I think some of the concerns people have are that, they will get a 1099 form which has the lump sum total dollar amount of all their transactions for the year. And then the IRS presumption would be this is all income and then it will be up to you upon audit to justify not reporting that as income.
At least that’s what I gather from hearing people discuss this issue. Also $600 is a pretty low threshold to be reporting transactions for the year.
I don’t have a venmo account or PayPal so this doesn’t affect me. But I get the impression many people use these venmo type accounts for private transactions, and not because they are running a business and generating income. But the way taxes work and IRS audits work, it will be up to you to justify if you did not report that dollar amount on your income tax returns.
I have been ringing this bell for months. Most FReepers were like, whaat??
Yep, it’s real.
Many of us use the services. Let’s say in the last year you’ve sold a few things on eBay, had a relative send you $1,000 for a piece of furniture and you sold a car on Craigslist. You used Venmo or PayPal because it was easy and safe. To the IRS, this will appear as INCOME.
There is no place or form for you to rationalize, either you put the entire amount down as INCOME or you can explain it in your audit. All this talk about profit/loss only applies if you are filing as a business - and that opens up a whole other area - are you paying self employment taxes on your “business income”?