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How to add Payapl to the tax return?

Discussion in 'Payment Processing' started by Site, Jan 11, 2007.

  1. #1
    Hi,

    a few days before new year's day a funded my Paypal account with 500 USD.
    I used only $100 that day, and still have $400 this year.

    How should I count it?
    i.e Is it $100 in IRS eyes, or I should include the whole $500 in my tax return report?

    Cheers
     
    Site, Jan 11, 2007 IP
  2. fsmedia

    fsmedia Prominent Member

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    #2
    anything that is earned under $600 does not need to be reported to the IRS, so you should be fine without reporting any of it.
     
    fsmedia, Jan 11, 2007 IP
  3. Site

    Site Member

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    #3
    Thanks,
    Acutually, I have earnings of a few dozens of grands.
    I funded my paypal account with $500, but spent only $100 in 2006.
    Should I declare paypal expenses of only $100 in the tax return?

    btw, I have no revenues in my paypal account.

    Cheers :)
     
    Site, Jan 11, 2007 IP
  4. fsmedia

    fsmedia Prominent Member

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    #4
    If you have revenue of X grand, then yes, you should be reporting it.

    What do you mean by "Funded"? just adding money to the account?
     
    fsmedia, Jan 11, 2007 IP
  5. Site

    Site Member

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    #5
    Yes, Funded is added money to my Paypal account.

    But, is it right to report expenses of $500 while I used ONLY 100?

    Thanks again mate :)
     
    Site, Jan 11, 2007 IP
  6. fsmedia

    fsmedia Prominent Member

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    #6
    if you added funds of $500, that has absolutely nothing to do with taxes. taxes are only based on what you earn.
     
    fsmedia, Jan 11, 2007 IP
  7. Site

    Site Member

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    #7
    Thanks a lot fsMedia!!
     
    Site, Jan 11, 2007 IP
  8. sundaybrew

    sundaybrew Numerati

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    #8
    Oh interesting I thought paypal wasnt actually taxable income....
     
    sundaybrew, Jan 11, 2007 IP
  9. fsmedia

    fsmedia Prominent Member

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    #9
    hah, that's a funny one :rolleyes:

    sure it is, it's still income no matter how you look at it.
     
    fsmedia, Jan 11, 2007 IP
  10. epic1231

    epic1231 Peon

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    #10
    i don't remmeber looking at my previous IRS w9's from paypal what do they breakdown for you, the total you had incoming or the total you used the site? I know they send you something but i never really looked at it before, but this year i'm sure i'm going to have to claim it.
     
    epic1231, Jan 11, 2007 IP
  11. Colbyt

    Colbyt Notable Member

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    #11
    No it is not. For tax purposes a PayPal account is the same as a bank account. You simply transferred money from one account to the other.

    You do not have a tax deduction until you spend that money.
     
    Colbyt, Jan 11, 2007 IP
  12. 007

    007 Well-Known Member

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    #12
    There is a difference between PayPal "income" and money that you receive to your PayPal account.

    First of all, PayPal doesn't report transactions to the IRS. Period. That means what happens IN PayPal, stays in PayPal UNTIL it is withdrawn from your PayPal account. At that point it is legal income.

    So if you earn $10k a year in PayPal, and don't actually take that money out, but instead use it to pay hosting, advertising, development, etc, the government will never see that money, where it came from, or who it was paid to. Sure, technically it's still "income" per-say even before you withdraw it, but until the IRS makes PayPal report on that, they'll have no way of knowing what goes on in PayPal.

    So, no, the government won't see it, however it's the same as paying somebody in cash, or receiving cash payments. The government can't track this, but it's still illegal to not report it. This is a decision everybody has to make on their own, but it's also a scenario where it's much better to be on the safe side of the law.. then the sorry side. :)

    I highly recommend filing your PayPal income as taxable income. To find your income. That's why it's smart to keep track of all of your PayPal transactions as you receive them.. Otherwise you are in for a real pain trying to load a year's worth of "Payment Received" transactions in the advanced search. If you are asking the question in the first place I'm sure that means that you have more than just a few transactions to report on... ;)
     
    007, Jan 11, 2007 IP
    epic1231 and Not Registered like this.
  13. epic1231

    epic1231 Peon

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    #13
    + rep for that post very good info above.

    Thanks,
    Bill
     
    epic1231, Jan 12, 2007 IP