I wanted to know if I should report my paypal earnings to the IRS. I'm inclined not to, as I don't believe paypal reports my info to the IRS. I know Google does, so I know I have to file for my Adsense earnings. But is there anyone here who reports their Paypal earnings to the IRS, or do you skip that part and feel what the IRS doesn't know won't hurt them?
If you earn over the reportable minimum, which I think is somewhere around $700 annually, then you should if you don't want to risk trouble later.
Paypal isn't a revenue source at all. There is no way to tell if the money in the account are just transfered funds or income. You must track down the income sources to find the revenue. I do use paypal receipts to track income for my records though. A very nice way to get a receipt for a service you may buy that didn't generate an invoice. Paypal is very much linked to banking information. The way I see it, is if you get audited, they will see the transactions start to question the transactions. You will however have to declare the income generated from any interest you receive if you have such accounts with paypal.