My state: Washington State
Hello all,
I’m just wondering if anyone knows:
1) If it’s legal to hold another person's money in your bank account.
2) If you did that, would you have to pay taxes on that money, even though the money wouldn’t belong to you and you wouldn’t have any moral right to spend it AND the rightful owner reports it to the IRS. (Because if you both report it, then two people would be paying taxes on the same income, no?)
3) If you don’t have to report it, how could you prove the money you hold doesn’t belong to you? Just get the owner to write a letter?
4) If you do have to report it, how should it be reported? As miscellaneous income? As self-employment income that you have to pay self-employment tax on (even when you don’t have a company)?
I’m thinking, for example, a friend who doesn’t have a bank account holds a garage sale, makes a few $100 and, rather than stashing it under the mattress, she asks you to hold it.
Any advice appreciated! Thank you in advance.
C.S.
Hello all,
I’m just wondering if anyone knows:
1) If it’s legal to hold another person's money in your bank account.
2) If you did that, would you have to pay taxes on that money, even though the money wouldn’t belong to you and you wouldn’t have any moral right to spend it AND the rightful owner reports it to the IRS. (Because if you both report it, then two people would be paying taxes on the same income, no?)
3) If you don’t have to report it, how could you prove the money you hold doesn’t belong to you? Just get the owner to write a letter?
4) If you do have to report it, how should it be reported? As miscellaneous income? As self-employment income that you have to pay self-employment tax on (even when you don’t have a company)?
I’m thinking, for example, a friend who doesn’t have a bank account holds a garage sale, makes a few $100 and, rather than stashing it under the mattress, she asks you to hold it.
Any advice appreciated! Thank you in advance.
C.S.