@GeorgieBush wrote:In 2021, I had ~$20,000 of undocumented landscaping income (Venmo and Paypal) from customers who paid >$600. I have received no 1099s. I failed to report this on 2021 tax return. I have no official or registered business. My only other income was $1500 W2 from separate job.
Intend to file CH7 ASAP. Due to the risk of these transactions and tax return discrepancy being uncovered in bankruptcy, I'm wondering if and how I should amend 2021 tax return. The risk is probably slim, as my bankruptcy is otherwise very simple (virtually no income, assets, accounts, marriage, transactions etc.) and there has been none of this undocumented income or transactions for over 9 months.
I had related expenses: probably ~$5000 paid under the table to various helpers (Venmo) as well as transportation, equipment rental, tool purchases, etc. I failed to include anything related to this business on taxes.
If I report income from my customers, it presumably becomes obvious to IRS that customers failed to file their 1099s. I'm concerned about potential liabilities/risks to my customers as well
Does anyone have experience with how their Venmo or Paypal is looked at in CH7? Do they just ask you if you have those accounts and then ask for recent statements if you do? What if the accounts have been closed?
The main reason behind all this is that I've been struggling throughout this time with increasing health problems from my cancer treatment that have interfered with my ability to work, manage finances and life in general.
I've started the process with upsolve.org
Welcome @GeorgieBush
Here we will always say seek legal advice when it comes to all these situations outside of a simple debt no assest case. But:
"Under the American Rescue Plan Act, people who sell goods or services on platforms like Etsy, eBay and other sites that use third-party transaction networks – like PayPal, Cash App and Venmo – will be issued a tax form called a 1099-K for online sales totaling $600 or more starting next year. "
Looks like it might show up next year once the bookeepng is done.
@GeorgieBush wrote:I have virtually no assets: no funds, no cash, no valuables, no vehicle, no real estate. All I have are basically just everyday possesions. A handful of $500 items.
That law applies to designated business transactions. These were designated personal.
Only way to know for sure is to talk to an attorney. Mine did a free consult.
Siggy updated Feb 16 2023
It seems like you are breaking the law.
I would not continue to do so through BK.
PayPal Policy:
https://www.paypal.com/us/smarthelp/article/HELP543
"If you meet the IRS threshold in a given calendar year, PayPal will send you a Form 1099-K in January of the following year and file this form with the IRS by the required due date."
@Shooting-For-800 wrote:It seems like you are breaking the law.
I would not continue to do so through BK.
This would definitely be my advice as well.
You could probably benefit from talking to a lawyer that is also a CPA before talking to a BK lawyer.
@GeorgieBush wrote:Any leads on finding a CPA who is also BK attorney? I don't know where to start. Seems like anyone in the US would work
Where do you live? You should be able to search your state bar associations website.