How to handle a PayPal account

[kathy4530050]

I have one client that pays me via PayPal, and then I transfer the funds to my bank account, so all of the payments show up on my bank statement. But I wonder if, along with my bank statements (lawyer said to provide 6 months worth), I need to provide PayPal statements as well. Anyone have experience with this?

Thanks

[CCCrazy]

I have had payments from PayPal transfers show up in my bank account in the past six months for business reasons and my trustee never said anything about it - even at the 341 it was never mentioned. So I would advise not providing those statements, I didn't. If they want them, they will ask for them and they probably won't want them.

[OregonMom]

I asked my lawyer if I needed to provide statements for my paypal account and he said they didn't need them. I don't transfer money into bank account from them either.

[kathy4530050]

This is really surprising to me. If you get paid through PayPal and you keep the money in that account and don't transfer it to your bank account, how can they know how much money you are actually earning? It seems that it would be too easy to hide money. If there is one thing I have learned on this forum it is to disclose everything and hide nothing. I am really surprised that your lawyers didn't tell you to provide documentation and your trustees didn't bring it up.

[CCCrazy]

Let's say for example that you sold something on eBay and the payment for the item was put into your PayPal account - if that item was sold at a loss it is not income.

[BkinTX]

I do a very, very small amount of freelance writing. I typically earn less than 200/mo doing this. I am paid via paypal.

Our lawyer had us list the income but I did not have to print out paypal statements. I don't know if it would be different if it were a larger amount of money.

I disclosed $ from selling items on Craigslist too, just in the interest of full disclosure.

[kathy4530050]

Let's say for example that you sold something on eBay and the payment for the item was put into your PayPal account - if that item was sold at a loss it is not income.

Right--so I guess it's different in your case. In my case, almost all of the activity on my account is income--so maybe I will have to provide documentation.

[roozterdvx]

Our attny asked about for PayPal and eBay history statements for the 6 months prior just like any othe rincome paperwork.
The TT also asked for updated statements because the original statements only covered up to the week before filing so I emailed the updated statements reflecting 1 week past our filing date as the TT requested.

To the OP, you may not have to provide PayPal statement if the transactions show up in your bank statements but I'd be willing to bet that your TT would ask just to verify that you don't have additional money in the PayPal account which you may not be disclosing.

The TT will see the transactions from PayPal, and therefore will know you have an account so, I would print out the statements and have them ready if asked for them.

[kathy4530050]

Our attny asked about for PayPal and eBay history statements for the 6 months prior just like any othe rincome paperwork.
The TT also asked for updated statements because the original statements only covered up to the week before filing so I emailed the updated statements reflecting 1 week past our filing date as the TT requested.

To the OP, you may not have to provide PayPal statement if the transactions show up in your bank statements but I'd be willing to bet that your TT would ask just to verify that you don't have additional money in the PayPal account which you may not be disclosing.

The TT will see the transactions from PayPal, and therefore will know you have an account so, I would print out the statements and have them ready if asked for them.

Thanks, I'll do that. There may be $$ in the PayPal account on the day of filing because it takes 3-4 days for money to be transferred into my bank account. Even if my lawyer doesn't ask for them, it sure does seem like I should have them ready.

[Flamingo]

Paypal and eBay have been discussed heavily in this forum. Do a search and you will be amazed at what you find. A Paypal account is a custodial account (read the info in the paypal website itself about the account). Funds in that account are considered an asset and are funds available for your use. Therefore, those funds need to be disclosed. All paypal transactions are easily traced and viewed since they are hooked up into a checking, savings or other account where funds can be transferred. Disclosing all this information will avoid the embarrassment or issues/problems that can arise if discovered.

[chad9162]

Right--so I guess it's different in your case. In my case, almost all of the activity on my account is income--so maybe I will have to provide documentation.

Technically your Profit and Loss sheets (for your business) should cover your income.

Since you also transfer the funds into your bank account I don't see the point in providing Paypal statements.

[kathy4530050]

Technically your Profit and Loss sheets (for your business) should cover your income.

Since you also transfer the funds into your bank account I don't see the point in providing Paypal statements.

I just want to provide documentation that all of my income has been accounted for.

[chad9162]

I just want to provide documentation that all of my income has been accounted for.

Thats what Profit and Loss reports are for. Since you're self employed your attorney should have requested these since you don't have pay stubs. Don't forget that Paypal fee is a loss.

[kathy4530050]

Thats what Profit and Loss reports are for. Since you're self employed your attorney should have requested these since you don't have pay stubs. Don't forget that Paypal fee is a loss.

The only P&L reports I have are from QuickBooks and I can't imagine that those alone would suffice. There's got to be more accountability than just the numbers that I enter into this program. I think it's too easy for self-employed people to hide income. For example: I could get a substantial check and then just hang onto it and wait until this is long behind me to deposit it. It would be very easy for me to delete all files from my computer that indicate that I ever performed work for this particular client. Given that this is possible, it seems impossible that the trustee wouldn't require additional accountability from a sole proprietor. I figure if I am prepared to provide contracts, memoranda of agreement, bank records, and PayPal records then I've covered all my bases.

Maybe I am over-thinking this, but this whole process just has me in KNOTS. When I read the posts by some of the people on this forum who have really been through the wringer I just want to do whatever it takes to avoid a shadow of suspicion so that this thing is just clean and easy and over soon. I have a lawyer appt Thursday and hopefully will know more soon.

[chad9162]

The only P&L reports I have are from QuickBooks and I can't imagine that those alone would suffice. There's got to be more accountability than just the numbers that I enter into this program.

Nope its really that simple, but as others have said every district is different. My P&L reports for the last 6 months fitted nicely on one pice of paper...

My BUSINESS

MONTH #1

Gross Income
Expenses
Net Income

MONTH #2

Gross Income
Expenses
Net Income

ETC.....

This is what my attorney asked for. Now do I have have more detailed records that can back up my P&L reports, of course, but my attorney said I didn't need it. Of course my business according to income taxes has always taken a loss.

I think it's too easy for self-employed people to hide income. For example: I could get a substantial check and then just hang onto it and wait until this is long behind me to deposit it. It would be very easy for me to delete all files from my computer that indicate that I ever performed work for this particular client.

Obviously, if you are filing BK business hasn't been that great so I don't think you'll be hiding a substantial amount of money. If the additional income affects the means test then just wait it out. People here close their business or even become unemployed so that their average income over 6 months falls within the means test. Is this bad, NO, because they are following the law.

Given that this is possible, it seems impossible that the trustee wouldn't require additional accountability from a sole proprietor. I figure if I am prepared to provide contracts, memoranda of agreement, bank records, and PayPal records then I've covered all my bases.

I think this falls under common sense. If your tax records show a $100K profit for two years and all of sudden your business took a $100K loss you'd need to explain. But in this economy that's what's happening. Business are shutting down everyday because no one is buying.

Maybe I am over-thinking this, but this whole process just has me in KNOTS. When I read the posts by some of the people on this forum who have really been through the wringer I just want to do whatever it takes to avoid a shadow of suspicion so that this thing is just clean and easy and over soon.

Yep, we all over think this. If you truly have no assets then the trustee will leave you alone. They are trained to smell the money and if you have none they'll move on to someone who does. Trust me they know what to look for.

I understand some people here have been through the wringer but most of them had specific issues that flagged them. I have no problems answering questions. I have nothing. They can even take all my property if it means a fresh start. Like you and others I will be honest. Its easier that way.

I have a lawyer appt Thursday and hopefully will know more soon.

This will hopefully be a day of clarity. This forum is awesome but not always clear since districts can vary. Write down all your questions and TEST your lawyer.