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I just got my 1099 from Paypal


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#1 Philflound OFFLINE  

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Posted Thu Feb 2, 2012 7:28 PM

What a surprise this was today in the mail. I'm barely surviving in this world with not being able to get a full time teaching job for 3 years and now I get hit with this crap. Paypal has reported the money I have received for 2011. Supposedly this is the 1st year the IRS is making them do this. Anything over $20,000. This is, any returned money for non-shipped items or refunds for overshipment and such are not deducted from this reported income. Also, their fees weren't deducted from this either. So now I'm gonig to have to spend hour upon hour deducting everything. And probably all for a measley $4 to $5k profit. Which will still leave me below poverty level. Sad thing is I did my taxes last night and got this surprise today. And this isn't only for Ebay. So if you take paypal on your personal site, or other auction sites, or any other reason, if you received $20k+ you'll be getting one of these too.

Phil

#2 krypton85 OFFLINE  

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Posted Thu Feb 2, 2012 8:52 PM

Sweet.... Hopefully I won't hit the 20k mark.

#3 kheffington OFFLINE  

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Posted Thu Feb 2, 2012 9:41 PM

They announced this several times last year after congress passed it. They also demanded a SS number back in September.

Anyway if you are trading to the tune of $20,000 a year, you are taking a big risk by not tracking and reporting it.

#4 allhallowseve2000 OFFLINE  

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Posted Thu Feb 2, 2012 11:13 PM

These new rules apply to sellers who receive over $20,000 in gross payment volume AND over 200 separate payments in a calendar year. (BOTH requirements must be met)


Or- just be careful not to go over those 200 payments "received" - BTW...sorry, that really sucks


Edited by allhallowseve2000, Thu Feb 2, 2012 11:19 PM.


#5 labrat OFFLINE  

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Posted Thu Feb 2, 2012 11:32 PM

Given that they're internet transactions you should know that this 'income' has been recorded for years; its just now big enough to be worth them asking for their share of it. Besides the $20K is just gross.

Its not too hard to deal with. I've been declaring mine for the last few returns and am WELL BELOW the current threshold. You just need to fill out a 1040 schedule C and you can deduct expenses such as the cost of buying and shipping the items you have sold, among other expenses. The same form allows you to take a loss if you have had a bad year.

PS. I don't even sell on ebay; I'm just talking about random AA sales as well as some books on amazon.

Edited by labrat, Thu Feb 2, 2012 11:34 PM.


#6 kevincal OFFLINE  

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Posted Fri Feb 3, 2012 1:00 AM

to hell with paypal and the irs, robbing everyone. as if we dont pay enough paypal fees over the years and as if the government hasnt been mishandling money for decades. our country is in debt, what, billions of dollars?! LOL why keep giving them money, our government is a BAD investment. I dont fear them, i fear nothing. the only reason people pay this shit is fear.

most people are struggling bad right now myself included, good honest people. the government aint full of good honest people, neither is paypal, screw them and their 1099

ps - i got the 1099 too. gee, wonder what im going to do? LMFAO.

Edited by kevincal, Fri Feb 3, 2012 1:01 AM.


#7 bojay1997 OFFLINE  

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Posted Fri Feb 3, 2012 11:20 AM

to hell with paypal and the irs, robbing everyone. as if we dont pay enough paypal fees over the years and as if the government hasnt been mishandling money for decades. our country is in debt, what, billions of dollars?! LOL why keep giving them money, our government is a BAD investment. I dont fear them, i fear nothing. the only reason people pay this shit is fear.

most people are struggling bad right now myself included, good honest people. the government aint full of good honest people, neither is paypal, screw them and their 1099

ps - i got the 1099 too. gee, wonder what im going to do? LMFAO.


Messing with the IRS is a sure fire way to end up in jail and bankrupt. Also, people selling $20K and 200+ things on Ebay a year are not mom and pop hobbyists, they are running small businesses and they should have been reporting this income all along. As someone who has worked my entire life and been honest about my taxes, I have no sympathy for people complaining that selling on Ebay should mean they shouldn't have to pay taxes. All of us have struggled in this economy, but it's not an excuse to break the law.

