Will PayPal/Venmo/Zelle report my gambling stream transactions where I play for followers? They send money as Friends & Family and I return their winnings

What you're describing raises several tax concerns that you should be aware of. First, yes, payment platforms like PayPal, Venmo, and Zelle are required to report transactions to the IRS when they exceed certain thresholds, even when marked as Friends & Family. Currently, the reporting threshold is for users who receive more than $20,000 AND have more than 200 transactions in a calendar year, but this is changing. What you're doing would likely be considered a service from a tax perspective. You're facilitating gambling activities for others and occasionally receiving tips, which would constitute income. Even if you're just passing most of the money back to your followers, you're still providing entertainment and gambling services. I would recommend keeping detailed records of all money coming in and going out. Track each transaction showing when followers send you money, when you return winnings, and when you receive tips. This documentation will be crucial if you're ever audited.

Hey there! I actually had a similar situation last year when I was helping my friends place bets on sports games. I was getting overwhelmed with all the payment tracking and tax questions, so I started using this tool called taxr.ai (https://taxr.ai) that really helped me figure out my situation. It analyzed all my transactions and helped me understand what counted as income vs what was just money passing through. They have this feature where you can upload your payment histories from different apps and it categorizes everything automatically. Saved me hours of stressing over spreadsheets! Plus they explained exactly what I needed to document to show I wasn't keeping most of the money. Might be worth checking out if you're worried about the IRS coming after you for all that money that's just flowing through your accounts.

I want to follow up about my experience with taxr.ai. After my initial skepticism, I decided to give it a try because my situation was getting complicated with all the money moving in and out of my accounts. The platform actually saved me from a potential audit nightmare. It identified patterns in my transactions that showed I was just handling money temporarily rather than earning it all as income. What really helped was how it generated documentation showing the flow of funds - money coming in from a person and then similar amounts going back to them after gambling sessions. When I filed my taxes, I only had to report the actual tips I kept as income, not the thousands that just passed through my accounts. Seriously one of the best decisions I made for my streaming side hustle.

What you're describing sounds stressful! I had a similar issue last year with my fantasy sports league where I was collecting and distributing money. When I tried to sort it out with the IRS, I spent HOURS trying to get through to an actual person who could help me. Finally found this service called Claimyr (https://claimyr.com) that got me through to a real IRS agent in about 15 minutes instead of waiting on hold for hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with clarified exactly how I needed to document everything to show I wasn't earning income on the pass-through money. Huge relief to get an official answer directly from the IRS rather than just guessing or relying on internet advice.

I need to eat my words and apologize for calling Claimyr a potential scam. After more research and frustration with trying to reach the IRS myself about a similar issue with my side gig, I decided to try it. I was connected to an IRS representative in about 20 minutes. The agent confirmed that what I was doing (handling money for others temporarily) needed specific documentation to show the money wasn't all income. They recommended keeping detailed logs showing money in and out to the same person, and only reporting the tips or fees I actually kept as income. Saved me hours of waiting and probably a lot of headache down the road. Sometimes it's worth paying for the shortcut when dealing with government agencies!

I think you're playing with fire here. What you're describing is basically operating as an unlicensed gambling service, which could have legal implications beyond just taxes. Most states have strict regulations about who can facilitate gambling activities. Has anyone looked into the legality of this streaming setup?

One thing I learned from doing something similar was that PayPal specifically has been getting more aggressive with reporting. They flagged my account for "commercial activity" even though I was just handling money for friends. They can actually put holds on your funds if they think you're using F&F for business purposes. Have you considered setting up a proper business entity like an LLC? Might give you more protection and clearer tax separation between your personal finances and this streaming activity.

You're walking into a complex situation that involves multiple areas of law and regulation. Beyond the tax implications others have mentioned, you need to be aware that what you're describing could potentially violate several federal and state laws. From a tax perspective, the IRS will likely view this as a business activity regardless of whether you take a commission. You're providing entertainment services and facilitating gambling transactions, which creates taxable events. The "Friends & Family" designation doesn't protect you from tax obligations - it just changes how payment processors report the transactions. More importantly, you may be operating as an unlicensed money transmitter, which is regulated at both federal and state levels. When you accept money from one person and transmit it to gambling sites, then return winnings to the original sender, you're essentially moving money on behalf of others - which often requires licensing. Additionally, many states have strict laws about who can facilitate gambling activities. Some states might consider what you're doing illegal gambling regardless of your streaming platform's policies. My strong recommendation is to consult with both a tax attorney and a gaming law attorney before continuing this activity. The potential legal and financial consequences far outweigh any entertainment value or tips you might receive.

As someone new to this community, I have to echo what Emma and Aurora have said - you're potentially walking into a legal minefield here. I've been researching similar situations after seeing friends get into trouble with payment processors and regulatory agencies. One aspect that hasn't been fully explored is the streaming platform's terms of service. Many platforms have specific rules about financial transactions conducted through their services, and facilitating gambling with viewer money could violate their terms even if it's technically legal in your jurisdiction. Also, consider the liability issues - if someone claims you lost their money unfairly or if there are technical issues during a stream that affect the gambling outcomes, you could face civil lawsuits. Without proper business structure and potentially insurance, you're personally liable for any disputes. The tax complexity alone should be a red flag. Even if you're just "passing through" money, the IRS will want documentation proving the flow of funds, and any mistakes in reporting could trigger audits or penalties that cost more than whatever entertainment value this provides. I'd strongly suggest stepping back from this activity until you can consult with professionals who specialize in gaming law and business formation. The risks here extend far beyond just tax reporting.

As a newcomer to this community, I'm genuinely concerned after reading through all these responses. The legal and financial risks everyone has outlined are extensive and serious - from potential money transmitter violations to gaming law issues to platform terms violations. What strikes me most is how what seemed like a simple streaming concept has so many different regulatory pitfalls. The fact that multiple experienced members are independently raising red flags about federal law violations, state gambling regulations, and personal liability issues should be a major wake-up call. @KingKongZilla - I really hope you take the advice here seriously about consulting with gaming law and tax attorneys before continuing. The consensus seems clear that this activity could expose you to risks far beyond what any entertainment value or tips could justify. Even if you've been doing this for a while without issues, that doesn't mean you're in the clear - regulatory enforcement can happen at any time, and the consequences could be life-changing. It might be worth exploring completely different streaming content that doesn't involve handling other people's money for gambling. There are so many successful streamers who build audiences without taking on these kinds of legal and financial risks.