Paypal and taxes

[Deeker]

I was wondering if others have had to deal with this.  I keep getting a message from paypal asking for my social security # and have yet to provide it.  This is the newest message I received:

 

We're asking for your tax ID number due to new IRS rules. Your tax ID
number is one of these:

- Your Social Security number
- Your Individual Tax Identification Number
- Your Employer Identification Number

We'll use your tax ID number to send tax Form 1099-K to you and the IRS
when the payments you receive exceed both of these milestones in a calendar
year:

 

Has anyone given their SS# to paypal or dealt with this?  I don't sell enough for this and already pay way more then my fair share in taxes.  I am worried that this will cost me and be more of a hassle with my accountant then it is worth.  If I choose to ignore this will I get banned from paypal?

 

I guess I am looking for anyones advice in regards to this. Or what you have experienced yourself.   Thanks  

[justafrog]

Yes, PayPal asks for this information from everyone at some point, and they ask for it well in advance of the reporting requirement. Provide it to them if you want to continue using your PayPal account.

 

Your opinion that you already pay way more than your fair share in taxes isn't relevant to PayPal or the IRS - and if your accountant isn't telling you the same, it's time to find a new accountant who will keep you out of trouble instead of getting you into it. 

 

You will need to declare your income regardless of whether you meet the criteria for PayPal to issue you a 1099 - your accountant can advise you on the best way to handle tracking income and expenses for your business.

[asharerin]

I have given them my SSN. They did ask for it well in advance of me hitting their limits. I believe if you do not then they will withhold 28% of all payments for taxes.

[justafrog]

I have given them my SSN. They did ask for it well in advance of me hitting their limits. I believe if you do not then they will withhold 28% of all payments for taxes.

 

I haven't seen that information anywhere - do you have a link?

 

Here's more information on PayPal and the 1099s, tax i.d. numbers, etc.:

 

https://cms.paypal.com/us/cgi-bin/marketingweb?cmd=_render-content&fli=true&content_ID=marketing_us/IRS6050W

[hxckid88]

But if you don't sell more than 20,000 a year you are fine right?

[asharerin]

If you do not go over both 200 transactions and $20k in gross sales you will not get a 1099. If Paypal asks for your tax ID and you do not give them one they will suspend you from receiving payments or hold 28% of gross sales for Fed taxes. Two different issues - 1099 vs backup withholding requirements.

[dbost01]

200 transactions through paypay or 200 received payments through paypal?

[asharerin]

200 payments received for goods and services. Personal payments, refunds etc do not count.

[terrymc4677]

200 payments received for goods and services. Personal payments, refunds etc do not count.

Just to clarify, a "personal payment" would be when you withdraw money from your paypal balance to your bank account, correct?

[Achilles]

But if you don't sell more than 20,000 a year you are fine right?

 

"Fine" means it won't automatically be reported. If your income is 19,999 and you don't report it, you are not paying taxes that you should, and would be subject to penalty and audit. 

 

Not to come off as too preachy, but pay your taxes. If you're keeping proper records most of what you are doing should be tax deductible anyway. 

 

Not that anyone is going to read this and say, "Yea, that guy who I don't know is right. I'm going to pay my taxes now." But I find it very irksome that some people complain about business practices designed to protect the seller, yet try to avoid paying taxes. You can't have it both ways folks.

[emazers]

If you go buy a $50 Lego set with your paypal credit card in a store or online and take it back to the store for a refund thats called a chargeback and that does count as a Paypal Transaction. And if you don't get a 1099 in the mail, you don't have to put that you made $19,000 selling Lego, etc on you tax form.

[justafrog]

And if you don't get a 1099 in the mail, you don't have to put that you made $19,000 selling Lego, etc on you tax form.

 

This continues to be terrible advice. It's telling people it's fine to commit tax evasion. Please, stop telling people this, the IRS puts people in jail for this when they catch them.

[willy431]

Oh no......not again.  Can we just delete these type of tax  posts. It has nothing to do with lego/investing.  Let's all put the personal back in personal tax filing.

[justafrog]

Seriously, if I came on this forum on a regular basis and told people it's totally fine to take Lego sets from Target without paying for them - just wear bulky clothes and move fast through the exits - I assume I would be told to knock it off.

[emazers]

The Law says $20,000 and over 200 paypal transactions and get a 1099 Form, then you have to claim all the income.

[hxckid88]

Lol. Reselling lego is the same as having a yardsale. Besides, not to go off on some rant but why would u want to give more money to our corrupt government? I have a rain tax in my state a freaking rain tax. I have a tax based on the square footage of my roof and how much rain runoff that creates which causes pollution. If any of you live in Arizona I'm sorry about your solar panel tax thst want into affect today. I'm going to go enroll in obamacare with my bitcoin.

[justafrog]

The Law says $20,000 and over 200 paypal transactions and get a 1099 Form, then you have to claim all the income.

No, the law doesn't. PayPal is required to issue a 1099 at those numbers. It has absolutely nothing to do with the requirement of a business to report its income.

[justafrog]

I am not interested in arguing the corruption of the government and whether they deserve any of our legally required tax dollars. I am interested in preventing any lurkers who think that buying and selling Lego with the intention of making a profit is anything at all like a yardsale. It's not.

[dbost01]

can you resale taxes?

[justafrog]

No, the IRS bans you.

[njseale]

Honestly. If you are at the point where you are doing 5 figures of sales of year through paypal regularly.....you should be filing on your taxes. For your own safety.

[TheOrcKing]

People, can we at least agree that just because you fall short (intentionally or not) of what is required for PayPal to report is not a good reason to evade certain fees. Selling a few goods once in a while is one thing but not reporting what you earned through a side hobby simply because you almost but not quite reached the limit is a bad move.

[willy431]

I had to give my ssn number--got the email just before crossing  the 10k line this year.  And 2.8k was a used car I sold locally.  Guy offered to pay the  3% PayPal fee on top of what he bought the car for---so he could use his cc.  Oh well...not worth the risk for me....Just because  they send you a 1099 @ 20k doesn't mean they don't report your earnings to irs does it?  I thought anything over 600 had to be 1099'd after obamacare....I know that was in the original bill...not sure if it was in the final.

 

http://money.cnn.com/2010/05/05/smallbusiness/1099_health_care_tax_change/

 

Looks like it was repealed....still not clear if it is still law or not.

[akohns]

This continues to be terrible advice. It's telling people it's fine to commit tax evasion. Please, stop telling people this, the IRS puts people in jail for this when they catch them.

This!

 

Seriously, if I came on this forum on a regular basis and told people it's totally fine to take Lego sets from Target without paying for them - just wear bulky clothes and move fast through the exits - I assume I would be told to knock it off.

This

 

No, the IRS bans you.

And This!

 

Emazers, you're welcome to do what you wish. But I'd feel more comfortable if you didn't tell other people to pay their taxes because their "appears" to be a way around it. Whether you can get away with not claiming that income or not, it just not good advise. 

In general I'd rather not have these types of threads appear because they are just to mixed up and misleading. This is a forum with so many people from so many different countries with many different tax laws concerning these maters. Not to mention just the differences state to state here in the US. I'd HOPE people are smart enough to know not to trust tax advise given on an online forum such as this, I just don't want anyone saying "but taxman, those brickpickers told me such and such."

[RunMan3]

Without starting another fight about what is right/wrong concerning paying taxes.

 

What about selling on Brick Classifieds and EBay, will it be the sum of sales from both which will be used by PayPal to determine when to issue a 1099 form at the end of the year?