Dakotagrafx

paypal required to report on 1099-K for $600 in some states

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from an e-commerce blog site - here it comes . . . .

Some Massachusetts and Vermont residents are getting an unpleasant surprise in the mail this week from PayPal thanks to revenue-hungry legislators in their states. And beware, other states may follow.
 
Payment processors such as PayPal are required to send 1099Ks to customers who process $20,000-plus-200 transactions in a year. But some people are getting 1099Ks from PayPal for amounts as low as $600 with very few transactions.
 
That's because Massachusetts and Vermont retroactively passed new laws last year requiring payment processors to file 1099Ks for customers who processed at least $600 in 2017, no matter how little the number of transactions they processed. (We live in Massachusetts and follow small-business and tax issues, and we hadn't heard a word about this new law until today.)
 
Sellers who inquire about the surprise 1099Ks are reporting on forums that PayPal is telling them it is not sending the form to the Feds - we've got a question in to PayPal about this. We also asked PayPal why it didn't inform sellers of the change ahead of time (as a courtesy), since this came as a complete surprise to many sellers until they opened their mail this week.
 
Some may have little sympathy for those impacted, assuming they are tax evaders. But this also impacts people selling casually who are following IRS guidance about "Online Garage Sales" - see this page on the IRS website.
 
On one board, a seller noted he received a 1099K for $630. He said he had probably paid $1,000 for the items, so didn't profit from the sales. But given that the law is retroactive, someone in his shoes may not have considered whether they had receipts for the items before selling them online last year.
 
Such laws will likely push casual sellers towards local selling through classified sites and apps, including Craigslist and Facebook, unless / until lawmakers figure out a way to track cash transactions.

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oh my..Not good at all, is just just business accounts or anyone? i often sell things using paypal for payment not sure how much i sold in 2017 it was more then normal

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1 hour ago, eprcvinyls said:

oh my..Not good at all, is just just business accounts or anyone? i often sell things using paypal for payment not sure how much i sold in 2017 it was more then normal

It will e for all accounts unfortunately.  So far just the 2 states but expect more to joint in on the added revenue for the state

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3 hours ago, Dakotagrafx said:

It will e for all accounts unfortunately.  So far just the 2 states but expect more to joint in on the added revenue for the state

That sucks.. They already take out there fees per item.

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6 hours ago, haumana said:

Boo PayPal. I wonder if other online payment services will be doing the same - Square, Venmo, etc. :(

From now I understand it I would suspect so, states were working at taxing any internet sales hard during the  last bush years, now it is a renewed effort

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I don't quite get why this is an issue? So the problem is just that you are now forced to claim the income on your taxes rather than the honor system where you were suppose to anyway?

If people are wanting to skirt taxes that badly switch to accepting Monero, or one of the other cyrptocurrencies that claim to be truly anonymous.

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3 hours ago, darcshadow said:

I don't quite get why this is an issue? So the problem is just that you are now forced to claim the income on your taxes rather than the honor system where you were suppose to anyway?

If people are wanting to skirt taxes that badly switch to accepting Monero, or one of the other cyrptocurrencies that claim to be truly anonymous.

Well for me, because as of right now I've not sold anything toward a business standpoint. I only sell mostly used Radio control related items to people on RC forums I'm a member of so if i sell $600 worth of used equipment in a year sounds like I'm now going to have to put that on my taxes, I added up past 3 months I've sold a lot trying to just pay my bills at like $500 already not sure if the laws have changed, most likely they have but i thought even if you worked a regular job you didn't have to file taxes if you didn't make like $2000 for the whole year. I'm not sure what kinda laws like that are for personal business. I need to look more into it.

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Ok, but just because you get the tax form from Paypal doesn't mean you have to pay taxes on it if the sales fall into that garage sale thing. And if the sales don't fall into that category then you were suppose to pay taxes on it anyway. I suppose it does require the seller to keep better records to justify why they don't need to pay income tax on it, so that'd be annoying.

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20 minutes ago, darcshadow said:

I don't quite get why this is an issue? So the problem is just that you are now forced to claim the income on your taxes rather than the honor system where you were suppose to anyway?

If people are wanting to skirt taxes that badly switch to accepting Monero, or one of the other cyrptocurrencies that claim to be truly anonymous.

true - I separate my business and have been liquidating some of my old belongings along with my grandparents household stuff.   but because I run a long term sales presents all the garage sale type stuff will be taxed even though that is separated in my accounting

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3 hours ago, darcshadow said:

Ok, but just because you get the tax form from Paypal doesn't mean you have to pay taxes on it if the sales fall into that garage sale thing. And if the sales don't fall into that category then you were suppose to pay taxes on it anyway. I suppose it does require the seller to keep better records to justify why they don't need to pay income tax on it, so that'd be annoying.

Oh, okay i didn't know they had a other sales type spot. I guess its not so bad if people like myself are just selling misc items, i mean I know people on the sites im a member of that in one payment are selling $2500.00 helicopters. we already paid taxes when we buy the stuff new. it would stink to need to pay taxes again.

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3 hours ago, darcshadow said:

The garage sale thing is a tax thing linked to in Dakota's first post.

Sorry, i missed the link somehow... I shouldn't read when i first wake up

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Just now, eprcvinyls said:

Sorry, i missed the link somehow... I shouldn't read when i first wake up

and mentions down lower that if you sell those type of things on an ongoing business it is taxable and not like an occasional garage sale

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3 hours ago, Dakotagrafx said:

and mentions down lower that if you sell those type of things on an ongoing business it is taxable and not like an occasional garage sale

Yeah, Glad i clicked the video seems like a lot of good info on the site for tips and stuff.

 

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Are they just flagging the "product/services" in the PayPal transactions? I wonder if they're going to chase the send cash to friends/family too. That's my preferred way to reimbursing my peeps ;)

 

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