Edited by bojay1997, Fri Feb 3, 2012 11:20 AM.


#8 Welsh Wizard OFFLINE  

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Posted Fri Feb 3, 2012 3:18 PM

Seems to me , you have to be a multi millionaire to legally avoid paying taxes, perhaps if you increase sales you may be able to end up paying less taxes than a secretary.
At least thats the way it seems to be reported about your presidential candidates and the US tax system down here.

#9 Philflound OFFLINE  

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Posted Fri Feb 3, 2012 4:20 PM

Doing 200 transactions is not a hard thing. That is only 4 sales per week.
Phil

#10 bojay1997 OFFLINE  

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Posted Fri Feb 3, 2012 4:29 PM

Doing 200 transactions is not a hard thing. That is only 4 sales per week.
Phil

Sure, but $20K in sales in a year and 200 sales? I don't know any hobbyist or casual seller who can even get close to that. Let's face it, if you're at that level, you've gone pro and you need to have the proper documentation and infrastructure in place to pay taxes on what you're selling, 1099 or not.

#11 qix_maniac OFFLINE  

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Posted Fri Feb 3, 2012 4:51 PM

so if paypal asked for your ssn# and you don't give it and have less then 20k in total transactions you are ok?
I got the email about asking for ssn# but never got a 1099?

#12 kheffington OFFLINE  

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Posted Fri Feb 3, 2012 5:04 PM

You can log into paypal go to the history tab and select tax documents. If there is no 1099 listed there, you will not be receiving one. You have to have both $20,000 in receipts and 200 transactions to get one.

You could have $2,000,000 in receipts and less than 200 transactions and not receive one. You can have thousands of transactions and if they don't add up to more than $20,000 you will not receive one.

You can also log into paypal and go to the history tab and select Reports and then click on 2011 financial statement. That will download pdf file with all your information for the full year.

At any rate, selling thousands of dollars worth of merchandise without reporting it is risky to say the least with or without a 1099 form.

#13 NickelPlate OFFLINE  

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Posted Fri Feb 3, 2012 5:29 PM

to hell with paypal and the irs, robbing everyone. as if we dont pay enough paypal fees over the years and as if the government hasnt been mishandling money for decades. our country is in debt, what, billions of dollars?! LOL why keep giving them money, our government is a BAD investment. I dont fear them, i fear nothing. the only reason people pay this shit is fear.

most people are struggling bad right now myself included, good honest people. the government aint full of good honest people, neither is paypal, screw them and their 1099

ps - i got the 1099 too. gee, wonder what im going to do? LMFAO.


While I certainly share some of your sentiments, you could be made to pay alot more in fines and jail time for not reporting income or paying taxes. Be careful if that's what you choose to do.

#14 jetset OFFLINE  

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Posted Fri Feb 3, 2012 6:32 PM

Messing with the IRS is a sure fire way to end up in jail and bankrupt. Also, people selling $20K and 200+ things on Ebay a year are not mom and pop hobbyists, they are running small businesses and they should have been reporting this income all along. As someone who has worked my entire life and been honest about my taxes, I have no sympathy for people complaining that selling on Ebay should mean they shouldn't have to pay taxes. All of us have struggled in this economy, but it's not an excuse to break the law.


Quite possibly the best post ever. :thumbsup:

Edited by jetset, Fri Feb 3, 2012 6:33 PM.


#15 Philflound OFFLINE  

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Posted Fri Feb 3, 2012 7:36 PM

I actually wasn't anywhere near these numbers until I opened my ebay store in 9/10. In the beginning I didn't hit anywhere near $20k since the store was only open for 3 1/2 months. But now with ove 1400 items in the store with many more coming, I'll be hitting these numbers easily next year. What the real screwup was ebay forcing us to list paypal. I listed it anyway, but they took away the listing option of money orders and checks. You can still accept m.o./checks but don't have this under payment options, so it would have to be written in the description that you do.

