is PayPal required to report gift transaction in and out of an account?

[ithelps]

If a PayPal account only receives large gift payments, does PayPal report this? I'm aware of the service payments, but what about gift payments?

[Evofox]

Originally Posted by ithelps

If a PayPal account only receives large gift payments, does PayPal report this? I'm aware of the service payments, but what about gift payments?

A couple of years ago I had an account that was receiving only gift payments, let's say 2,3 a day for 7-8 months.. I never had a problem.. But I think is risky

[ithelps]

Originally Posted by Evofox

A couple of years ago I had an account that was receiving only gift payments, let's say 2,3 a day for 7-8 months.. I never had a problem.. But I think is risky

What made you stop accepting gift payments? Did you ever report your gift income to your government? Did that PayPal had your real info?

[PepsiCoin]

Originally Posted by ithelps

What made you stop accepting gift payments? Did you ever report your gift income to your government? Did that PayPal had your real info?

i'm curious as well...

[Evofox]

Originally Posted by ithelps

What made you stop accepting gift payments? Did you ever report your gift income to your government? Did that PayPal had your real info?

Real info, no report to government, I stopped only because I changed business type and I no longer have to do that

[phaz0rz]

Here's the factual answer:

Only commercial transactions are required to be reported. Only commercial transactions are included if/when you have 1099K's made.

This is part of the reason Paypal is so strict about F&F payments. They aren't required to be reported so they are an easily detectable method of laundering money without being expected to pay taxes.

F&F/"gift" payments are not reportable but it's very very easy for Paypal to tell when you're using F&F payments for commercial transactions. Nobody sends their friend thousands of dollars regularly as a "gift". Paypal shuts down the account every time they catch on.

Using F&F payments for commercial transactions is also fee evasion from Paypal's POV since they aren't getting the fee they charge for commercial transactions. That's another reason they're so harsh with the consequences once they catch on.

[ithelps]

Originally Posted by phaz0rz

Here's the factual answer:

Only commercial transactions are required to be reported. Only commercial transactions are included if/when you have 1099K's made.

This is part of the reason Paypal is so strict about F&F payments. They aren't required to be reported so they are an easily detectable method of laundering money without being expected to pay taxes.

F&F/"gift" payments are not reportable but it's very very easy for Paypal to tell when you're using F&F payments for commercial transactions. Nobody sends their friend thousands of dollars regularly as a "gift". Paypal shuts down the account every time they catch on.

Using F&F payments for commercial transactions is also fee evasion from Paypal's POV since they aren't getting the fee they charge for commercial transactions. That's another reason they're so harsh with the consequences once they catch on.

This is what I thought, because there are a bunch of accounts that hasn't been verified so how would PayPal even report accounts with ⊗⊗⊗⊗ identity. But my next question is if an account is verified and received large gift payments, then would PayPal report gift transaction to the government versus an account that hasn't verified their identity?

I understand that they aren't required but would they make an exception for those who have their ssn to PayPal?

[Evofox]

Originally Posted by ithelps

This is what I thought, because there are a bunch of accounts that hasn't been verified so how would PayPal even report accounts with ⊗⊗⊗⊗ identity. But my next question is if an account is verified and received large gift payments, then would PayPal report gift transaction to the government versus an account that hasn't verified their identity?

I understand that they aren't required but would they make an exception for those who have their ssn to PayPal?

What do you mean by "large payments"? and How many payments are you talking about? i think in EU is very easy to do that but not in the US

[phaz0rz]

Originally Posted by ithelps

But my next question is if an account is verified and received large gift payments, then would PayPal report gift transaction to the government versus an account that hasn't verified their identity?

No.

Reporting income is not something they do at their discretion. It's black and white.. either it was a commercial transaction or it was not. Paypal isn't allowed to assume certain F&F payments are commercial transactions.

Again, this is why they're so strict about not letting users use F&F payments for commercial transactions. They aren't reported so it's textbook tax evasion.

[phaz0rz]

What we are discussing is actually the loophole which allows Cash App to exist. Cash App will allow you to take in way over $20k/200 transaction per year, and they never generate 1099k's, because their service isn't meant to facilitate commercial transactions.

[ithelps]

Originally Posted by phaz0rz

What we are discussing is actually the loophole which allows Cash App to exist. Cash App will allow you to take in way over $20k/200 transaction per year, and they never generate 1099k's, because their service isn't meant to facilitate commercial transactions.

Interesting... Thanks for the answer, this helps clear things up a bit regarding how the law and these businesses work.

[ithelps]

Originally Posted by phaz0rz

What we are discussing is actually the loophole which allows Cash App to exist. Cash App will allow you to take in way over $20k/200 transaction per year, and they never generate 1099k's, because their service isn't meant to facilitate commercial transactions.

Actually isn't that how venmo also works? There actually isn't that much commerical transaction on Venmo and most of the funds are being transfered through friends and they don't require you to verify your ID so in a way it's similar to cash app. But actually, I remember they requiring you to ID after receiving more than $500 or $1000, so I think Venmo is even worse than Cashapp.