cancel
Showing results for 
Show  only  | Search instead for 
Did you mean: 

Does Ebay or Paypal report our sales to IRS?

janies_bizz
Enthusiast
I just started selling on Ebay and Im a little worried about reporting my extra little income. Its not that much but is there like a certain amount that I have to make for them to report or how does this work? Any help would be appreciated. Tax time is near.
Message 1 of 236
latest reply
235 REPLIES 235

Re: Does Ebay or Paypal report our sales to IRS?


I'm not an accountant, but one is allowed to make hobby income.



And one is supposed to report it as income.



Newt
“Foreign aid is taking money from the poor people of a rich country and giving it to the rich people of a poor country”. Ron Paul
Message 121 of 236
latest reply

Re: Does Ebay or Paypal report our sales to IRS?

Does eBay or PayPal report our sales to IRS?


 



I certainly hope not!



But remember... Al Capone went to jail for Tax Evasion!


(not racketeering, bootlegging, or any of that crap)


---------------------------------------------------------------------------------------------
New Toy: 1996 Adamas 1881 ;  photo d3c27a4e-2de6-48e4-8a38-73242748826d_zpsbb3k8gvk.jpg
Message 122 of 236
latest reply

Re: Does Ebay or Paypal report our sales to IRS?

kali-the-pup
Thrill-Seeker

It begs the question, if you don't pay the taxes due on your


eBay income, does the IRS open an UID...  do you get an


invisible strike, if you don't pay up? How many strikes are


you allowed to rack up, before they throw your butt in Jail...


 


Just wondering ?:|


 

Message 123 of 236
latest reply

Re: Does Ebay or Paypal report our sales to IRS?

Bump


********************************************************************************

The fragrance always remains in the hand that gives the rose.

For the sake of others, please learn CPR. You could save a life.


Message 124 of 236
latest reply

Re: Does Ebay or Paypal report our sales to IRS?

They would audit you b4 they threw you in jail.Now if you were making reportable income as a tax id business that may be different

Message 125 of 236
latest reply

Re: Does Ebay or Paypal report our sales to IRS?


 


And one is supposed to report it as income.


...


http://www.irs.gov/uac/Is-Your-Hobby-a-For-Profit-Endeavor%3F


 


The following factors, although not all inclusive, may help you to determine whether your activity is an activity engaged in for profit or a hobby:


 


 




  • Does the time and effort put into the activity indicate an intention to make a profit?



  • Do you depend on income from the activity?



  • If there are losses, are they due to circumstances beyond your control or did they occur in the start-up phase of the business?



  • Have you changed methods of operation to improve profitability?



  • Do you have the knowledge needed to carry on the activity as a successful business? Have you made a profit in similar activities in the past?



  • Does the activity make a profit in some years?



  • Do you expect to make a profit in the future from the appreciation of assets used in the activity?



With April 15 fast approaching I thought this thread needed a bump.


 


 

The definition of insanity is doing the same thing over and over again and expecting a different result.
Message 126 of 236
latest reply

Re: Does Ebay or Paypal report our sales to IRS?

So I've read all these posts and it still seems very confusing to me. Before I take all my info to a  CPA, which will cost $, I'd like to try to have a better understanding.


 


I just got my 1066-K from Paypal, and they are saying I need to report this income. My situation is that I'm a Trading Partner, so 90% of my sales are not my own items and I only receive a fraction of the actual payment I receive. So even thought I've done $25K in sales (for example), I've only actually made $2500 profit. The 1066-K amount also doesn't take in to account all the eBay fees and expenses it takes to run a part-time business. I was just wondering if anyone else is in this situation and if they have any more info.

Message 127 of 236
latest reply

Re: Does Ebay or Paypal report our sales to IRS?

The 1099-K just reports your entire PayPal income. It's up to you to keep records for deductions and expenses, from postage to eBay/PayPal fees, to the amounts that you paid to the owners of the items for which you acted as an agent. 


 


Before you meet with the accountant, look through IRS Schedule C and the instructions, to get an idea of how the IRS looks at the allowable expenses. Schedule C is where you report the PayPal income and then deduct everything else, to show that your profit was only $2500. Only your profit is reportable income.


 


The IRS also has lots of useful pages for small businesses. Surely somewhere in this thread those have already been referenced, including the basic page for 'online auction sellers":

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Tax-Tips-for-Online-Auction-Sellers

Message 128 of 236
latest reply

Re: Does Ebay or Paypal report our sales to IRS?

Just got my first ever 1099 from PayPal so be aware they are being sent out.  It will take some paperwork to figure it all out as postage is included as part of your income!!!  Glad I kept good records!!!!!!!!

Message 129 of 236
latest reply

Re: Does Ebay or Paypal report our sales to IRS?

hey  ausrob,


 


it looks like you went over 200 payments for the year and that is why you got 1099ed.idk what all the fuss is about this paypal clearly doesnt want this to effect every merchant ,thats why the 20,000.00 /200 is the rule.if you fall under that guideline you are not required to report to the irs.you can if you want,thats the individuals choice.but why would you?

Message 130 of 236
latest reply

Re: Does Ebay or Paypal report our sales to IRS?


it looks like you went over 200 payments for the year and that is why you got 1099ed.idk what all the fuss is about this paypal clearly doesnt want this to effect every merchant ,thats why the 20,000.00 /200 is the rule.if you fall under that guideline you are not required to report to the irs.you can if you want,thats the individuals choice.but why would you?



For the love of God, will you people stop giving out tax advice that might get people busted by the IRS???


 


What kind of fool thinks that the government lets you sell $19,999 worth of stuff on eBay and NOT report your profits?


 


It is NOT, repeat NOT the individual's choice. If you make even $1 of profit, it doesn't matter what your total sales are, that profit is part of your TAXABLE INCOME.

Message 131 of 236
latest reply

Re: Does Ebay or Paypal report our sales to IRS?


 


... paypal clearly doesnt want this to effect every merchant ,thats why the 20,000.00 /200 is the rule.if you fall under that guideline you are not required to report to the irs....


you can if you want,thats the individuals choice.but why would you?



 


Those reporting thresholds ($20K, 200 transactions)  were set by the federal legislation not by PayPal. They set the bar for where PayPal has to send out 1099-K's, not where sellers have to report their income.  The legislation was passed as a first step in catching up with online merchants who avoid their tax obligations; clearly there's a long way to go.

Message 132 of 236
latest reply

Re: Does Ebay or Paypal report our sales to IRS?

Well that makes no sense prior to 2012 it wasn't required at all.Then they make it 20.000.00/200 and everyone else should too???Why not just require it,.?? Talking about paypal ??

Message 133 of 236
latest reply

Re: Does Ebay or Paypal report our sales to IRS?


Well that makes no sense prior to 2012 it wasn't required at all.Then they make it 20.000.00/200 and everyone else should too???Why not just require it,.?? Talking about paypal ??



Of course it was required for YOU to report your income. That hasn't changed. The only change is that the IRS is trying to catch the worst offenders (tax evaders) by having PayPal issue a 1099 to sellers over $20k.


 


If you haven't been paying taxes on your eBay profits, you're a tax evader, and you're subject to back taxes, penalties, and possible criminal charges.

Message 134 of 236
latest reply

Re: Does Ebay or Paypal report our sales to IRS?

Thanks for the clarification.I still dont get why prior to 2012 it wasnt required by legislation that paypal not report sellers earnings,all sellers earnings???Thats the part that makes no sense.Its not like ebay is some small town eCommerce(paypal) establishment.

Message 135 of 236
latest reply