I sent myself multiple invoices on PayPal totaling about $2000 and paid it off with my own money. Do I have to file and report this? I didn’t make any profit from these transactions and in fact, I lost money due to transaction fees.
I sent myself multiple invoices on PayPal
…why? Moving money from one of your pockets into another isn’t a taxable transaction. This is like transferring money between bank accounts, except you’re paying a fee for it.
I sent myself multiple invoices on PayPal totaling about $2000 and paid it off with my own money.
I’m genuinely curious… why would you do this? What was the thought process behind it?
This situation sounds suspicious. Just a heads-up: the rule for reporting income is nothing new. You’re still required to report all income, regardless of the amount. The $600 rule mainly applies to platforms like PayPal and eBay, which are now required to report payments to the IRS on your behalf.
@Stevie
That’s not correct. The $600 rule isn’t fully in effect yet. In 2024, you don’t have to report anything under $5000 per transaction. Even if you get a 1099, you can ignore it.
Sloane said:
@Stevie
That’s not correct. The $600 rule isn’t fully in effect yet. In 2024, you don’t have to report anything under $5000 per transaction. Even if you get a 1099, you can ignore it.
The $5000 threshold for issuing a 1099 applies to the payer. But for taxpayers, you’re still required to report all income, even $1.
Sloane said:
@Stevie
That’s not correct. The $600 rule isn’t fully in effect yet. In 2024, you don’t have to report anything under $5000 per transaction. Even if you get a 1099, you can ignore it.
Could you provide a source for that information?
@Sai
They can’t cite a source because they made it up. You must report all income, and the platforms only report when the threshold is met.
Sloane said:
@Stevie
That’s not correct. The $600 rule isn’t fully in effect yet. In 2024, you don’t have to report anything under $5000 per transaction. Even if you get a 1099, you can ignore it.
That’s incorrect. Legally, you must report all income. The $5,000 reporting threshold applies to third-party marketplaces (like eBay) in 2024, but your legal obligation to report is $1. If you get a 1099-K, the IRS already knows about it. Failing to report could result in an audit or worse.
I don’t understand why you’re sending invoices to yourself. PayPal will automatically send a 1099-K if you meet the reporting threshold. If you’re using platforms like eBay for personal sales, you’re responsible for filling out Schedule D to declare any profits or losses from the sale of assets. You can’t deduct losses if you’re not operating a business.
I once helped a guy who did this when I worked as a case advocate in TAS. He was reviewed by the IRS after doing this and ended up being examined. The intention was to withdraw cash from a credit card without the associated withdrawal fees, but it ended up costing him more in fees and interest than it would have if he just paid the fees. Bottom line: you should report it on your return.
You should be getting 1099s from PayPal and Cash App automatically. If you receive a 1099, the IRS already has a copy and will check that you filed correctly.
Yes, it’s still considered income because the transaction isn’t treated like a refund. It’s as if you never made the original purchase.