PayPal and income taxes

[BigTJ]

There was an informative “heads up” about having to receive a 1099 and report income to the IRS if you receive more than $600 in goods and services through PayPal or venmo. It was deleted by the mods I think because it went political. It would be nice to have the heads up. Mods are you ok with locking this thread and pinning it, as a key piece of info to board members that frequently use those services? The information can be obtained easily in a web search.

If not please delete and accept my apologies.

John

[chugbug]

Apparently you'll now get 1099'd after receiving $600+ in payments as a seller on eBay. There's nothing new here, unless you're unfamiliar with receiving payments from a business, or with reporting them as a small business. 1099s have been required on $600+ payments per year to individuals and noncorporate entities for decades. It's the independent contractor's W2.

[ffftroutbum]

Dunno, bug, but you maybe comparing apples to oranges. The requirement you referred to is for services not goods.

[tiptop]

And then there's the question about the use of paypal outside of ebay which no longer owns paypal. Will paypal require your SSN and file 1099s independent of ebay? I use paypal frequently for both buying and selling (not for profit) outside of ebay. Paypal hasn't asked for my SSN yet.

[BigTJ]

It’s new to eBay and PayPal the limit was $20k last year.

[chugbug]

Dunno, bug, but you maybe comparing apples to oranges. The requirement you referred to is for services not goods.

Hmm...
Thankfully I'm now retired.
Carry on.

[SpringCreek]

It’s new to eBay and PayPal the limit was $20k last year.

The limit was $20K last year but that all changed at the first of the year. When Congress passed the American Rescue Plan Act last year they changed the reporting requirements and that is impacting not only eBay, but PayPal, Venmo and the like. Now they all must issue a 1099 to anyone who had sales for goods or services of over $600 in a year. Most, if not all, will require that you provide your SSN # once that threshold is met.

[wrong66]

It doesn't make any difference to people that have been paying taxes on sales all along, which has been the law forever.

[tiptop]

"It doesn't make any difference to people that have been paying taxes on sales all along, which has been the law forever."

That's true if you're referring to vendors - those who are selling for profit. If no profit is made, no income tax is due on the sales amount.

[rsagebrush]

Perhaps you should have a good tax accountant and keep records of purchases and sales.

[BigTJ]

Sound asvice.

The main thing here is not to argue over tax responsibility or rules it’s to give a heads up so the good people here on the board don’t get caught off guard.

John

[Gnome]

and another black market will emerge.

[Srock]

Practical question. How will this new rule be applied to sales on forum type classified sales sections? Will the new sales reporting rule be applied or not, say on this forum?

[tiptop]

The forum itself offers no financial services and it has no way of knowing what is bought or sold. However, if paypal is used for forum sales, paypal may report those sales both to the seller and to the IRS with a form 1099. I don't know the threshold of annual sales before that reporting is done. It could be $600 or higher - I don't think that has been determined yet. If you're a vendor and selling for profit, you have an obligation to declare the income whether you sell on the forum or ebay,

[GRASSNGLASS]

I think this will cause many people to stop selling. Not because they don't want to pay the taxes, just because it will be too big a hassle. Probably cost more to get an accountant than what profits, if any, would be realized by a seller.

[Seabowisha Salmo T]

I think this will cause many people to stop selling. Not because they don't want to pay the taxes, just because it will be too big a hassle. Probably cost more to get an accountant than what profits, if any, would be realized by a seller.

truer words were never spoken! and a tax attorney is light years ahead in assistance. cpa will explain to irs his workup based upon your numbers. tax attorney will defend your numbers.

regards, jim w

[tiptop]

Here's a link to the changes that went into effect January 1, 2022:

https://newsroom.paypal-corp.com/2021-1 ... s-Answered

So it looks like PayPal will be asking for our tax ID numbers (SSN, EIN, TIN) this year and will file a 1099-K for those who receive over $600 in sales regardless whether those sales were for profit or not. What remains to be seen is whether they will require those ID numbers from all users of PayPal or just those who receive funds over $600 annually via "goods and services". Also, I wonder if they'll wait until the threshold is reached before requiring the tax ID. We'll see.

[rsagebrush]

Hope you all kept receipts then, or can dig them up somewhere.

[Barney]

I recently sold a WWII item that I inherited from my uncle (no one in the family wanted it). Now they want my TID.
I am not a business, and how do you calculate "profit" from something my uncle risked his life for? They took 12.5%
of the sale, and now I have to pay out more on taxes?

[GRASSNGLASS]

It's nice to vent to each other, but doesn't hurt to call your Representatives and give them your opinion.

I did, not that it will change anything.

Barry