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jugglefire t1_j1fhmw2 wrote

I’m a bit concerned about this legislation. In one of my jobs I get quite a few Venmo tips. I already report those to that employer and am taxed accordingly. In addition I manage income properties for a family member, all those tenants pay rent via Venmo and I deposit it directly into the business account for those properties. And my band mates all pay their share of rent on our rehearsal space to me via Venmo, then I pay the landlord.

All this adds up to over $80K per year of income that I’m already paying tax on or money that was never mine to begin with. I’m just moving it around for others.

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[deleted] t1_j1fllua wrote

You can deduct those as expenses/non-income to avoid paying taxes on money you didnt technically make, even if the rule went into effect.

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amerovingian t1_j1ftkj6 wrote

That sounds like something that's going to take at least a day's worth of research or a tax specialist to pull off properly.

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No-Reach-9173 t1_j1gocl6 wrote

You literally just fill out a list on 1099 c

Total 1099 misc $100

Rent to relative -45

Rent to studio -55

Total Adjusted 1099 income $0

Easy as it gets. You should make sure you have documentation if you get audited but if you do you just hand it over and they check it out and go on their way.

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amerovingian t1_j1gpwgp wrote

That seems doable. What are acceptable forms of documentation?

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danester1 t1_j1gqb4s wrote

Probably a record of receipts from whatever vendor you have. You should have a transfer history in venmo/PayPal/cashapp that will show you who paid you, how much they paid you, and vice versa. Not sure what else you’d be able to produce.

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amerovingian t1_j1gsszo wrote

Do you need to print that out or just screenshots will do?

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danester1 t1_j1gta4m wrote

Since the rules haven’t gone into effect yet I wouldn’t worry about it, but if/when they do, I would make sure to mark all transactions with notes describing what they’re for, so you can sort them later.

Then if you want you can print out the receipts but I’m not really sure that would be necessary unless it specifies on your tax forms that you need to. I’d have to look at mine to see and I don’t have them on hand.

They really should only require strict itemization for auditing purposes, but I’m not an accountant or even in a tangentially financial field so don’t take my word for it.

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No-Reach-9173 t1_j1gv6ij wrote

The other poster has the right answers for you.

You will need hard copies if you get audited it's your choice if you want to have it all together in case you get audited to make future you life a bit easier or not.

The only real thing to remember is you can not carry a loss this way so if you sell a $100 item for $50 you can only deduct 50. If what you are doing is complex enough that not carrying those losses matters you should set up a "business".

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Taysir385 t1_j1gcyjx wrote

> least a day's worth of research or a tax specialist to pull off properly.

On the plus side, the amount you pay to that tax specialist is probably tax deductible.

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Boollish t1_j1hy0ka wrote

Not to be glib, but if you're running a property management business this should be really small potatoes compared to all the other tax related things property managers do.

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amerovingian t1_j1ks7pk wrote

If it's a property management business, sure. That doesn't sound like what this is, though. It's just a guy/gal taking payments as an individual on behalf of another individual they're related to.

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UncleMeat11 t1_j1hilmm wrote

It'll take 15 minutes of reading and 10 minutes of data entry in a tax preparation software.

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jugglefire t1_j1fm6m4 wrote

That’s what I assumed, thanks for the reassurance.

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Kurshuk t1_j1fmo9q wrote

It's not income. Income is money you get to keep. I assume the money moves from you to a bank and you're not handing out sums of cash which means there's a record on their side showing the receipt. Pretty much any accountant can connect those dots even if that's not how I would handle money personally. I'm still disappointed in the legislation. Reminds me of chainmail. Started out doing everything by hand, making coils, cutting them into rings, then fabricating the mail. I optimized the shit out of making rings. I could make tens of thousands a day. Fabricated machines and jigs to do everything. I optimized the wrong part. Making rings slowly wasn't the bottleneck at all. Which I soon realized after filling my workshop with rings and had the same output as before. Why? Because making metal into cloth is the time consuming step. I made the easiest part easier but it didn't solve the issue because it wasn't the problem. This feels much the same. Say you have to pay the full amount of taxes on your cash handling, that'll be about 20k. Now imagine if they invested the same effort in someone skirting taxes on millions. That's where we should be aiming in my opinion.

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jugglefire t1_j1fpg9s wrote

Chain mail is absolutely fascinating! Do you have any pictures or links to your work?

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Kurshuk t1_j1fqlzf wrote

Nah, is just a supplement for body armor under the arms and inside the thighs. Also where the plate carrier moves from ceramic to kevlar from the bottom of the lungs to the groin.

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snakeplantselma t1_j1flput wrote

Depending on what state you're in, setting up an llc is pretty simple and cheap for something ike a band llc to run your income and expenses through. It let's you take advantage of those expense deductions (rented space, guitar strings, yada yada) against any income you're earning with your music. There's no reason for you to take a tax hit on money received to pay for a joint expense of rehearsal space. What they give you in income goes out in expenses.

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Taysir385 t1_j1gd5t2 wrote

> It let's you take advantage of those expense deductions (rented space, guitar strings, yada yada) against any income you're earning with your music.

You can take advantage of this even if you file as an individual, it's just a couple different steps.

Which isn't to say that llcs aren't useful. They absolutely are, and more people should take advantage of them. But more people should take advantage of tax benefits too.

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sciguy52 t1_j1g2xip wrote

I would like to say that you behaving in an honest legit way like this would be understood by the IRS. My personal experience being audited is that you have very good reason to worry.

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