security credentials - which in order not to hold-up the check out line I skipped and used a physical card. About a week later, I logged back in to enter the security info and I was locked out - forever. I can NEVER, ever use paypal again.

I google this and apparently it happens to all sorts of random people and Paypal keeps their money for months. I can understand locking an account but Paypal doesn't give people the option of clearing up in issue. If they suspect ANYTHING or your account falls into a slightly higher statistic it's shut down forever.

a reply to: Daughter2

it's happening to me at the moment! i've had a paypal account for 18 years, and now that i've decided to sell a few of my old records (via discogs), paypal have locked my account down and demanded valid I.D and proof of fulfillment.... the proof of fulfillment isn't a problem.... but my only i.d. is a passport that ran out in 2018, and with no hope of near-future travel and limited funds, i decided that there's not much point in renewing it... i have no other form of I.D. so it looks like I'm going to have to get another passport just to access my paypal account... and it's going to take bloody ages too...

You are allowed to give someone up to $16,000 per year with no tax consequences.

originally posted by: 00018GE
You are allowed to give someone up to $16,000 per year with no tax consequences.

I'm pretty sure that the IRS tax-free financial gift allowance you're referencing was limited to spouses only. And I honestly thought it was a one-time thing, as in once in your lifetime, not annually. And the last time I heard about it was more than 10yrs ago... I would be shocked if they haven't tightened the rule since then, if not outright eliminated it.

Any accountants in the house? Inquiring ATSers want to know.

a reply to: lasvegasteddy

This is pure speculation and has nothing to do with more IRS agents.

Get your facts in order with verifiable (meaning legitimate sources - not facebook or tik tok) and then we'll talk.

If you want to freak out even more research "Gross Flows Bank Reporting Provision".

Don't use Paypal because they are a rip off.

So sending money to

My sister to save for me because I suck at saving
My father to repay some money that I borrowed two years ago
My son who asked to borrow some money to get out of a financial crunch
My daughter who is in college and needs some fast cash
My granddaughter as a birthday present
My friend who purchased some items for me while in big town and paid with his own money so I am reimbursing him.

Those possible scenarios above are all valid reasons someone might send money and should not be taxed but also aren't anyone else's business.

ETA:

Ok, just looked up some stuff. PPFF is Paypal for friends and family. It isn't taxable but it is reportable. Go figure:

PayPal Report To IRS On Friends And Family
You shouldn't have to report to the IRS on PayPal Friends And Family transactions; it is only applicable for commercial transactions. But in order to comply with the financial regulations of the government and keep tax evasion at bay, PayPal monitors all of its transactions.

For buying goods and services, PayPal reports transactions from sellers who receive more than $20,000 in gross payments and more than 200 separate payments within a calendar year.


www.zenledger.io...

a reply to: FyreByrd
what's wrong with you and no i don't want to talk to you

the mass who read my op comprehended clearly i was passing along info
which may affect them as many use paypal

the message had nothing to do with what you perceived it to do

"BEAT IT"

originally posted by: StoutBroux

It isn't taxable but it is reportable. Go figure:

i for one read between lines there and wasn't even aware of that
not taxable but reportable
" YIKES "


when my sis contacted them they said it was an IT issue they hope to resolve but if not
she could on her own have a tax accountant fix this 1099 reporting error and address it when filing her taxes

originally posted by: incoserv
a reply to: lasvegasteddy

My daughter is needing a PayPal acc't to get paid for a job, but can't do it right now for a technical reason. I was thinking about letting her use mine but wasn't sure if that'd not be a problem. This certainly gives me pause. Thanks.

You might want to consider telling her to find a different job. If a potential employer told me they wanted me to have a PayPal account to get paid I'd laugh in their face.

Every single person I know who has a job that wants their employees to use PayPal have ended up getting paid late or having to fight to get paid in the first place.