Lawrence, KS asked in Tax Law for Kansas

Q: My friend pays me to buy things online for him. Do I have to pay taxes on the money he gives me to make those purchases?

I have been buying high-value items online for my friend online over the last 6 months. He has given me somewhere around $30,000, of which only a couple hundred dollars went to me. The rest went to make those purchases. What are my tax obligations on that money? Wouldn't it look like part of my income to the IRS?

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1 Lawyer Answer
Linda Simmons Campbell
Linda Simmons Campbell
  • Tax Law Lawyer
  • Burlington, CT

A: If you have another job then you need to include the few hundred dollars (minus any allowable deductions) as self employment income on your tax return. If this is your only income you may be under the amount that would require you to file a return. If you are audited you will need to prove that the funds you received went towards the purchase of the items for your friend. You should keep a separate bank account. This will make it easier to show where the funds you receive are going. Keep in mind that any funds you receive will be counted as income by the IRS unless you can prove that the were not. Keeping careful records will help to make any audit go more smoothly.

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