Will I be taxed for receiving and wiring money after taking commision?

Question

I am a US citizen and currently receiving grants becouse of low Adjusted Gross Income. Some of my friends in Turkey make money from their websites and receive these money via Paypal. They asked me to take out the money from Paypal and to wire the money after taking some commision.

Here are the questions:

Will I need to pay tax for the whole amount if I take out their money from Paypal and send them after taking some commision from the money? Also, do I need to pay tax for the whole amount or just for the commision? Will it effect my AGI, because I do not want to lose my grants.

Thank you.

Answer 1

This sounds like a complete SCAM. Let your friends in Turkey deal with their own PayPal accounts; PayPal is available in most countries. At the very least this looks like some sort of money laundering scheme and that is quite illegal.

Any commissions received are fully taxable. Of course it will affect your AGI! All income does. eBay and PayPal are already on the IRS' radar screen and they are pushing Congress for more reporting from both. PayPal is already considered a banking institution under the law so those transactions are subject to review by the government anyway in certain cases.

Answer 2

If these are your real "friends", then the Commissions only are taxable. However, in order to comply with the IRS and any potential audit, you would probably list on Sched C all of the GROSS income from paypal and in the expenses list commissions paid as an expense. The net amount leftover represents your "commissions". Be aware you have to pay income tax and Social Security/Medicare tax on the net amount.

Good luck. And don't give your friends your bank account #. Just send them a paypal transfer or something like that! Don't even pay them by check, because ince they have your account number, you might as well forget about any money in the account again.

Answer 3

You may not have to worry about taxes as you are probably about to fall for a SCAM.