Paypal users...help me understand

[Bubba_Bruiser]

What is your understanding on picking different options for paying with PayPal? For gifts or services and the other different options. Can you get in trouble for tax reasons by using the different options? Is it recorded and submitted to the IRS? I could read all this at their website, but I would rather hear it in layman's terms. And Bryce, you can comment, I will try to decipher the code.

[MississippiBoy]

Don't buy something and pay with the "gift" option. PayPal will not protect you if you do, because a "gift" is given without expecting something in exchange.
Beyond that, I don't know much...I usually tell it to do a direct bank account withdrawal.

[bassboogieman]

Gift saves paypal fee, but no protection in a bad deal. I use a direct payment with credit card, that way I have an additional record of the transacton and the credit card company to back up Paypal in a dispute. Paypal is pretty good, I've only had to use them to settle a dispute once, and that was with a seller in Japan, be very careful with dealing with sellers outside the USA.

I don't think Paypal transactions are reported to the IRS, most are too small to get any attention, and private transactions with unregistered merchandise isn't taxable. A business accepting payments for merchandise on the other hand, would likely have to maintain records of sales, similiar to what would be done with other methods of payment.

[Bubba_Bruiser]

I have paid fees when doing the gift option. I thought that was the truth too, but I sent someone some money they other day and paid 3 or 4 dollars for the transaction.