Reporting to IRS

[ssa13]

for reporting to the IRS, 

PayPal will track the payment volume of your account(s) to check whether your payment volume exceeds both of these levels in a calendar year:

• $20,000 USD in gross payment volume from sales of goods or services in a single year
• 200 payments for goods or services in the same year                                                                                                                                                               My question, what if you do $10,000.00 in gross payments, instead of $20,000.00  and 400 payments instead of 200, will I need to report this.  I receive a lot of payments, but they are small amounts.

[Whac-A-Mole · Accepted solution]

No 1099 as you did not meet the $20,000 threshold.

Now,there are sellers who sell 100 transactions and $15k on Etsy  and ,$10k ,200  transactions on Ebay ,they will get no 1099 from either Paypal or Etsy.

But in an IRS audit,they ask to see your bank statements for 12 months and study where the deposits come from.they figure if not your SS income,pension,salary and wages,inheritance,insurance claims ,then it could be income and they want a piece.

[ssa13]

Thank you for your reply.  The key word is the $20,000.00.

[ssa13]

Accepted Solution

[brandon33328]

Somebody who bought items new for $1,000 and then sells on ebay next year for $600 actually takes a loss of $400. You do not pay taxes on a loss, that is the most ridiculous thing I've ever heard. Not everybody is running a business on eBay. You need to determine whether the account in question is someone getting rid of old stuff or if it is a manufacturer selling professionally online. 

[Whac-A-Mole]

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wrote:

Somebody who bought items new for $1,000 and then sells on ebay next year for $600 actually takes a loss of $400. You do not pay taxes on a loss, that is the most ridiculous thing I've ever heard. Not everybody is running a business on eBay. You need to determine whether the account in question is someone getting rid of old stuff or if it is a manufacturer selling professionally online. 

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Paypal 1099k numbers are taken from payments you receive as goods and services,it includes price of the item,shipping and sales tax you collectd for the state.

it has nothing to do with Obama,if it exceeds $20k and 200 transactions,Paypal or AMZN or Barnes and Noble or eTSY would all have to comply and send a copy of 1099k to you and to IRS.

IF you are selling your own stuff,like toasters and coffee mugs,IRS does not expect you to make a profit,you probably see for less than what you pay for,so if you have no profit,then you dont report any.

if you do manage to squeeze out a profit,by the time y ou deduct your expenses like driving to post office,packing and shipping supplies ,paypal and eaby fees,you would be lucky if you break even or buy a dinner for the whole family.

IRS is learning how to audit ecommerce ,so it is sending auditors to learn from you,the problem is anyone can sell on Ebay,including the ones who audit you or someone in the family is selling,so you are giving away your vendors and what sells and what do not sell to a potential competitor.  

[Whac-A-Mole]

if you are a business,whether you get a 1099 or not,Uncle expects you to report and pay your share of taxes.

dont forget when you do so,deduct any returns,sales tax you collected and remit to the states from  the paypal gross .

if y ou sell high ticket items,returns could amount to a tidy sum

[SterlingSharpe8]

What a terrible surprise I received Saturday from the IRS.

I've been a small-time hobby seller on eBay since 1999-2000.

I usually did an average of about $8k a year. Small sales. That's sales too, not profit.

I knew when I started that it was considered a hobby and no need to deal with taxes, which is good.

Little did I know that in 2011, Obama stuck us with this new IRS law taking away a lot of your hard-earned money, if you sold $20k plus in a year, with 200+ sales. 

I found this out because of this IRS letter Saturday, saying I sold $25k worth on PayPal in 2015, and didn't file this on our tax returns.

So the IRS wants a $9k check from us now. 

Why didn't PayPal send me this, with a letter explaining this?
Why didn't PayPal and eBay send us this in 2011 when Obama got the IRS to do this?
Or how about an actual robot-phone call from eBay? I have a store.

And now this, I am trying to look right NOW on PayPal to see what our total is up to. And it doesn't work like that. It just shows sale, sale, sale, sale, etc. no running today. Surely I am missing it right? Anyone have a link what to click to see a running balance for this calendar year? I'd rather stop at $19k then sell 5k more and have to pay 7k in taxes. Thanks for all the help PayPal and eBay. Your customer service is absolutely outstanding. You take care of us like family.

[DPCreations]

When you sell you are responsible to report business income/loss to the IRS.  That has nothing to do with PayPa.

So you were operating a business and failed to report your business on IRS 1040-C form.  You will now need to go back for whatever  year is requested and complete the required forms for an amended submission.  You may owe conserably less when you complete the business form.  It's probably a good idea to pay a business tax accountant to get it all straightned out.

PayPal is required to send a 1099-k under certain circumstance.  Abssence of a 1099-K does not absolve you of the requirement to submit your net profit on your 1040 form.

With a merchant account you would receive a 1099-k for ALL payments.

It's not a big deal when you do proper business accounting.  The IRS just checks the 1099-K against your gross receipts on the 1099-k.  Assuming you have receipts from other other sources your gross receipts will always be greater than what is on the 1099-k, so so problem.

If this was for a specific year, now is a good time to re-state your tax forms for all subsequent years before you get into more trouuble.

[SterlingSharpe8]

Thank you that's pretty much what the IRS said.
I'm recovering all expenses related to that calendar year 2015.

I do have a business tax accountant helping me.

I wonder if, since the IRS considered it a business that year that I was running out of my house, if we can write off our mortgage payments that year. Or 40 hours/week worth.