Hello, ARMY!!ย 
Many of us are familiar with PayPal.
There are some details of importance this post will try to address in regards to:ย 
ย PayPalโs tax reporting requirementย ย transaction activity andย ย the potential risks involved.
This is a long post but please please do take the time to read through to the end. Thank you so muchย 
DISCLAIMER: This is not tax advice. For specific guidance, please consult with a tax professional.
๐ ๐๐๐๐๐๐ & ๐ ๐๐๐๐๐ ๐ฏ๐ฌ. ๐๐๐๐๐ & ๐๐๐๐๐๐๐๐โ
When using PayPal to transfer money, there are two different options:ย Friends and Family or Goods and Services.
The ๐ ๐ซ๐ข๐๐ง๐๐ฌ ๐๐ง๐ ๐ ๐๐ฆ๐ข๐ฅ๐ฒ option is used to send a gift or a contribution to a friend or family member.
ย The Friends and Family option is ๐ง๐จ๐ญ ๐๐ฏ๐๐ข๐ฅ๐๐๐ฅ๐ ๐ข๐ง ๐๐ฅ๐ฅ ๐๐จ๐ฎ๐ง๐ญ๐ซ๐ข๐๐ฌ.
The ๐๐จ๐จ๐๐ฌ ๐๐ง๐ ๐๐๐ซ๐ฏ๐ข๐๐๐ฌ option is used when paying for a purchased good OR service provided with a transaction fee charged by PayPal.
๐๐๐๐๐๐ ๐๐๐ ๐๐๐๐S
PayPal has reporting requirements to the ๐๐ ๐๐ง๐ญ๐๐ซ๐ง๐๐ฅ ๐๐๐ฏ๐๐ง๐ฎ๐ ๐๐๐ซ๐ฏ๐ข๐๐ (๐๐๐) for any payments RECEIVED that are identified as ๐๐จ๐จ๐๐ฌ ๐๐ง๐ ๐๐๐ซ๐ฏ๐ข๐๐๐ฌ.
In accordance with this requirement, PayPal tracks the total volume of ๐๐จ๐จ๐๐ฌ ๐๐ง๐ ๐๐๐ซ๐ฏ๐ข๐๐๐ฌ payments RECEIVED on all accounts to determine whether the total exceeds the IRS threshold in a calendar year.
If an account exceeds the IRS threshold forย ๐๐จ๐จ๐๐ฌ ๐๐ง๐ ๐๐๐ซ๐ฏ๐ข๐๐๐ฌย payments RECEIVED, PayPal will issue a ๐
๐จ๐ซ๐ฆ ๐๐๐๐-๐ to the account owner and send a copy to the IRS.ย 
Goods and Services payments SENT do NOT result in a 1099-K
๐ ๐๐๐ ๐๐๐๐-๐
๐ ๐จ๐ซ๐ฆ ๐๐๐๐-๐ย is the document used to reflect the total amount of payments received electronically for ๐๐จ๐จ๐๐ฌ ๐๐ง๐ ๐๐๐ซ๐ฏ๐ข๐๐๐ฌ via third party payment processors like PayPal.
The recipient of the 1099-K is required to report that information on their individual tax return as ๐ญ๐๐ฑ๐๐๐ฅ๐ ๐ข๐ง๐๐จ๐ฆ๐ and or explain with evidence to the IRS (if requested) that the 1099-K was received for a ๐ง๐จ๐ง-๐ญ๐๐ฑ๐๐๐ฅ๐ ๐ญ๐ซ๐๐ง๐ฌ๐๐๐ญ๐ข๐จ๐ง.
This could result in additional taxes being owed and failure to comply may result in serious consequences.
DISCLAIMER: This is not tax advice. For specific guidance, please consult with a tax professional.
๐๐๐๐-๐ ๐๐๐๐๐๐๐๐๐
Recently, the 1099-K tax reporting requirement threshold was changed.
Prior to 2022, third party payment processors like PayPal were required to report the total payments received for Goods and Services over $๐๐,๐๐๐ AND over ๐๐๐ separate ๐ฉ๐๐ฒ๐ฆ๐๐ง๐ญ๐ฌ in a calendar year.
Certain states (VT, MA, VA, IL, MD) had lower reporting thresholds ranging between $600 to $1,000.
๐จ ๐๐๐๐๐๐๐๐๐ ๐จ
As of January 1, 2022 third party payment processors like PayPal are now required to report the total payments received for goods and services over $๐๐๐ ๐ซ๐๐ ๐๐ซ๐๐ฅ๐๐ฌ๐ฌ ๐จ๐ ๐ญ๐ก๐ ๐ง๐ฎ๐ฆ๐๐๐ซ ๐จ๐ ๐ฌ๐๐ฉ๐๐ซ๐๐ญ๐ ๐ฉ๐๐ฒ๐ฆ๐๐ง๐ญ๐ฌ.
PERSONAL VS. BUSINESS
There are two types of PayPal accounts: personal or business.
PayPal ๐ฉ๐๐ซ๐ฌ๐จ๐ง๐๐ฅ accounts are designed to be used primarily as an online payment method as well as a way to transfer money via ๐ ๐ซ๐ข๐๐ง๐๐ฌ ๐๐ง๐ ๐ ๐๐ฆ๐ข๐ฅ๐ฒ.
PayPal ๐๐ฎ๐ฌ๐ข๐ง๐๐ฌ๐ฌ accounts are used by businesses to accept online payments for ๐๐จ๐จ๐๐ฌ ๐๐ง๐ ๐๐๐ซ๐ฏ๐ข๐๐๐ฌ provided.
POTENTIAL RISKS
If a personal account is receiving contributions that are incorrectly classified as Goods and Services, PayPal may determine that the personal account is conducting a business regardless if Friends and Family contributions were also received.
*Contributions can also be referred to as non-taxable gifts and or donations.
ย ๐๐๐๐๐๐๐๐๐ย
Therefore, PayPal will at their discretion shut down or limit personal accounts that are receiving large scale transactions classified as Goods and Services.
With these conditions in mind,ย WAB ARMY only accepts PayPal contributions classified as Friends and Family.
We also accept contributions via GoFundMeย because GoFundMe is a platform that allows and supports fundraising and therefore the contributions are classified as โpersonal giftsโ which are generally considered to be non-taxable.
If you have any additional questions, please check out ourย FAQย or feel free toย email us via this contact form.
Thank you, ARMY ๐