Received a 1099-K from Paypal this year...

[VirtualLarry]

First year that I know of that I've received one.

Little disturbed, actually. It says one is required, if I've done $20,000 worth or 200 total transactions a year. (LOL, not even close.)

The other reason, it states, is "taking payment cards".

So, I guess some dipshitvalued customer used a CC through Paypal, to pay me, rather than use a Paypal account, now I have to file this crap, I guess.

Now I know why everyone states "non-CC Paypal", on their listings.

Or is Paypal 1099-K'ing everyone that's received non-gift money through them now, just to cover their butts?[/S]

 

[Ventanni]

Did you sell stuff and make money throughout the year using PayPal as the transaction host?
Whoops, hit Edit for some reason rather than Reply, my apologies. -Mod VirtualLarry

 

[VirtualLarry]

Did you sell stuff and make money throughout the year using PayPal as the transaction host?

Not $20,000 or 200 transactions worth, that's for certain.

 

[slayer202]

was it by any chance:

"If you received a tax email from us that references Vermont and Massachusetts state tax laws but live outside of these states, please disregard the email. This was sent in error and we’ll send a correction email to your account."

 

[DietDrThunder]

Now the burden is on you as to whether you actually made a profit on the items you sold. I hope you kept good records.

Anything I've sold that I accepted payments through PayPal were stuff I no longer needed/wanted that was around the house, that I paid a lot more for in the past.

 

[brianmanahan]

what's the problem with 1099k? were you not going to report the income otherwise?

 

[Ventanni]

Not $20,000 or 200 transactions worth, that's for certain.

Eep! I wouldn't chance it. I know it's not fair, but the IRS doesn't care. You may have to show records that you did not earn that money. I had a similar situation happen to me when I was younger when one of my employers misreported my income on their income. Knowing I was in the right, so I didn't take it as seriously as I should have (I fully admit I did not handle this like I should have). Needless to say, I had to pay a lot of taxes on money I never earned. And because I waited and ignored it, I paid an enormous amount of interest on it too. And my former employer knew they misreported it, but because he knew he'd have to pay more in taxes himself if he fixed it, he didn't.

Back to the point though, if this situation is similar, I'd call up PayPal and have them correct it. If you got that 1099, then that's what they reported to the IRS, and the IRS will expect both PayPal and your records to match in order for this issue to be resolved.

Do not ignore this. Act now to fix. You do not want to be in the situation I was in.

 

[VirtualLarry]

what's the problem with 1099k? were you not going to report the income otherwise?

If I didn't make a profit, is it income? I re-sold stuff, that was already purchased, with non-taxable income. Does it suddenly become taxable income once I sell them?

Just trying to figure out my legal liabilities. I guess I'll just have to pay the taxes on the gross income.

 

[VirtualLarry]

Back to the point though, if this situation is similar, I'd call up PayPal and have them correct it. If you got that 1099, then that's what they reported to the IRS, and the IRS will expect both PayPal and your records to match in order for this issue to be resolved.

I'm not saying that their reporting is incorrect, only that it seems, unnecessary, at least accord to what is quoted on the form, as being "required" if I sold $20,000 or 200 transactions in a calendar year.

The actual amount reported is around $1400. Nothing major, and certainly not $20,000. The other reason that it states that the reporting is required, is if I "accepted payment cards". So I'm guessing, one of my Paypal forum buyers, used a CC to pay me with. That's the only think that I can figure.

 

[repoman0]

I was pretty irritated to get one of these too. It’s because the good state of Massachusetts now requires them for any amount over 600 bucks rather than 20000. To hell with them, I’ll be filing it and proving I didn’t turn a profit on those 750 bucks worth of sales.

 

[GoodRevrnd]

1099K really falls more under the heading of data the IRS will use to evaluate the reasonableness of your tax return in determining whether or not to audit you. You should get it corrected, but as long as you have your own records to demonstrate the payments received aren't income you should ultimately be okay. I don't do personal tax, I'm just familiar with this form. I suspect to truly cover yourself there's another form you can file where you could list the 1099K amounts as income and deduct your expenses against those items. I should point out you'll receive a 1099K for any amount of payment card settlements--the $20,000 threshold only applies to 3rd party settlements.

 

[dullard]

I'll just put this here (especially see page #2):
https://www.forbes.com/sites/kellyp...-k-and-the-19399-reporting-hole/#3abb0d271ae8

 

[VirtualLarry]

I was pretty irritated to get one of these too. It’s because the good state of Massachusetts now requires them for any amount over 600 bucks rather than 20000. To hell with them, I’ll be filing it and proving I didn’t turn a profit on those 750 bucks worth of sales.

Well, that explains it, I guess, thanks. I'm in MA too.

Edit: Thanks, @dullard, I'll have to digest that article. I read it, and it was complicated.

 

[dave_the_nerd]

Didn't get one. Paypal account says I have no 2017 tax documents to retrieve.

Been quietly selling arts and crafts through a personal website for a few years now. Just do it to do it, more or less break even. Probably ~$2k revenue last year, no 1099 from Paypal.

If I had to file business paperwork, it'd be the most boring return ever.

