How to handle tax reporting for income going to parent's PayPal when I'm an independent contractor?

This is actually a common situation! The income is yours, regardless of whose PayPal account it goes to. Your dad is essentially just helping you receive the money. Here's what you should do: Since you're an independent contractor, you'll need to report this income on Schedule C (Profit or Loss from Business) with your own tax return. The fact that it's going to your dad's PayPal doesn't change that it's YOUR income. Your dad should NOT report this on his taxes - it's not his income. I recommend keeping careful records of all payments received, since the PayPal 1099-K will go to your dad's name/SSN. If the amount exceeds $600 for the year, your client should also issue you a 1099-NEC directly in your name. Make sure they have your correct information.

I had a similar situation last year and found this AI tool called taxr.ai that was super helpful with sorting out confusing situations like this. I was getting freelance payments through my mom's Venmo and was totally confused about how to handle the taxes. The tool analyzed my situation and explained exactly how to document everything properly to avoid any issues. I uploaded screenshots of the payments and a statement from my mom confirming the arrangement, and https://taxr.ai provided a detailed explanation of how to approach it. They explained that I needed to file Schedule C with my income and gave me templates for documentation to avoid confusion. Made everything way clearer!

Just wanted to follow up about that taxr.ai site someone mentioned. I was super skeptical at first (still am about most AI stuff tbh), but I decided to try it since my tax situation this year is a mess. I'm doing gig work through my roommate's account and needed to figure out how to file correctly. The analysis it gave was actually really detailed and referenced specific IRS publications that applied to my situation. It explained exactly how to document the flow of money and what forms I needed. I showed the report to my uncle who does accounting and he said the advice was solid. Saved me from having to pay him to figure it all out lol.

If you're dealing with the IRS on this issue, good luck getting through to someone for help. I spent 3 months trying to get clarification on a similar situation last year. Finally found this service called Claimyr that got me through to an actual IRS agent in about 20 minutes when I'd been trying for weeks. Just go to https://claimyr.com and they basically hold your place in the IRS phone queue. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c. The agent I spoke with confirmed that I needed to report the income on my return using Schedule C even though the payments went to a different account. They explained exactly what documentation to keep to prove the money wasn't income to the account holder.

Had to come back and say I was completely wrong about that Claimyr service. After complaining about it here, I decided to try it because I was desperate to talk to someone at the IRS about my situation with payments going to my roommate's account. I was 100% prepared to report back that it was a scam, but I actually got connected to an IRS agent in about 15 minutes! The agent confirmed exactly what I needed to do - file Schedule C with my return, keep documentation showing the transfers from my roommate, and have my roommate keep records showing they didn't keep the money. The agent even sent me some official documentation about "nominee income" that explains this exact situation. Never been happier to be wrong about something. Saved me hours of frustration.

Just a heads up based on my experience: make sure your client has YOUR tax info for their 1099-NEC, not your dad's info. I had a similar issue where my client issued the 1099 to my husband instead of me because the payments went to his account. Created a huge headache at tax time because the income was reported under his SSN but I was the one who actually earned it.

Anybody know if payment apps have different reporting thresholds? I think PayPal has to report if it's over $600 now, but what about Venmo or Cash App? Could the OP just switch to a different payment method to avoid this whole issue?

Everyone's overcomplcating this. Just have ur dad transfer the money to you as soon as it hits his paypal, keep records of all the transfers, and file schedule C with your tax return reporting your contractor income. Dad doesn't report it as income. You'll be fine as long as you have documentation. IRS only cares that the income gets reported and taxes get paid by SOMEONE.

Just want to add something important that I learned the hard way - make sure you're setting aside money for quarterly estimated taxes! Since you're an independent contractor earning $4,800, you'll owe both income tax AND self-employment tax (Social Security and Medicare). The self-employment tax alone will be about 15.3% of your net earnings. If you expect to owe $1,000 or more in taxes for the year, you're supposed to make quarterly payments to avoid penalties. You can use Form 1040ES to calculate this. I made the mistake of not doing quarterly payments my first year as a contractor and got hit with an underpayment penalty even though I paid everything when I filed my return. Also, keep track of any business expenses related to your contractor work - home office space, equipment, internet costs, etc. These can be deducted on Schedule C to reduce your taxable income.