I just sold a $2500.00 dollar Pen!!

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KenB259

KenB259

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Hold on now, it's not as good as it sounds. Last winter my wife received a 25 year service award from the company she works for. She got 2500 hundred dollars on a American Express gift card. We have tried multiple ways to get that money into our savings account. Banks couldn't help, American Express couldn't help, their only advice was to spend it . My wife actually came up with idea of using it to buy a pen, using our square that we use at craft shows. Worked like charm and I can brag that I sold a pen for 2500 and won't even by lying. 😜
 
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KenB259 said:
Hold on now, it's not as good as it sounds. Last winter my wife received a 25 year service award from the company she works for. She got 2500 hundred dollars on a American Express gift card. We have tried multiple ways to get that money into our savings account. Banks couldn't help, American Express couldn't help, their only advice was to spend it . My wife actually came up with idea of using it to buy a pen, using our square that we use at craft shows. Worked like charm and I can brag that I sold a pen for 2500 and won't even by lying. 😜
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I believe you will now be getting a 1099K form to pay tax on it. 🙂
 
sorcerertd said:
I had to laugh, but it's not really that funny. Uncle Sam will get his part of it no matter what, huh?
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Unfortunately yes because IRS started this in 2022 for all third party collection payments such as PayPal and Square and others. They lowered the income number to $600. This will effect lots of crafters and small business people. I am not a tax person but this is what I am hearing. I will need to look into this myself with my shows.
 
Sadly, it might have been better to find other ways to spend the money. As others have indicated, tax law changed this year to require reporting on all income over $600 from all sources. PayPal and Square are conveniently helping you out in that endeavor by reporting all payments to you through their services to the IRS, free of charge.
 
Ken, Don't you just hate the truth these guys dump so straight on you? They could have just let you enjoy it for a day or so! 😁

In the end, it will probably be doubly taxed - your wife probably will be, or has been taxed on it and now you! 😕
 
Another way to do it is to spend the card on everyday things you need, and then put your own money into savings. 😉
Then again, since the card is from an employer, it will probably have a 1099 Form anyway, or be included as income on the W-2.
 
grebmar said:
Another way to do it is to spend the card on everyday things you need, and then put your own money into savings. 😉
Then again, since the card is from an employer, it will probably have a 1099 Form anyway, or be included as income on the W-2.
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We thought about that but we just wanted to be done with it.
 
I'm no tax expert, but I don't think you have to pay taxes on that money twice (assuming you are filing jointly). Her company will most likely report it as taxable income, so it should be included in her W2. While you will likely getting a 1099-K from Square for processing it as a sale, that money was already yours (jointly). While you probably need to report it on your return to be sure your reporting matches up with IRS records, there are ways to make adjustments to "income" so it doesn't get included with your taxable income.

Now, if you file separately, it's likely a totally different story.

Consult your CPA.
 
If you issue a refund to the customer before the Square deadline for refunds expire, I am pretty sure they back out the value including fees. I don't know for sure how their refund procedure works, but it is highly unlikely that they can refund back to a gift card. Square should provide instructions for making an alternative refund, like cash maybe. Since the money is refunded it should mean no income, no fees, and no 1099 tax form.
 
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