IRS reporting.....

[juacorte-32]

Does the amount that PayPal reports to

the IRS already include the eBay and PayPal fee deductions?

[wallaceanderson2015]

No.
They give 1099 that is the gross $ they collected and processed through your account.
Fees and shipping are included in this number.

[slippinjimmy]

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@juacorte-32 wrote:

Does the amount that PayPal reports to

the IRS already include the eBay and PayPal fee deductions?

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No it does not. The amount PayPal reports is the total of all payments processed through your account. It does not include (or exclude) ANYTHING else including fees, refunds etc.

[juacorte-32]

Ok good so I can already shave off 12.9% plus an additional 0.30 per each transaction of the amount that was reported correct?

[7606dennis]

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@juacorte-32 wrote:

Ok good so I can already shave off 12.9% plus an additional 0.30 per each transaction of the amount that was reported correct?

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I would make sure that I had documentation to support any deductions that I were claiming in case the IRS decides to audit.

[slippinjimmy]

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@juacorte-32 wrote:

Ok good so I can already shave off 12.9% plus an additional 0.30 per each transaction of the amount that was reported correct?

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Just pull an activity report from PayPal, it will give you a total of fees paid to PayPal, also fees paid to eBay (if you pay your eBay fees vial PayPal). Also totals of expenses for shipping if you pay your shipping via PayPal.

Plus of course many other deductions (cost of goods, shipping supplies, office expenses etc. etc. etc.) that are probably not found in your PayPal reports.

[nobody*s_perfect]

On Schedule C, you can report as an expense the fees that you paid to PayPal and eBay.  

[juacorte-32]

Ah ok nevermind looks like every time I sell an item on eBay when the money arrives in my account the PayPal fee is immediately deducted but eBay doesn’t charge me their fees till the end of the month and it’s taken out of my bank account so that means I can only deduct 10% from what they reported correct?

[7606dennis]

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@juacorte-32 wrote:

Ah ok nevermind looks like every time I sell an item on eBay when the money arrives in my account the PayPal fee is immediately deducted but eBay doesn’t charge me their fees till the end of the month and it’s taken out of my bank account so that means I can only deduct 10% from what they reported correct?

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I believe that eBay charges your account the instant the sale is made and you only pay your bill once a month.  I would suggest that you consult an accounting & tax professional to make sure that your're accounting methods are up to snuff for your needs.

[nobody*s_perfect]

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@juacorte-32 wrote: ... that means I can only deduct 10% from what they reported correct?

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No, not correct. You report the total PayPal income (you'll get a 1099-K from them if you pass the thresholds) and then you deduct the amount that you paid to PayPal in those automatically-deducted fees. The net is the same, but there is no process in which you just deduct a percentage of your income.

And for eBay fees, you don't just deduct 10%. You look up the exact amounts on the 12 invoices, or do a PayPal report.

I strongly recommend that you look up IRS Schedule C and its instructions, to get a better idea of how the IRS looks at this.  Te also have several useful reference pages on their web site, under small businesses.

[chapeau-noir]

Don't do this by guess and by golly - use a reputable tax site or consult a tax professional.  You don't want to overpay.

ETA: Cross posted with above - the IRS has a very good small business resource area. I also use Turbo-Tax. 

[juacorte-32]

Thanks everyone