I received gift money through PayPal last year but the sender had to mark it as goods and services...how do I report this?

[aa0612]

PayPal would only allow the gifter to send the money via goods and services. I am concerned because the transactions looked like I was running an online business given the "goods and services" nature of the transactions. No, there was no 1099 but I still want to report this in the event I receive an audit. I don't want the IRS to view these transactions and think I'm lying because they don't look like gifted transactions even though they were.

Will I have to pay the IRS for this gift money?

[Anonymous · Accepted solution]

a gift is not taxable.   there is no good way to report a gift on the 1040.  the fact that no 1099 was sent to you should mean that the IRS knows nothing about the transaction.  by trying to report this, you may create problems rather than solving a problem that doesn't exist.  should you be audited for other reasons and the IRS asks about it, get a letter from the donor. 

[Carl]

If no tax reporting document was issued, then don't worry about it. Gifts are not taxable or reportable on any tax return, provided the gift is less than $15,000 in any one tax year. But I would suggest you get a letter from the donor as a "just in case I'm audited" measure.

[aa0612]

Thank you very much! I've been SO stressed about this and you and the other commenters helped ease that. 🙂