I received a 1099-k (Paypal) due to $1300 wired to my account as a wedding gift. Do I need to report this as "self-employment" income? No goods or services were sold.

[mirceajr1]

Virginia requires merchant reporting at a threshold of "$600  USD in gross payment volume from sales of goods or services in a single calendar year regardless of the number of transactions". However, we did not sell goods or services - the $1300 was a gift.

[MaryK4 · Accepted solution]

No you do not have to report gifts.  1099-K is used for electronic transactions and as you correctly stated, the Virginia filing threshold is problematic for many people.  I suggest keeping a copy with your records (including a printout of the Paypal transaction in case they do question you (it is highly unlikely).

[Ejr84]

But if the gift was given via a credit card and you received the same 1099-k, then what? I can’t just not include it somehow in my tax return, I could get a you-know-what…

[ErnieS0]

Gifts are not taxable for income tax purposes and should not be included on your return. TurboTax says: "If you received the money, no matter how much or how little, you don't report anything."

You could get a you-know-what" from the IRS because they won't know whether the 1099-K was a gift or something else. If you receive an audit letter, tell the IRS the amount was a gift and include some proof if possible. For example, maybe there was a personal message on the PayPal transaction. Otherwise you can ask the giver to write a note for you to send along with your response to the IRS.

Gifts up to $15,000 per person are not taxable for gift tax purposes to the giver so your friend will not have to worry about IRS issues if they write a letter for you.

For more info: Where do I report a cash gift?