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bostongrammy
Community Member
Posts: 9,287
Registered: ‎11-24-2002

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

in reply to janies_bizz

The legislation was passed a few years ago and implementation was phased in so that calendar year 2011 was the first year that the reporting requirement (for sending the 1099-K's)  was in place. This is not about eBay or Paypal, it's about all financial companies like PayPal that process credit card and other online payments. Here's PayPal's page of explanation:


 


https://cms.paypal.com/us/cgi-bin/marketingweb?cmd=_render-content&content_ID=marketing_us/IRS6050W

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rusty1234russell
Community Member
Posts: 104
Registered: ‎11-04-2009

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

in reply to janies_bizz

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.

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the_right_stuff99
Community Member
Posts: 3,027
Registered: ‎02-11-2004

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

in reply to janies_bizz


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.

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rusty1234russell
Community Member
Posts: 104
Registered: ‎11-04-2009

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

in reply to janies_bizz

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 ??

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bostongrammy
Community Member
Posts: 9,287
Registered: ‎11-24-2002

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

in reply to janies_bizz


 


... 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.

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the_right_stuff99
Community Member
Posts: 3,027
Registered: ‎02-11-2004

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

in reply to janies_bizz


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.

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rusty1234russell
Community Member
Posts: 104
Registered: ‎11-04-2009

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

in reply to janies_bizz

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?

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Community Member
Posts: 14
Registered: ‎11-25-2004

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

in reply to janies_bizz

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!!!!!!!!

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bostongrammy
Community Member
Posts: 9,287
Registered: ‎11-24-2002

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

in reply to janies_bizz

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

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jdgtradingpost
Community Member
Posts: 33
Registered: ‎01-21-2013

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

in reply to janies_bizz

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.

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hondamedic
Community Member
Posts: 7,002
Registered: ‎06-05-2005

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

in reply to janies_bizz


 


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.


 


 

BBL: Blocked Bidder List... BIN: Buy It Now... BO: Best Offer... BR: Bid Retraction... DC: Delivery Confirmation

DSR: Detailed Seller Rating FB: Feedback FRB: Flat Rate Box FVF: Final Value Fee IPR: Immediate Payment Required

NARU: Not A Registered User OP: Original Poster OT: Off Topic PM: Priority Mail.... PS: Power Seller....

SNAD: Significantly Not As Described...... TRS: Top Rated Seller...... UIA: Unpaid Item Assistant..... UID: Unpaid Item Dispute
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rusty1234russell
Community Member
Posts: 104
Registered: ‎11-04-2009

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

in reply to janies_bizz

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

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ipickubuy
Community Member
Posts: 13,323
Registered: ‎08-04-2004

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

in reply to janies_bizz

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.


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Community Member
Posts: 668
Registered: ‎01-23-2011

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

in reply to janies_bizz

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 ?:smileyindifferent:


 

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old_man_arthur
Community Member
Posts: 840
Registered: ‎11-13-2007

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

in reply to janies_bizz

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)


---------------------------------------------------------------------------------------------
Next toy: Composite Acoustics "X"  photo 488a8888-34a3-4c87-b05b-872e1f1890f3_zps10e09319.jpg
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janewt-1
Community Member
Posts: 1,915
Registered: ‎12-01-2006

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

in reply to janies_bizz


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
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Community Member
Posts: 1
Registered: ‎03-29-2009

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

in reply to janies_bizz

I'm not an accountant, but one is allowed to make hobby income.  If we actually run business selling stuff on ebay there would be many many write-offs.  Just think of it!  Buying the item, storage, gas for car, insurance, computer, printer, boxes, tape postoffice (driving to , again more car expense.)  Did I mention wear and tear on your car?  And the portion of car & medical insurance one can deduct.  Also, let's not forget the eBay fees and PayPal Fees — there quite high.  The list goes on and on.  So, when we all have to be businesses instead of hobby type, many will drop selling on eBay...and they know it!



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theguitarpartsguy
Community Member
Posts: 596
Registered: ‎01-01-2009

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

in reply to janies_bizz

Hmmm, since I report my eBay sales as part of my daily receipts since they're part of my store's income anyway, and I make my living from my store, I wonder if there's anything new in there that I need to know... I'm guessing probably not, but I am thinking I should probably have my accountant person skim through that just to make sure we don't end up getting a surprise we don't expect....

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hondamedic
Community Member
Posts: 7,002
Registered: ‎06-05-2005

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

in reply to janies_bizz

 


Good morning my friend.

PayPal reporting criteria> https://cms.paypal.com/us/cgi-bin/marketingweb?cmd=_render-content&content_ID=marketing_us/IRS6050W


 


These new rules apply to sellers who receive over $20,000 in gross payment volume AND over 200 separate payments in a calendar year.

Hope this helps!


 


 

BBL: Blocked Bidder List... BIN: Buy It Now... BO: Best Offer... BR: Bid Retraction... DC: Delivery Confirmation

DSR: Detailed Seller Rating FB: Feedback FRB: Flat Rate Box FVF: Final Value Fee IPR: Immediate Payment Required

NARU: Not A Registered User OP: Original Poster OT: Off Topic PM: Priority Mail.... PS: Power Seller....

SNAD: Significantly Not As Described...... TRS: Top Rated Seller...... UIA: Unpaid Item Assistant..... UID: Unpaid Item Dispute
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Community Member
Posts: 1
Registered: ‎05-06-2012

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

in reply to janies_bizz

MY FRIEND,


 


IF YOU MAKE 200 TRANSACTIONS, OF  $10.00.


YOU MADE $2000.00,    YOU WILL BE REPORTED.


 


THAT MEANS,   ALMOST EVERY BODY WILL BE REPORTED.


THAT $20,000  GROSS INCOME IS B.S.


 


 


                                                                     HAVE A GOOD DAY


 


                                                                                     JOHN M.

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