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When using the Square reader, is it considered taxable income? I don't meet Square's requirements for the 1099-k so it's a bit of a grey area for me. I just need to know if I need to prepare to make a payment to the IRS for these transactions?!

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    Whether you use the square reader or receive cash makes no difference. It depends on why you are receiving the money. – ChrisInEdmonton Nov 16 '15 at 22:38
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If the money you receive via Square is taxable income, then the IRS will want you to report it regardless of whether you get a 1099-K from Square.

Just because you receive the money via Square doesn't make it taxable -- if a friend borrows $100 from you and pays you back via Square, that's not taxable income. If you sell jewelry for $100 to someone, and they give you the money for it via Square or a check, then it is taxable income.

  • Although, if audited - it is highly unlikely that an explanation "my friend paid me back through square" will be accepted, especially if there are multiple transactions. – littleadv Nov 17 '15 at 3:23
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    And if you sold jewelry for $100 (received by Square or check or cash or even traded for beaver pelts) that you previously bought or made for $80, and you spent $5 on advertising to make the sale, it is your net profit of $15 that is taxable (for income tax and SE tax if you were doing this as a profit-making activity i.e. a 'trade or business'), not the gross receipts of $100. – dave_thompson_085 Feb 13 '19 at 17:17

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