the Paypal tax question - answers
11-14-2010, 09:48 AM
#1
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Join Date: Jul 2009
Location: Southwest Kansas
Posts: 4,820
Paypal is now required to report to the IRS any user with over $20,000 in sales or 200 transactions in one year. The user or merchant (seller) will also get a form similar to a 1099. You will not pay taxes on the entire amount. You will file a Schedule C with your tax return and report the income and expenses against that income. Every one that receives a Paypal 1099, or whatever they designate the form, should already be keeping business records. If you're not keeping records you'll have to start.
It's very probable most of the small sellers will actually generate a business loss instead of income by the time they get thru with all the deductions they can take. For example business use of the home, vehicle deductions, actual business expenses for things like postage and packing materials and other office supplies. Schedule Cs really aren't all that hard to do. A good tax program will walk you thru it.
Feel free to PM me with any tax questions.
It's very probable most of the small sellers will actually generate a business loss instead of income by the time they get thru with all the deductions they can take. For example business use of the home, vehicle deductions, actual business expenses for things like postage and packing materials and other office supplies. Schedule Cs really aren't all that hard to do. A good tax program will walk you thru it.
Feel free to PM me with any tax questions.
11-14-2010, 10:10 AM
#3
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Join Date: Jul 2009
Location: Southwest Kansas
Posts: 4,820
Originally Posted by ptquilts
I believe the criteria set by the IRS is $20000 AND 200 transactions. That is not to say that Paypal could choose to send out forms for less.
11-14-2010, 10:10 AM
#4
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Join Date: Apr 2010
Location: Auburn, WA
Posts: 1,343
Originally Posted by Scissor Queen
Paypal is now required to report to the IRS any user with over $20,000 in sales or 200 transactions in one year. The user or merchant (seller) will also get a form similar to a 1099. You will not pay taxes on the entire amount. You will file a Schedule C with your tax return and report the income and expenses against that income. Every one that receives a Paypal 1099, or whatever they designate the form, should already be keeping business records. If you're not keeping records you'll have to start.
It's very probable most of the small sellers will actually generate a business loss instead of income by the time they get thru with all the deductions they can take. For example business use of the home, vehicle deductions, actual business expenses for things like postage and packing materials and other office supplies. Schedule Cs really aren't all that hard to do. A good tax program will walk you thru it.
Feel free to PM me with any tax questions.
It's very probable most of the small sellers will actually generate a business loss instead of income by the time they get thru with all the deductions they can take. For example business use of the home, vehicle deductions, actual business expenses for things like postage and packing materials and other office supplies. Schedule Cs really aren't all that hard to do. A good tax program will walk you thru it.
Feel free to PM me with any tax questions.
11-14-2010, 10:19 AM
#5
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Join Date: Jul 2009
Location: Southwest Kansas
Posts: 4,820
Originally Posted by UglyCook
Originally Posted by Scissor Queen
Paypal is now required to report to the IRS any user with over $20,000 in sales or 200 transactions in one year. The user or merchant (seller) will also get a form similar to a 1099. You will not pay taxes on the entire amount. You will file a Schedule C with your tax return and report the income and expenses against that income. Every one that receives a Paypal 1099, or whatever they designate the form, should already be keeping business records. If you're not keeping records you'll have to start.
It's very probable most of the small sellers will actually generate a business loss instead of income by the time they get thru with all the deductions they can take. For example business use of the home, vehicle deductions, actual business expenses for things like postage and packing materials and other office supplies. Schedule Cs really aren't all that hard to do. A good tax program will walk you thru it.
Feel free to PM me with any tax questions.
It's very probable most of the small sellers will actually generate a business loss instead of income by the time they get thru with all the deductions they can take. For example business use of the home, vehicle deductions, actual business expenses for things like postage and packing materials and other office supplies. Schedule Cs really aren't all that hard to do. A good tax program will walk you thru it.
Feel free to PM me with any tax questions.
11-14-2010, 10:28 AM
#6
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Join Date: May 2010
Location: A lake in Minnesota
Posts: 491
Remember that the guidelines are only requirements for Paypal to follow. IRS requires ALL income to be reported by a seller whether a 1099 is issued or not. Also there are different rules for business and hobbies. It's always best to use a trusted professional.
11-14-2010, 06:40 PM
#7
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Join Date: Jun 2010
Location: Vermont
Posts: 6,978
Here is a link from the Paypal blog
https://www.thepaypalblog.com/2008/08/proposed-irs-reporting-requirements-become-law/comment-page-2/]https://www.thepaypalblog.com/2008/0...omment-page-2/[/url]
"Under the legislation, PayPal will be required to report to the IRS the total payment volume received by PayPal customers in the U.S. who:
1. receive more than $20,000 in payment volume in a single year; and
2. receive more than 200 payments in a single year."
https://www.thepaypalblog.com/2008/08/proposed-irs-reporting-requirements-become-law/comment-page-2/]https://www.thepaypalblog.com/2008/0...omment-page-2/[/url]
"Under the legislation, PayPal will be required to report to the IRS the total payment volume received by PayPal customers in the U.S. who:
1. receive more than $20,000 in payment volume in a single year; and
2. receive more than 200 payments in a single year."
11-14-2010, 08:18 PM
#9
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Join Date: Jul 2009
Location: Southwest Kansas
Posts: 4,820
Originally Posted by debbieumphress
Doesn't this start in 2011. Would help to know this.
That means everybody gets to start record keeping fresh with a new year.
11-14-2010, 08:25 PM
#10
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Join Date: Mar 2010
Location: North Texas
Posts: 8,710
That works for me. I will get an accounting book and make columns. I am not a regular seller but want to cover myself for the little I do make. With the deductions, etc, the small seller will not have to pay. Thanks for the post. GOod to know.
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