I need HELP with taxes?

Question

I use a paypal accnt, and was wondering I am a minor [16] if someone sends me alot of money...like 2000 or 4000 or something in that area, do I have to show that on my taxes, that i dont even have b/c i am a minor? If i am just going to spend it, and not save it? Like straight to the mall? How does all of that work? And what if my source of this money, is just from a person not a business or anything, and from another country vs from the states?

ok...then what if its just like gift money. like i just send you like 2000$ what happens then. its not a business or anything its just a personal expenditure. Like if i sent my friend 2000$ is it taxable? or rather they send me.

Answer 1

The IRS doesn't really care whether a person is a minor or not, if they have taxable income. That's why we see people with their summer jobs filing tax returns to get back the withholding on their W-2's. They also don't care what we do with it... like spending it at the mall.

Fortunately, the income of a dependent child will not affect the tax return of the parents who will be claiming this child as a dependent on their tax return.

If you are selling merchandise that you bought to sell online, then you have taxable income and you need to report it on a federal (and possibly state) income tax return. Since this income qualifies as business income, you have to pay Self-Employment tax on part of the profit from it. Fortunately, a person is allowed to write off the expenses they incur in order to make their business income.

You are required by law to keep accurate records as to your income and expenses and to file a federal income tax return. Your parents should know this, and should be doing something about it. At the very least, you should seek their advice about this whole thing.

If you have money coming in from foreign countries, you may qualify for what the IRS calls a foreign income exclusion, but a tax professional will need to make that decision.

Gifts aren't generally taxable, because it is assumed that the person doing the giving has taken care of the tax on a gift. However, there are limitations on this, and you need to do more checking on this, if you've received a large gift... say, at least $5000.

Any income (regardless of whether it comes from a business or an individual) that a person receives for goods or services when they're conducting a business is taxable to the extent that it exceeds the expense of doing business.

Answer 2

The US Treasury Department defines taxable income as any income not specifically excluded. True gifts (no strings attached are tax free to the recipient but may trigger a gift tax to the giver. The basis of a gift is the donor's basis. The law allows a lot of deductions, credits, etc. to offset income and taxes that a taxpayer might otherwise need to recognize. Many of them make sense; e.g., you may deduct the cost of goods sold if you are selling inventory held; you may deduct what you've paid (less depreciation claimed) for capital assets. Other items don't make particular sense, but are allowed anyway; e.g., taxes paid and home mortgage interest. The tax law makes no exceptions for how old you are or where it came from. If you owe, you owe; pay up. If you need help figuring what you owe, there are some free resources; e.g., AARP and the IRS. If you don't want to worry about it quite so much, you can take them to a paid preparer such as H&R Block or a local CPA.

Answer 3

That depends upon what the money is for. If you sold some personal property for less than you paid for it, it's not taxable. If you're in business, then it may be taxable. Without knowing what you're talking about, it's not possible to say anything more.

The source of the funds really doesn't matter. Income from a foreign country is taxable just as it is if it's from within the US.

Answer 4

any income over $3,200 (may be $3,600 for this year) needs to be reported. being a minor is irrelevant except that you have the option of allowing your partents to claim your earnings. And be prepared to pay self employment taxes on that earning. It is also possible your business can be considered a hobby, and then a different set of rules apply.

But then again, you should deduct any business expenses incurred, such as your pay pal account. For instance, if your selling baseball cards, you guy one for $100 and sell it for $110, your profit is only $10, not $110.

I don't know how accurate the IRS is at catching paypal profits, but legally they can do some damage. Better to get a business lisence and learn how to file taxes now if you are interested in going into business.

Gifts from one individual to another do not generally have tax implications. You don't claim them as income and the lender can't deduct them. This is different if a company gives you a gift, like a toaster from a bank. Believe it or not, that needs to be reported at its fair market value.

Answer 5

Gifts aren't taxable at all at that level, and they are never taxable to the receiver. I doubt that at age 16 you have friends or random people giving you $2000. If it is your grandparents, maybe, although I would think they would mail you a check.

As others have said, if you are selling over the Internet and make a profit, the profit is taxable.

Answer 6

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Answer 7

Why would someone you don't know send you that kind of money? Sounds like you are being setup for a scam. Talk to your parents.