Pay Pal Policies on Reporting Payments to the IRS (1 Viewer)

[jazzeum]

I'm sure some of you may be aware of this but PayPal is required to report to the IRS payments you receive in your account if you receive in excess of $20,000 in payments for the sale of goods or the provision of services or if the number of payments you receive for the sale of goods or th provision of services exceeds 200 (regardless of the aggregate amount you receive). In such event you will receive a 1099 from PayPal.

PayPal will not report payments to the IRS up to $20,000 but if you receive $20,001, PayPal reports back to dollar 1, not just the amount in excess of $20,000.

This occurred to a friend of mine and he had a large tax liability as a result so you should keep track of payments you receive. According to PayPal, payments recieved through Friends and Family are not counted in the above calculations.

 

[BLReed]

Sellers were going to properly report the sales on their tax return anyway to include under $20K, right? So what's the big deal?
Don't forget income to your State.

 

[jazzeum]

If you sell for a living, yes, you probably do, but if it's a part time activity, as it is for many, they may not do that.

 

[BLReed]

If you sell for a living, yes, you probably do, but if it's a part time activity, as it is for many, they may not do that.

it doesn't matter. Income is Income. Although some states may waive as they do with Garage sales.
Here is better guidance.
https://www.irs.gov/businesses/small-businesses-self-employed/tax-tips-for-online-auction-sellers

Also:
http://www.nbcnews.com/id/11658852/ns/business-answer_desk/t/do-i-have-pay-tax-stuff-i-sell-ebay/#.VztuleRA6cs

 

[theBaron]

I suspect that it's related to other procedures implemented by laws intended to combat money laundering, like the Currency Transaction Report (CTR) that banks submit for transactions involving $10K in cash or more.

Remember, Al Capone was never successfully prosecuted for murder, but they got him on tax evasion.

Prost!
Brad

 

[Running-Buddy]

I'm sure some of you may be aware of this but PayPal is required to report to the IRS payments you receive in your account if you receive in excess of $20,000 in payments for the sale of goods or the provision of services or if the number of payments you receive for the sale of goods or th provision of services exceeds 200 (regardless of the aggregate amount you receive). In such event you will receive a 1099 from PayPal.

PayPal will not report payments to the IRS up to $20,000 but if you receive $20,001, PayPal reports back to dollar 1, not just the amount in excess of $20,000.

This occurred to a friend of mine and he had a large tax liability as a result so you should keep track of payments you receive. According to PayPal, payments recieved through Friends and Family are not counted in the above calculations.

I have a question. Is this reporting for a calendar year when you say PayPal goes back to the first dollar? So you would have to have 200 payments or $20K total in a calendar year to receive a 1099?

Thanks
Howard

 

[jazzeum]

Howard,

Yes, calendar year.

Brad