# Update on Paypal and Taxes- 1099s



## Nickinator (Dec 14, 2017)

UPDATE:

Had started another thread earlier on the "new" tax system at PP- as I'd spoken with 3 reps and got 3 slightly different versions, but all had said that F&F and transfers were counted towards Gross sales...the thread was getting confusing with all the updates, so I had a Mod take it down.

I have since spoken to someone in their actual tax dept, and can confidently say that no changes have been made to the way PP sorts and reports transactions since 2011- ONLY those transactions which are marked as Goods, Services and Donations are counted towards your Gross.

And if those #'s are below the 200 transactions AND 20k in Sales (have to meet both to get a 1099), no 1099 will be generated for the IRS. So getting a refund from Target won't count, adding money with a PP cash card won't count, F & F won't count, transfers won't count.

And just FYI- if you do accidentally get a 1099k and your records are different, you can dispute it, and an updated one will be sent to the IRS. You would know sometime around the end of January if one was going out.

Can't believe how many people at Paypal had the wrong info on this... 

Darcie


----------



## bricycle (Dec 14, 2017)

Thanks, Great info!


----------



## Jesse McCauley (Dec 14, 2017)

Ohhhhh good, had me worried


Sent from my iPhone using Tapatalk


----------



## Dan the bike man (Dec 14, 2017)

Good info. I just buy. No selling.


----------



## Waterland (Dec 16, 2017)

I don't understand any of what you just said.  If I sell on ebay, does that mean the IRS is going to send me something saying I need to pay in and claim my Ebay sales as taxable income?


----------



## Freqman1 (Dec 16, 2017)

Waterland said:


> I don't understand any of what you just said.  If I sell on ebay, does that mean the IRS is going to send me something saying I need to pay in and claim my Ebay sales as taxable income?




Here's the short version the way I understand it; if you have 200 or more transactions AND $20k or over on sales generated from Good & Services or Donations you will receive a 1099 that you will have to file. V/r Shawn


----------



## catfish (Dec 16, 2017)

Thank you very much for looking into this. Great info!


----------



## Flat Tire (Dec 16, 2017)

If you want to know anything about PayPal rules, policy, or legal info all you have to do is log into your PayPal account. You can click on Legal and Policy Updates at the bottom of the page, if they change their policy on anything you will get an email.
Really quite simple.


----------



## Nickinator (Dec 16, 2017)

Flat Tire said:


> If you want to know anything about PayPal rules, policy, or legal info all you have to do is log into your PayPal account. You can click on Legal and Policy Updates at the bottom of the page, if they change their policy on anything you will get an email.
> Really quite simple.




Except for determining what is specifically is counted as Goods or Sales, which is not addressed on their site.
And if you call PP to ask for this info, you will likely be told something incorrect. That was the point of the thread.

Also if you have a business account, you can check your #'s online, but it will show you the total of transactions that counts everything, not just those specifically coming in as Goods, Services and Donations. So you can't rely on those figures. If you want to know the actual transaction # or what's being counted in your Goods and Sales, you'll have to call and talk to someone in their tax dept. Certainly could have a better online accounting system for their users.

Darcie


----------



## 66TigerCat (Feb 6, 2018)

I live in Massachusetts and received a 1099-k. MA and VT recently changed the law stating that anything over $600. is now reported to the IRS. Since I had approx. $3500. in sales and 89 total transactions (well below the $20k/200 transaction IRS threshold) I believe I only have to claim in on my state taxes. I need to do more research. I called PayPal but they refused to tell me who I had to file with since they are not tax consultants. Kind of BS since they were the one's issuing a tax document. Stay tuned....


----------



## schwinnbikebobb (Feb 6, 2018)

Maybe this factors in as to why ebay wants that new payment service. Maybe I am wrong but doesn't ebay own Paypal?


----------



## catfish (Feb 6, 2018)

Anyone else get a 1099 from pay pal?


----------



## ivrjhnsn (Feb 6, 2018)

catfish said:


> Anyone else get a 1099 from pay pal?



Yup,,,sons of itches . Sold a bike for a friend on ebay and a couple other things, now I gotta pay taxes on it.


----------



## 66TigerCat (Feb 6, 2018)

schwinnbikebobb said:


> Maybe this factors in as to why ebay wants that new payment service. Maybe I am wrong but doesn't ebay own Paypal?



Ebay and PayPal split a few years ago and now it looks like it will be permanent after the new payment service is instituted. I'm guessing the new service will also issue a 1099 if that's the law in MA now.


----------



## catfish (Feb 6, 2018)

66TigerCat said:


> Ebay and PayPal split a few years ago and now it looks like it will be permanent after the new payment service is instituted. I'm guessing the new service will also issue a 1099 if that's the law in MA now.




This sucks!


----------



## catfish (Feb 6, 2018)

ivrjhnsn said:


> Yup,,,sons of itches . Sold a bike for a friend on ebay and a couple other things, now I gotta pay taxes on it.




Looks like I'll be going back to USPS money orders only......


----------



## partsguy (Feb 6, 2018)

In all honesty, the days of sales-tax-free selling online is about to end. The writing is on the wall. With major brick-and-mortar retailers now going digital, it is only a matter of time.

I don't like it, but it is what it is.


