So, Paypal GIFT does count as income

[BerryTogart]

Crap very sorry for you man - commends on how you handle this situation, nevertheless let us know when/if when can help

 

[xorthen]

So, how exactly do they even have the legal right to pry into your private financial information in the first place? What gives them the authority?

 

[hyper]

lol

 

[wyndcrosser]

That's crazy to hear. I have not linked my pp account to my social, I didn't even know that this was possible for them to do. I do wonder though, how much money has to be involved for them to bother sending out a letter.

Aren't you able to write off all this by having it as a "hobby"? I am sure you have spent more than just 21k on arcade stuff and video games. I mean, you also buy video games with your credit card and debit card, correct? You might be able to make up the other 2k of the 23k by showing proof of additional transactions. Although at 2k it might be below the taxable threshold.

Hope you get everything sorted out man, keep us updated.

When I did it, it was because PayPal wouldn't let me pull more than $500 from my PayPal account per month without doing it. I usually only do about 2k or so a year with PayPal.

 

[MCF 76]

This is honestly making me sick. Mike is one of my best friends you won't ever know a nicer guy. He would do anything to help you out. He has bought & sold for me a ton of stuff over the last few years. So i feel a decent chunk of my crap is responsible for this adding up to get to this tier of debt. Mike's the kind of guy that would never take a hand out but this a hand up Mike. And thats what you do for friends, I want to help 100%. So please consider letting all your friends help you and please don't sell all your gear it isn't necessary.

 

[Fritz]

So, how exactly do they even have the legal right to pry into your private financial information in the first place? What gives them the authority?

Eh this is the government (IRS). They do what they want. Basically they saw how much potential revenue they were missing out on and since 2009 online payment processors have been required by law to file a 1099 if you hit certain sales volume criteria.

They tack the 'gain' on top of your other taxable earnings so it can be a bitch.

This really sucks. Mike would it help if people sent you a signed statement declaring they paid XXX for a purchase on a particular day? For those gift payments that will not count towards lowering the total.

 

[mjmjr25]

Mike would it help if people sent you a signed statement declaring they paid XXX for a purchase on a particular day? For those gift payments that will not count towards lowering the total.

I did ask that question - she sort of smiled as if i'd said something cute. She basically said most auditors are by the book and once it looks like you've tried to cheat - documents must be indisputable, so for something like a member saying I paid this payment for this item at cost on this date - it would need to be notarized. The tedium associated with that is monstrous. That said - I am going to try and get a live IRS body on the phone Monday to ask that and a few other questions. I may ask a few guys who sent over $500 each to do that if it seems like it could help.

Marty - don't worry about it man - seriously, it's good. I'll hit you up later today.

 

[LegoSlug]

I did ask that question - she sort of smiled as if i'd said something cute. She basically said most auditors are by the book and once it looks like you've tried to cheat - documents must be indisputable, so for something like a member saying I paid this payment for this item at cost on this date - it would need to be notarized. The tedium associated with that is monstrous. That said - I am going to try and get a live IRS body on the phone Monday to ask that and a few other questions. I may ask a few guys who sent over $500 each to do that if it seems like it could help.

Marty - don't worry about it man - seriously, it's good. I'll hit you up later today.

I might be one of those guys. Let me know what you need from us.

 

[mjmjr25]

I might be one of those guys. Let me know what you need from us.

Ha, yeah, you are definitely one of the guys who got in on a lot of buys and I think you and a couple others always pay as goods, but cover the fee of course - who knew it would come to this. But I appreciate that offer. Maybe i'll start getting those ducks in a row now so on the off-chance I can get an in-person with a live IRS body I can show him a statement from you and a few others. I'll pm the guys who sent over $500 in 2014. I'll be in touch via pm later today - thanks dude.

 

[300wins]

Damn, good luck with this Mike. I know you don't want any financial help, but if you change your mind, we're here for you.

 

[Xian Xi]

I'm in the same boat as well. It would be helpful if PayPal would subtract shipping costs tied to a transaction in a report. I have to go through 519 transaction for 2015. Estimated shipping costs are about $8k last year. I need to find someone to do this for me, I don't have the time. I also need to redo 2014 as well.

 

[wyo]

I'm in the same boat as well. It would be helpful if PayPal would subtract shipping costs tied to a transaction in a report. I have to go through 519 transaction for 2015. Estimated shipping costs are about $8k last year. I need to find someone to do this for me, I don't have the time. I also need to redo 2014 as well.

AFAIK you have to go to the Reporting Center and then Transaction Finder and do a search for "shipping". It's a PITA though because you can only search 90 days at a time max. If there's a better way, I haven't found it yet. Regular or advanced search in Activity tab didn't work right for me. Also in the Reporting Center, the Financial Summary report is helpful because it totals all the PP transaction fees you paid. Then it seems to be a matter of searching outgoing payments manually to add up your business-related expenses. That part's gonna take a while for you I'm sure. Good luck!

 

[mjmjr25]

I'm in the same boat as well. It would be helpful if PayPal would subtract shipping costs tied to a transaction in a report. I have to go through 519 transaction for 2015. Estimated shipping costs are about $8k last year. I need to find someone to do this for me, I don't have the time. I also need to redo 2014 as well.

