This has been such an incredibly informative thread! As a newcomer to this community, I've learned so much about PayPal transactions and tax obligations from everyone's detailed explanations. What really stands out to me is how the seller's confusion between PayPal's 1099-K income reporting and sales tax collection requirements has created this whole situation. It's clear they don't understand that these are completely separate systems - one is about reporting potential income to the IRS, the other is about collecting taxes from buyers at the point of sale. The unanimous community consensus is absolutely right: legitimate sales tax would have been automatically calculated and included in your original PayPal invoice if it was actually required. The fact that the seller is asking for additional payment after completing the transaction is a major red flag, regardless of their intentions. I appreciate how everyone has emphasized that most individual sellers aren't even required to collect sales tax unless they're operating as registered businesses or exceeding specific state thresholds. This knowledge gives me confidence as someone considering occasional online selling myself. For the original poster: you definitely made the right call being cautious about this request. Don't send any additional money - your transaction was completed legitimately through PayPal's official system, and that should be the end of it. The seller's post-transaction realization about potential tax obligations doesn't create new responsibilities for you as the buyer. This discussion has been incredibly valuable for understanding how to recognize legitimate versus problematic seller behavior in online transactions. Thanks to everyone for sharing such detailed expertise!

This entire discussion has been incredibly enlightening! As someone who's relatively new to online selling through PayPal, I had no idea about the distinction between PayPal's income reporting obligations (1099-K forms) and actual sales tax collection requirements. What really strikes me about the original situation is how the timing reveals everything - legitimate sales tax would have been automatically calculated and included in the PayPal invoice when it was first created, not requested as an afterthought. The seller's confusion between these two completely separate tax systems (income reporting vs. sales tax collection) is understandable but doesn't create new obligations for you as the buyer. I appreciate how this community has consistently emphasized that most individual sellers aren't required to collect sales tax unless they're operating as registered businesses or exceeding specific state thresholds. This knowledge is invaluable for anyone participating in online marketplaces. The unanimous consensus here is spot-on: don't send additional money after completing a legitimate PayPal transaction. If sales tax was actually required, PayPal's built-in system would have handled it automatically during the original invoice process. The seller's post-transaction realization about potential tax obligations is their issue to resolve with their state tax authority, not something they can retroactively collect from buyers. You absolutely made the right call being cautious about this request. Your transaction was completed properly through PayPal's official system - that should be the end of it!

Ur good fam. The IRS moves slower than my grandma with her walker fr fr

Don't panic! 2 days is actually pretty standard right now. The IRS is swamped with early filers and their systems are processing slower than usual. I've seen returns take up to a week to get accepted during peak season. An audit determination wouldn't happen at this stage anyway - that comes much later in the process after your return is already accepted and processed. Just hang tight!

Don't feel embarrassed about not knowing this stuff - the tax system is deliberately confusing and nobody teaches it in school! I wish someone had explained this to me when I was starting out. One thing I'd add to all the great advice here is that you should definitely prioritize filing your 2022 return ASAP since you only have until April 2025 to claim any refund from that year. After that deadline passes, you lose that money forever. Also, keep in mind that even if you think you didn't make "enough" to file taxes, you should still file if you had any taxes withheld from your paychecks. I know people who skipped filing because they thought their income was too low, but they were leaving hundreds of dollars on the table in refunds. Start with the most recent year (2024) to get familiar with the process, then work backwards. You've got this!

Omar, you're definitely not in trouble for not filing! The IRS actually doesn't penalize you for filing late if you're owed a refund - they just hold onto your money until you claim it. Here's what I'd recommend as your action plan: 1. Start by gathering all your W-2s from the past few years (check old mail, contact previous employers if needed) 2. File your 2024 return first using free software like IRS Free File - this will help you understand the process 3. Then work backwards and file 2023, 2022 (remember, you only have until April 2025 for 2022!) 4. For any missing W-2s, you can get wage transcripts directly from the IRS website The process really is much simpler than it seems, especially with just W-2 income. The software asks you questions in plain English and does all the calculations. You'll likely be pleasantly surprised by how much you get back - many people in retail/food service jobs get substantial refunds because of how withholding works with variable hours and the Earned Income Tax Credit. Don't let another year go by! You've probably got hundreds or even thousands of dollars waiting for you.

