In July of this year I began giving online foreign language lessons. My clients pay me via PayPal. I anticipate I’ll make over $600.
Q1. Some of my clients have paid me using the “Friend and Family” option. I’ve asked them not to because I just don’t want to get in trouble, so they have stopped. I’m not sure if PayPal will include those specific “Friend and Family” option payments in the year-end 1099. Even if PayPal doesn’t include them, can I still report those payments as income or will this be suspicious to the IRS if PayPal sends me a 1099 with a lower amount (excluding the “Friends and Family” payments) but I report all payments?
Q2. If I happen to pick up a lot more clients towards the end of the year and find that I owe more than $1000 in taxes, will I be penalized if I didn’t make quarterly payments?
