@richs_rookies wrote:
...
I'm uncertain whether my tax obligations fall under US or Canadian jurisdiction, or if eBay's notification implies I'm exempt from taxes due to not meeting a specific sales volume. This situation is perplexing.
Could anyone provide clarity on these tax-related inquiries?
@richs_rookies,
eBay is not implying anything about your tax liability. eBay has no jurisdiction to do this, and they don't know anything about where or which countries you may be required to report income to. That is your responsibility.
The IRS rules are that if you are required to file a tax return in the USA, then you have to report the income, whether you receive a 1099-K form or not. There is no "specific sales volume" that would imply you are exempt from IRS income tax.
The 1099-K is a USA form, so you would not receive it if your registered address on eBay is in Canada, which I believe has to be the case in order to use a Canadian bank account. So it is not at all clear if you would be considered a USA or a Canadian resident for tax purposes.
The IRS also requires that all "USA persons" have to report their world-wide income for tax purposes, whether it is earned from a USA source or not. That includes both USA citizens and USA permanent residents, aka green-card holders, and those who are deemed to be USA residents for tax purposes.
Determining whether you are a USA or Canadian resident for tax purposes can be very complex. You may have to file income taxes in both countries. The USA-Canada tax treaty allows you to take a credit in one country for taxes that you have to pay to the other one, but this situation can be very complex as well. You need to find a tax expert who is familiar and very experienced with USA-Canada tax liabilities, taxation requirements and laws.
This will be a very specialized expert with a lot of experience in this situation. An ordinary tax lawyer or accountant who is qualified in one country or the other, would probably make mistakes that can be very costly -- this happens a lot, and you would still owe the taxes and penalties yourself if mistakes are made.
Definitely, do not rely on information you find on the internet. Including this answer, which has very general non-specific information. You need to do your own research and find an expert who can advise you on your personal, specific situation.
Also, USA persons who have foreign bank accounts have to file the Foreign Bank Account Report FBAR if their total amount in all foreign bank accounts is over US $ 10,000 at any point during the year. This is a separate form from the tax return, and is filed separately. If it turns out that you are a USA resident for tax purposes, then you need to file this form, and you may need to do it retroactively for previous years if you were not aware of the requirement to file it before. So this is something you need to be aware of. Your USA-Canada tax expert can help you with this.