 

[repoman0]

Found the official IRS line about this.

https://www.irs.gov/businesses/small-businesses-self-employed/tax-tips-for-online-auction-sellers

Online Garage Sales
If your online auction sales are the Internet equivalent of an occasional garage or yard sale, you generally do not have to report the sales. In a garage sale, you generally sell household items you purchased over the years and used personally. If you paid more for the items than you sell them for, the sales are not reportable. Losses on personal use property are not deductible, either. However, see Sales of Appreciated Assets at an Online Auction below for gain reporting.

I'm calling my $750 worth of 1099-k money a garage sale and am not going to bother. They can audit me over it if they want.

 

[VirtualLarry]

Note thought, that they specifically mention "Household Items". Which may have a legal definition. It could potentially be a stretch to consider technology items that I have purchased, personally used, and then re-sold 6-12 months later when I didn't need them, a "household item". Though, it would strengthen the case if they were used, IMHO.

If you paid more for the items than you sell them for, the sales are not reportable.

Well, that covers pretty-much everything I sold. I haven't been making any profits at this, that I know of.

I mean, buy SSD for $50, sell SSD 12 months later for $50 shipped, I'm out shipping, I'm not making a profit, just getting some liquidity back to pay my bills, really.

 

[repoman0]

I'd call used depreciated computer parts a garage sale/household item any day. I think they are trying to exclude jewelry, art, antiques etc.

 

[WhoBeDaPlaya]

@VirtualLarry : I have the exact same dilemma this year due to selling a 3-4 year backlog of hardware all at once. In my case, I blew the $20K limit. Hey, couple of Titans, Alienware lappys, HEDT CPU + mobos, etc. add up quick!

Thankfully, I kept a meticulous record of each sale (shipping, returns, fees, etc.), but I'll be damned if I can find every, single receipt with the original purchase prices!

 

[dave_the_nerd]

Note thought, that they specifically mention "Household Items". Which may have a legal definition. It could potentially be a stretch to consider technology items that I have purchased, personally used, and then re-sold 6-12 months later when I didn't need them, a "household item". Though, it would strengthen the case if they were used, IMHO.



Well, that covers pretty-much everything I sold. I haven't been making any profits at this, that I know of.

I mean, buy SSD for $50, sell SSD 12 months later for $50 shipped, I'm out shipping, I'm not making a profit, just getting some liquidity back to pay my bills, really.

I'm just curious why you're buying the SSD in the first place.

 

[VirtualLarry]

I'm just curious why you're buying the SSD in the first place.

Why stock up on paper towels when they're on sale? (Same reason I stock up on SSDs...)

 

[Red Squirrel]

I heard that the CRA ordered paypal to hand over ALL transaction data to them. Wonder if the IRS is doing the same. I removed all the donate buttons and stuff of my sites as a precaution. The little amount of money I was getting is not really worth the risk of it messing up my tax return.

Did not get anything in the mail though. But if they are going to start taxing it, at very least they are making it easy by sending a form, so there's that, I guess.

 

[paperfist]

Ah you tax evaders doing your part to make America great again!

Hanging's too good for you. Burning's too good for you! You should be torn into little bitsy pieces and buried alive!

 

[s0me0nesmind1]

Someone explain to me why a state law in MA is dictating wether or not s 1099k (a FEDERAL form I presume) is getti g reported to the FEDERAL government or not.

Last I checked, the federal government is the one that makes rules on what needs to be reported to them. If anyrhibg, this sounds like it's getting reported to MA state government and not federal?

Someone correct me if I'm thinking illogically here...

 

[bbhaag]

Someone explain to me why a state law in MA is dictating wether or not s 1099k (a FEDERAL form I presume) is getti g reported to the FEDERAL government or not.

Last I checked, the federal government is the one that makes rules on what needs to be reported to them. If anyrhibg, this sounds like it's getting reported to MA state government and not federal?

Someone correct me if I'm thinking illogically here...

This should clear up any confusion you have regarding 1099's, Massachusetts, and the Federal Government in respect to tax laws.
https://www.mass.gov/service-detail...ents-for-third-party-settlement-organizations

As you can clearly see that outlined in Subsection 3 paragraph 4 this is clearly a state 1099 not a federal 1099.

Payments subject to Massachusetts reporting but not to federal reporting
Where a TPSO has a Massachusetts Form 1099-K reporting obligation but is not required to file Form 1099-K with the IRS, a TPSO may file with the Department using Massachusetts Form 1099-K or IRS Form 1099-K.

Further more under said program using the state DOR program
Submission of Forms 1099-K to DOR using the Combined Federal/State Filing Program
Where amounts paid in settlement to a payee in a calendar year meet both the IRS and Massachusetts Form 1099-K thresholds, a TPSO may use the Combined Federal/State Filing Program to file Form 1099-K with the Department. Where amounts paid in settlement in a calendar year to a payee meet the Massachusetts threshold but not the IRS threshold, a TPSO should submit Form 1099-K to the Department directly using MassTaxConnect (MTC).

 

[WhoBeDaPlaya]

Ah you tax evaders doing your part to make America great again!
Hanging's too good for you. Burning's too good for you! You should be torn into little bitsy pieces and buried alive!

Uh huh. Tell us how you really feel.
Careful not to fall off of your pretentious high horse.