Paypal 1099K Tax Law

[EXOTICLEX]

darthkry just find you a CPA....he'll get you to where you are only taxed on what you made a profit on....it's their job....they can do it.

 

[Kanjar210]

$20.000 is not much at all. I hit $23.000 is sale on paypal . But $5000 was shipping cost and other $1700 or more was fees so profit was not much. Paypal should have deducted shipping fees. They are the one how made money on shipping not me. Why should we hire an accountant for this When you sell a Hot toys figure the profit is not much. Paypal have a horrible way to determine sale last year they fixed it this year. I feel they screwed everybody and made it hard to see what was sold. They they laughed all the way to the bank

 

[ashkanls]

Whats funny is that I broke it down month to month and the 5 months I balanced last night the numbers were off that they claimed on my 1099. For example they claim I sold $4500 in October. I added up the sales totals 6 times in case I made a mistake. My total was $4300 everytime! WTF are they looking at?

 

[karamazov80]

Sorry this is affecting you so directly Darthkry. Taxes are a real _____ sometimes. But the last thing you should do is let a bunch of jokers on the forum get you down. This does suck for you, and hopefully you can find an accountant that can help you sort through this to minimize the financial hit.

 

[DarthKry]

Thanks again guys..
Ash here is the run down of what paypal did... (given, this is not thier fault as some believe-It's a new law pushed on them to enforce)

Any credit/refund you get is counted at "income". Which I don't think it's fair since it was your money that was originally sent. Which is returned to you then taxed. So let's say you buy a figure, it ends up coming broken or not as described. You file a claim with paypal/ebay. They determine that you are correct and refund you the amount in your favor, that refund is included in you're income amount by paypal. They also don't deduct thier fees from that amount and leave thier fees on as your income. The best thing is they cannot count "gift" payments. Thank god for that.

Crazy thing is we are all operating illegally here, since I'm sure not many of us hold licenses in our respective states to do online business. That means if you sell on ebay without a licenses from you're state, you can be fined and cited by your state.

 

[ashkanls]

Thanks again guys..
Ash here is the run down of what paypal did... (given, this is not thier fault as some believe-It's a new law pushed on them to enforce)

Any credit/refund you get is counted at "income". Which I don't think it's fair since it was your money that was originally sent. Which is returned to you then taxed. So let's say you buy a figure, it ends up coming broken or not as described. You file a claim with paypal/ebay. They determine that you are correct and refund you the amount in your favor, that refund is included in you're income amount by paypal. They also don't deduct thier fees from that amount and leave thier fees on as your income. The best thing is they cannot count "gift" payments. Thank god for that.

Crazy thing is we are all operating illegally here, since I'm sure not many of us hold licenses in our respective states to do online business. That means if you sell on ebay without a licenses from you're state, you can be fined and cited by your state.

I actually factored all the refunds and fees in and out and the numbers dont match up. Im not a math major but this is easy stuff to figure out and Paypals totals are off somehow from what I see printed in front of me. Just a FYI to everyone.

 

[jye318]

So if we don't receive 1099k from Paypal, that means we don't need to file?? I am very worry about this since I been buying a lot, ALS sold some statues lately.

 

[DarthKry]

The law states that if you have any income at all, that you have to report it. Paypal will not submit your info to the IRS unless you meet BOTH of the triggers which is 200+ sales and $20,000 or more. But in the eyes of the IRS, you have to declare it no matter what, they just have no way of knowing unless someonw like paypal reports it. For us that did get the 1099 the scary part is an audit where they will go back and check since they now know that you conduct online sales. To be honest, for those of you that did not get one, I would file it anyways to be safe. This sounds like a crackdown to me..

Ash, you need to call paypal and find out why you're numbers don't add up. I think some of mine were different also, but they were under from the number I was adding in some cases.

 

[galactiboy]

Yeah, the way Paypal is just dumping a huge number on the IRS is completely messed up. You would think they could at least parse out shipping costs in order to give at least a semi-realistic view of what was bought and sold.

But as others have said I'm sure it is something you can sort out to get the taxed amount lower; but of course that will cost you some money in consulting with a professional.

I know I will be closely watching my numbers and making sure I don't go over either one of those milestones this year.

 

[hehateme23]

The number paypal gives you I believe is the total amount you received. The paypal fees and shipping costs are included in that total and should be used when you are calculating your deductions.

But if the numbers are way off still, then Paypal should be contacted. (Although I am not sure how they could have messed it up since you're history of transactions are right there).

 

[Mookeylama]

Yeah, the way Paypal is just dumping a huge number on the IRS is completely messed up. You would think they could at least parse out shipping costs in order to give at least a semi-realistic view of what was bought and sold.

But as others have said I'm sure it is something you can sort out to get the taxed amount lower; but of course that will cost you some money in consulting with a professional.

I know I will be closely watching my numbers and making sure I don't go over either one of those milestones this year.

me too. and just to make sure i've got it right... the whole 200+ transaction AND $20,000+ is NOT just stuff sold on eBay only? it's transactions on Paypal right? by that i mean, if i stayed off eBay completely and just sold at say forums, or other online auction sites, if i took Paypal as the payment method and had 200+ separate transactions on PAYPAL that totaled more than 20k, then i'd get reported. is that correct? thanks!

edit: oh and i read somewhere that Paypal now charges fees even on gifts. that info sounds wrong to me. anyone hear that?

 

[DarthKry]

Yes I had a bunch of sales that I just made and I asked people to pay as gifts if they did not want to pay the fee. So I did not charge them for it. I was hit with the fee anyhow. Now I'm out $80 in fees from sales which I would have just worked into the sale cost.. a-holes

 

[j97e1]

UPDATE - From the Paypal FAQ :
"...
Do I have to include the amounts from Form 1099-K on my tax return?

While the IRS has asked that taxpayers enter zero ($0.00) on the line that says "Merchant card and third party payments." (i.e., amounts from Form 1099-K) they did not change the requirements for payors, such as PayPal, to file Form 1099-K. Please consult your tax advisor or the IRS for additional clarification of your tax obligations. "

 

[mightyq]

This just sucks guys, game has changed forever. Are "gift" payments taxable?