The relevant tax laws are these:
1. If you receive a gift from a foreign person of more than $100,000 you must file a report. No tax is owed on legitimate gifts.
2. If you receive a gift of more than $14,000 from a foreign business or corporation, you must file a report. No tax is owed on legitimate gifts.
3. If you pay a gift of more than $14,000 per person per year, you must file a report. No tax is owed when you give a gift, unless your lifetime total of gifts is more than $5 million.
4. You must report all business income regardless of the source. If this was a business transaction in which you were providing a service, such as holding money and making payments for someone else, then you have business income. You would report the entire amount received as your gross income, you would report the fees and any other expenses as your business expenses, including money that was paid back to the original person. Anything that you kept for your services would be taxed as self-employment income.
5. If, on the other hand, this was a scam, then you may have a deductible theft loss. While we don't know the full circumstances of the transaction, one common scam is for a foreign person to make a large deposit into your account, from which you pay "fees" and "taxes". However the foreign deposit never clears because it is from a fake or closed account and is eventually removed from your bank account, leaving you with negative money. The amount of negative money represents the "fees" that were stolen by the scammer and you may have a deductible theft loss.
However, we cannot give legal advice, and there are certainly elements of this transaction that appear suspicious, and might look like money laundering to the IRS or other authorities. You may want to consult a tax attorney to really understand your position here.