As a newcomer here, I just want to say thank you to everyone who contributed to this discussion! I'm in my first year of full-time employment and was completely baffled when the IRS withholding calculator told me to put my $6,000 in 401k contributions on line 4a as "other income." Like the original poster, this seemed totally backwards to me. After reading through all these responses, I checked my paystub and confirmed that my employer is already reducing my federal taxable wages by the exact amount of my 401k and health insurance premiums. This means they're handling the withholding calculations correctly, and I don't need to make the adjustment the calculator suggested. It's really reassuring to see so many people had the same confusion and that there's such a clear way to verify what's actually happening with your specific payroll situation. The advice about checking your paystub first before making any W4 changes based on the calculator is invaluable. I almost made what could have been a costly mistake by blindly following the calculator's recommendation without understanding my employer's payroll system first. This community has been incredibly helpful for someone just starting to navigate all these tax and benefit decisions!

As someone who works in employee benefits administration, I wanted to add some context about why this confusion is so widespread. The IRS withholding calculator was designed to be a catch-all tool, but it can't possibly know the nuances of every employer's payroll system. Most large employers use sophisticated payroll software (like Workday, ADP, or Paychex) that automatically calculates federal withholding AFTER subtracting pre-tax deductions. This is called "post-deduction withholding" and it's the industry standard. Your 401k, HSA, health insurance premiums, and other pre-tax items are removed from your gross pay before any tax calculations happen. The calculator's recommendation to add these amounts on line 4a essentially assumes your employer might not be doing this correctly, which is why it seems backwards. It's trying to "fix" a problem that probably doesn't exist in your payroll system. Before making any W4 changes, always look at your paystub. If "Federal Taxable Wages" or "Fed Tax Wages" is less than your gross pay by the amount of your pre-tax deductions, your employer is already handling everything properly. In that case, ignore the calculator's advice about line 4a - you'd just be creating unnecessary overwithholding. This is honestly one of the most common misconceptions I see employees struggle with during benefits enrollment season!

I've been playing social casino games for about three years now and had this exact same worry! I actually contacted a tax professional last year because I was paranoid about it. Here's what I learned: For games like the ones you mentioned (Goldfish Casino, Lucky Time), where you buy coins but can't cash out real money, there's no taxable event. The IRS considers this entertainment spending - you're essentially paying for the experience of playing, just like paying for Netflix or going to a movie. The key distinction is whether you can convert your winnings back to real currency. If the answer is no, then you don't need to worry about tax forms or reporting anything. I've spent over $3,000 across various social casino apps over the past few years and have never received any tax documents, nor should I have. However, definitely keep records of your spending just in case, and be aware that some apps (like Chumba Casino or Global Poker) operate differently - they give you "sweepstakes coins" that CAN be cashed out, and those would be taxable. But for the traditional social casinos you're playing, you're just buying entertainment, not gambling in the traditional tax sense. Hope this helps ease your mind!

I've been dealing with this exact same confusion! I play several social casino apps including some of the same ones you mentioned, and I was really stressed about potential tax implications too. After doing a lot of research and even consulting with a tax professional, here's what I learned: For true social casinos where you can only win more virtual coins (not real money), there's generally no taxable event occurring. The IRS is primarily concerned with actual income - money or prizes that have real-world value that you can cash out or convert. When you purchase coins in these games, you're essentially buying entertainment, similar to purchasing a movie ticket or paying for a streaming service. The virtual coins you win have no monetary value outside the game's ecosystem, so they don't constitute taxable income. However, definitely be aware of these exceptions: - Apps that offer real prizes through tournaments or sweepstakes - "Sweepstakes casinos" where you can convert winnings to actual cash - Any rewards program that gives you real gift cards or merchandise For the traditional social casino apps you're playing, you should be fine. Just keep your purchase records for a few years in case any questions come up, but you shouldn't need to report virtual coin winnings that stay within the game. The key test is always: "Can this be converted to real money or real-world value?" If not, you're in the clear!