You would get a 1099. The rule is both over 200 transactions and over $20,000 worth of transactions.

So to be clear - if I have 300 Ebay transactions worth $5K and I load $48K worth of MyCash, I'd get a 1099? The Mycash loads are counted towards the transaction counter?

I believe by "transactions", the rule refers to merchant transactions, but I am not 100% sure. I just briefly read about it because I was considering using PayPal to do bulk AmEx GC run-throughs.

Why not just use google wallet and avoid any headaches.

So I have been doing business on ebay for some time and have been asking myself the same thing. Having called in multiple times, and getting multiple answers ( usually no, but I am paranoid about the IRS) I was able to speak to someone on the tax compliance team. After stating my concerns about being double taxed for trying to aggregate my funds into paypal she assured me that paypal mycash loads do NOT count toward the 1099k limit. Granted, I am going to get one anyway, but they will not be on the form, nor should they trigger the process....

As always, YMMV, but she seemed definitive and competent.

Are you trying to say that personal payments do not count? They do not count on PayPal, but I have not found anything regarding Google Wallet.

I was going to call, but I figured I'd get clueless reps too. The thing that makes me believe that it DOES count towards 20/200 is that when I look in my April Paypal statement and look at 'payments received,' I see it's something like $5,000 (4K from MyCash and 1K from Ebay). That makes me BELIEVE it will count towards the 20/200. If it wasn't posted there, I'd be happier. The only slightly good news is that every $500 is at lesat a $4 business "loss." But if you have lots of Ebay profit, I doubt it'd offset. I don't think we'll ever know unless someone tried this for tax year 2013 and report back to us.

I'm working on 2014 and will get back to you... ;)

Ultimately, I'm of the belief that in order to run enough legit cash through the paypal account to avoid shut down for mycash abuse you need to be pushing some volume through ebay and would probably get a 1099k either way.

With that in mind, I see this as a benefit; because it would make mycash purchases tax deductible. So, when I buy a $500 paypal gift card for $503.95, I am basically taking a $3.95 tax write-off for $30 in non-taxable statement credits per card.

Granted, I'm 22 and have been audited 4 out of the last 6 years; so this might not be the best advice.

Does the $3.95 really matter that much to you. You may be getting audited the last few years because of silly stuff like this.

Holy cow, I'm a tax preparer and I've never heard of this happening. You got audited as a teenager?? What did you have on your tax return??

Tried to write off online porn as an entertainment expense?

This reminds me of that one time I bought a Rolex. I run an online business on the side (nothing big, just $20,000 in yearly net income) and tried claiming the Rolex as a business expense (you know, since it is part of my uniform). Apparently, the IRS does not agree with my logic.

Soooo....

Making Money and Earning Points with Paypal and Square Cash by The Miles Professor blog

I have to hand it to her, I didn't know about the debit to debit Square Cash tip. Have people tried that w/o Paypal shutting them down?

Been doing it for a while (3 months or so). No problems here thus far. Paypal has been good to me.