Phil

#16 HatefulGravey OFFLINE  

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Posted Fri Feb 3, 2012 7:58 PM

If they would do it right this isn't a bad thing. They have to take the fees out and all that though. Then again I'm just a person behind a computer, what do I know? The issue here is a full blown store gets to write off the cost of doing business. Its going to be hard to prove this in our hobby. I can't show a reciept for the money I spent at a yard sale on this SNES, so I can't prove the cost of running my small business...

If you are in the small busniess bracket, write off the PC that gets you to Paypal, the desk its on, the room its in, the power that runs it, and the internet you have to have to get it done. :D

#17 Curious Sofa OFFLINE  

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Posted Fri Feb 3, 2012 9:17 PM

Yeah, I agree with the posts saying that if you're making over $20k at this it's clearly a real business and you've got to have your docs in order...

But PayPal needs to be deducting _their_ fees. As well as Ebay's listing fees (since they're the same company now). It's lazy, harmful and inaccurate of them to throw out the gross sales number by itself when the other numbers are at their fingertips. At the very least, they need to give you a quick total along with that 1099 form.

#18 kheffington OFFLINE  

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Posted Fri Feb 3, 2012 9:46 PM

Neither PayPal nor eBay can deduct their fees, shipping costs or anything else. For them to do so would violate the IRS regulations. It is up to the individual or business to keep track of expenses and declare them as deductions. While I might agree with your sentiment, that is not possible.

The wording below is direct from the IRS publication:


The gross amount of total reportable payment transactions exceeds $20,000
and
The total number of such transactions exceeds 200.

That IRS publication is at the link below as a PDF spelling it out.

http://www.irs.gov/p...-pdf/i1099k.pdf

Edited by kheffington, Fri Feb 3, 2012 9:47 PM.


#19 bigbee99 OFFLINE  

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Posted Fri Feb 3, 2012 10:39 PM

You can still accept m.o./checks but don't have this under payment options, so it would have to be written in the description that you do.

Phil

The last time I listed something with check/MO in the description eBay yanked the auction saying it was against policies. That has been a while back. It would be pretty cool if they have removed this.

B

#20 potatohead OFFLINE  

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Posted Fri Feb 3, 2012 10:59 PM

Re: Can't deduct the cost of the small business.

Sure you can!

Did you drive to the yard sale? Log it. Log every trip. Did you eat lunch, while "prospecting?" Log it. If I were you, I would also log what you got, where it was, what you paid, when you paid it, and from whom you bought it. Ask an accountant, but I'll bet that all works when deducted appropriately. They will know the miles rule and when it's business and when it's not.

Did you get supplies for restoration and cleaning? How about packaging and special storage / shipping requests? Got a storage unit with the stuff in it? What else did you SPEND to get the sales done? That's what it is all about, once you clear the amount needed to trigger the form. Got a business license? I'm sure there are other things, and that first half hour or hour with the accountant can educate you quick. Typically, you can get that for a coupla hundred bucks, less if they are doing a return.

I had some back taxes resolved this year from when I was forced to go self employed. When I found out how much I actually made that year, it was made clear I need to find some expenses, or it will be painful.

I read through that years e-mail, tagged all the trips, hit the google for miles, and it added up to a considerable amount. Took me about two weeks too. Wasn't pretty. You bet your ass I keep logs now. Not currently self-employed, but I still do some business under the name. The thing is this stuff is easy when it's done as a matter of habit, incrementally, when it happens. The more clear and robust the data the better. It's not so easy when it piles up for any length of time. In case of audit, I took the least amounts and if it was not clear, didn't add the trip to the tally. (That was about 20 percent of what I found, clearly another reason to do this right at the time.) School of hard knocks.