Ugh. Sorry man. There is a PDF you can print out when you click on the tax year - but that's only payments in; not your payments out to USPS.

You can also do an advanced search on activity - it will help a small amount.

ACTIVITY-->ADVANCED SEARCH-->PAYMENTS SENT ------ From there it will at least remove some of the clutter so you can just zero in on payments to US Postal Service. I've doing that trying to get everything as organized as I can.

 

[bubba966]

Well Mike, as I just said in my MP to ya if you gotta pay taxes on the GB "income" then that's part of the expense of the GB and as such shouldn't be shouldered by yourself. So I've got $ to send ya for my part of the expense of that if it comes to that. And you choose how you want me to send it, PP/Dwolla/MO/bank transfer/watever.

 

[kuze]

Well Mike, as I just said in my MP to ya if you gotta pay taxes on the GB "income" then that's part of the expense of the GB and as such shouldn't be shouldered by yourself. So I've got $ to send ya for my part of the expense of that if it comes to that. And you choose how you want me to send it, PP/Dwolla/MO/bank transfer/watever.

Agreed. Same here.

 

[xorthen]

Eh this is the government (IRS). They do what they want. Basically they saw how much potential revenue they were missing out on and since 2009 online payment processors have been required by law to file a 1099 if you hit certain sales volume criteria.

They tack the 'gain' on top of your other taxable earnings so it can be a bitch.

This really sucks. Mike would it help if people sent you a signed statement declaring they paid XXX for a purchase on a particular day? For those gift payments that will not count towards lowering the total.

I would think that since it's not an actual business they would have no ground to stand on. I guess they have their own criteria for what constitutes a business but it seems to me like it's just a way for them to get more money from people. I mean, technically if you are just selling private goods that you own I don't really see that as being a business or for profit. Especially if you buy the items initially and then decide to sell them later on down the road because technically you aren't profiting if they are goods that you bought originally and are just getting money back that the goods were worth. If you were selling the items for inflation/gains then I could see the reason for the IRS to be all butthurt.

 

[K-2]

Double dittos on what Bubba said.

 

[caldwert]

I've only done a few buys with you but I'll kick in some money for sure. I wouldn't trip too much over the payments, but I work in Corporate Tax and used to dispute over 300 notices/issuances/fines/audits a year for my last employer. So I'm a bit desensitized to warning letters. One thing though is you can always dispute the principal and even if that gets waived, you still generally have to pay the interest. I would most definitely dispute this and not use HR Block. One of my buddies writes parts of the 1040 in Washington and worked at Block's HQ in KC as part of their backup research team for times when guy like you come in. If you're up for it, I could call him and see what he thinks you should do. All of my experience is battling for large corporations vs. states, not the actual IRS itself. I'm not a CPA (eligible but haven't sat for it) so officially I know nothing, haha.

 

[grendelrt]

Damn this is some rough stuff man. I know you are saying you will take care of it, but I wouldn't mind chipping in a few bucks as well. Even if outside help doesn't pay it all down it could help soften the blow so you don't have to take all of the burden. See how much you can work out with the IRS and then we could send some help your way.

 

[mjmjr25]

IIf you're up for it, I could call him and see what he thinks you should do. All of my experience is battling for large corporations vs. states, not the actual IRS itself. I'm not a CPA (eligible but haven't sat for it) so officially I know nothing, haha.

Thanks, Bob. I found out there's a regional IRS office about 25 mins from my house - i'm going to pop in there on Monday with all of the documentation I have. I've got invoice receipts on all the flashcart buys and invoices on all the Tops / G-Front buys too. The days we were getting Last Blade 2 and Mr. Driller G for $55 and Panic Bomber for $45 - ha! Anyways - with that and a handful of emails from the guys who sent the most money - I feel like I can at least make the case that this was not business income - take it right to the horse's mouth. If that fails - i'll definitely hit you up for that offer of a call to your friend. Thanks!

 

[caldwert]

Yep, just let me know. Turns out two knucklehead college roommates end up both working in the tax industry, something NEITHER of us ever would have imagined. I am interested in how hard they're going to try and screw you since you didn't have an LLC set up or whatnot to funnel the money through even though I think there's a pretty clear case what you were actually doing. If this is the case, then many people who run NCAA pools are fucked. I know of the biggest one I play in (400+ entries) started to get heat from Paypal this year.

 

[Viewpoint]

Wow sorry you had to go thru this dude. I've never done a group buy from you before but I'm sure i bought something from you awhile back so I can kick a few bucks your way if need be.

 

[Reclaimer]

Best of luck handling this, you are smart enough to get through it alone... But don't! Let me know if there's any way to help! In for some cash if that's what you need.

 

[aha2940]

I got some PGM stuff from Mike IIRC. As others have said, anything you need, I'm all to help you the best I can. Best of luck with all this.

Regards.

 

[caldwert]

Talked with some coworkers today. They said you should come up with all the support you have and file 2 amended returns with a Schedule C included, marking yourself as sole provider. Not sure what you've heard in the meantime, but they said it didn't matter that you didn't have a business legally formed. I think one of them does something similar for their parent's rental property income.

Edit: by 2nd amended returns, I meant for 2014 and 2015. I've filed hundreds of amended returns in my life for the work I do, not at all a big deal.