----------



## stoney (Feb 6, 2018)

catfish said:


> Looks like I'll be going back to USPS money orders only......




The old ways of us doing business amongst each other are returning.


----------



## dfa242 (Feb 6, 2018)

ivrjhnsn said:


> Yup,,,sons of itches . Sold a bike for a friend on ebay and a couple other things, now I gotta pay taxes on it.



Yup, I got one too.


----------



## bikewhorder (Feb 6, 2018)

So how is this supposed to work? I mean its not like a salary income, you had buy the item before you can sell it.  Do you need to somehow prove what you paid for an item and what your profit or loss is?


----------



## ivrjhnsn (Feb 6, 2018)

bikewhorder said:


> So how is this supposed to work? I mean its not like a salary income, you had buy the item before you can sell it.  Do you need to somehow prove what you paid for an item and what your profit or loss is?




It has become taxable income, not like lottery winnings where you try to offset...Pay up sucka is what it comes down to. Anyone involved with getting money from Paypal is a target


----------



## bikewhorder (Feb 6, 2018)

Here's some discussion on the topic. Taxing people for reselling things regardless of whether or not they made any money on the sale is total BS!  What's next, taxing tea?  
https://www.reddit.com/r/hardwaresw...ta_residents_of_ma_and_vt_issued_a_1099k_for/


----------



## 66TigerCat (Feb 6, 2018)

Yeah, total BS. I just looked up the tax rate for 1099's. 15% ! Ouch !


----------



## bikejunk (Feb 7, 2018)

If you sell stuff at Copake auction above a certain amount you will -as I have get a 1099 as well  ...


----------



## 66TigerCat (Feb 7, 2018)

Been reading about the 1099-k for a couple of days now and I'm ready to puke. Since PayPal also furnished this info to the IRS, I'm on the hook to pay the Fed's now too. I'm out. Done with selling on Ebay/PayPal. Now only accepting Postal MO's and personal checks from people I know. It's over folks, get used to it. The fat cats are squeezing us more and more. Taking all the fun out buying and selling online. Oh well.


----------



## Freqman1 (Feb 7, 2018)

66TigerCat said:


> Been reading about the 1099-k for a couple of days now and I'm ready to puke. Since PayPal also furnished this info to the IRS, I'm on the hook to pay the Fed's now too. I'm out. Done with selling on Ebay/PayPal. Now only accepting Postal MO's and personal checks from people I know. It's over folks, get used to it. The fat cats are squeezing us more and more. Taking all the fun out buying and selling online. Oh well.



Rest assured if I receive a 1099 there will be no more Ebay/PP either! I pay more than my fair share already. V/r Shawn


----------



## 66TigerCat (Feb 7, 2018)

I'm wondering if I can deduct my Ebay and PayPal fees since they are a cost of doing business. In Mass. the tax rate for a 1099-k is 15%. Ebay/PayPal adds up to roughly 13%.

I'll look into this and report back what I find. Stay tuned.......


----------



## 66TigerCat (Feb 7, 2018)

A quick Google search turned up this on Ebay's Community website....

*Which expenses can I deduct for my eBay business?*

Every time you make a sale on eBay, you should record the expenses incurred for that sale. If you are reselling items (e.g. purchased wholesale, discovered at a garage sale, etc.), you should record the itemized price, along with any taxes and shipping costs associated with those items.

Similarly, if you are manufacturing or crafting products yourself, the itemized expenses should include the costs of direct materials, and tools and supplies necessary to produce those items.

Lastly, don’t forget to include the cost of postage, and any bank or PayPal fees and of course any eBay fees associated with the sale of that item.

I'm feeling a little better now that I know this. It will make a difference in the amount owed.


----------



## rustjunkie (Feb 7, 2018)

If the received paypal payments have generated a 1099-K, it is automatically sent to the IRS. Best not to fool around, and you might want to contact a CPA. If you don't report the amt on the 1099-K, you might receive a CP2000 down the road. I know 3 people that have rec'd these due to paypal 1099-K/tax return filing discrepancies.


----------



## catfish (Feb 7, 2018)

66TigerCat said:


> I'm wondering if I can deduct my Ebay and PayPal fees since they are a cost of doing business. In Mass. the tax rate for a 1099-k is 15%. Ebay/PayPal adds up to roughly 13%.
> 
> I'll look into this and report back what I find. Stay tuned.......




What about shipping?


----------



## rustjunkie (Feb 7, 2018)

catfish said:


> What about shipping?




I'm not a CPA but this is what my guy told me:
shipping is an expense if you didn't charge for it.
if shipping was charged it can be either a credit or debit, depending on what was charged vs actual cost of shipping.
Shipping materials are an expense, but accounted for separately from the cost of shipping.

Again, I'm not a CPA and what I don't know could be just barely squeezed into Dodger Stadium.
Best to contact a tax professional.


----------



## schwinnbikebobb (Feb 8, 2018)

Out of curiosity for anybody who got a 1099 did they put it in box 3 or box 7 on the 1099.


----------



## 66TigerCat (Feb 9, 2018)

Schwinnbikebob - 

Box 3 is number of transactions. 

Box 7 is State Identification #. 

The gross is listed in box 1a. This is a 1099-k, maybe different from a typical 1099 ?


----------