YMMV

**If I had 20K + of retro / classic related sales --actually any sales in that amount, I would totally document what happened. It can be worth a lot. Done right, you might spend a few percent of your time max. In terms of dollars per hour, it might pay off well. In my case, even the time spent over the two weeks equated to $100 / hour or so. Totally worth it. Had I done it proper at the time, I would have doubled or tripled that figure, more than compensating me for the log in terms of reduced taxable revenue. The kicker is I DID spend the money, why not deduct?

Edited by potatohead, Fri Feb 3, 2012 11:21 PM.


#21 potatohead OFFLINE  

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Posted Fri Feb 3, 2012 11:08 PM

Re: 1099

I think the IRS rule is reasonable actually. They want the folks that should be reporting, and that 200 transactions is a great filter, leaving most ordinary, "Hey, let's sell it on e-bay" people out of the system, just as they would be for a yard sale, or some other private transaction. The big earners with a few transactions can easily do their own reporting, or take the risk... (able to afford either)

Edited by potatohead, Fri Feb 3, 2012 11:09 PM.


#22 kheffington OFFLINE  

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Posted Fri Feb 3, 2012 11:25 PM

Both eBay and PayPal let you create monthly reports from their sites. If you pull eBay records once a month you will have records of eBay sales, along with listing fees, final value fees and shipping cost if you shipped through PayPal. A PayPal monthly report will give your totals received, refunds, shipping cost and fee totals. You can pull them as PDF files. That will cover a lot of your expense work with little effort. If you buy shipping supplies and other items used in the sales on line and pay through PayPal, that record will also be in the PayPal reports. If you use a credit card to pay for supplies, just keep a copy of the credit card bill.

The rest of the expenses for packing materials, boxes, your cost of the item sold and anything else related you will still need to track. As Potatohead points out above, this can include mileage, etc. Even a computer and any office equipment used for the sales as long as the main use of those items is related to transactions.

Don't know about PayPal, but eBay will interface with Quickbooks and track a lot of the expenses.

Edited by kheffington, Fri Feb 3, 2012 11:26 PM.


#23 ianoid OFFLINE  

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Posted Sat Feb 4, 2012 1:16 AM

I've been claiming my eBay profits on taxes since I started. Such a huge paper trail is not to be messed with. I think the most difficult part of the 1099 is that it must include shipping costs, which are part of eBay's payments.

People with money avoid paying taxes by claiming large amounts of business expenses. And when they have extra money, they spend it on business or 'business' to reduce their tax burden further.

Writing off driving is very tough because it does require a log. Which requires discipline. So I mostly skip it. I write off other legit expenses, like eBay fees, Paypal fees, labels, computers (rarely need a new one), and Endicia postage costs. And of course the costs of items should be subtracted from the gross profits. That is also hard to track.

#24 DeusExMachina OFFLINE  

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Posted Sat Feb 4, 2012 7:10 AM

What a surprise this was today in the mail. I'm barely surviving in this world with not being able to get a full time teaching job for 3 years and now I get hit with this crap. Paypal has reported the money I have received for 2011. Supposedly this is the 1st year the IRS is making them do this. Anything over $20,000. This is, any returned money for non-shipped items or refunds for overshipment and such are not deducted from this reported income. Also, their fees weren't deducted from this either. So now I'm gonig to have to spend hour upon hour deducting everything. And probably all for a measley $4 to $5k profit. Which will still leave me below poverty level. Sad thing is I did my taxes last night and got this surprise today. And this isn't only for Ebay. So if you take paypal on your personal site, or other auction sites, or any other reason, if you received $20k+ you'll be getting one of these too.

Phil


Based on what you have written with proper documentation, you can write off expenses like a millionaire boss. You just have to take the time to do the math and calculate your expenses. In the end, you probably won't pay much, if anything, in taxes.

#25 the-topdog OFFLINE  

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Posted Sat Feb 4, 2012 12:07 PM

as if the government hasnt been mishandling money for decades. our country is in debt, what, billions of dollars?! LOL why keep giving them money, our government is a BAD investment.


If everyone paid their taxes like they are supposed to, Then the country wouldn't be in debt.




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