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Paypal Reporting Income to IRS with 1099-K. eBay Sales Over $20,000 AND Sold Over 200 Items

blackblaze 3,222 February 2, 2012 at 07:18 AM
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I was reading this article this morning and posted it in another thread regarding 1099-K

http://www.forbes.com/sites/kelly...taxpayers/

I know there are a lot of folks here who buy and sell (using Paypal to receive payments) based on slickdeals they come across. Some folks for profit, some folks, to get their item for free (buy 4, sell 3, get their slickdeal item free). I've been able to get some great deals going the route of buying a few extra and getting the item for free. However, with so many great slickdeals throughout the year and selling, for some, you may have cross the threshold of now receiving a 1099-K from Paypal ($20K gross received and 200 transactions) that is also reported to the IRS

http://www.irs.gov/instructions/i1099k/ar02.html

So, how does one handle this. Some questions that come to mind:

1. What distinguishes hobby seller from small business?
2. Reported amount is gross, not net, where is clarity to show just net income?
3. If you receive this form, and somehow show a result of net income, can you claim expenses, itemized deduction (mileage to acquire items, etc, etc.)?
4. Since this is new, how well are tax accountants prepared to help tax preparers to navigate this new form?
5. Should you create a new Paypal/Ebay account to account for selling personal items/friends items, etc vs items strictly for resale?

Wanted to open it up for discussion. Cool2

256 Comments

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#181
Does anybody know the limit will be the same for 2013 calender year? $20k AND 200 transactions?
TIA
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#182
Quote from bunnyeric View Post :
Does anybody know the limit will be the same for 2013 calender year? $20k AND 200 transactions?
TIA
as far as i know, it is the same. amazon has the same reporting policy
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#183
you know you should pay your taxes even if you did 1 transaction for $50 right? not receiving a 1099 does not mean you don't have to pay your taxes. just saying.
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#184
Quote from rotogrip300 View Post :
In order to get fully verified and no limits. You need a credit card attached as well as a bank account. Both of which have to be different from your original account.
Finally got that done. Thank you so much. Rep Sent
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#185
Quote from daniel32 View Post :
Is it $20k AND 200 transactions

OR

$20k OR 200 transactions.
So if I sell $25,000 worth of stuff and only have 50 transactions, I would be safe?
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#186
Quote from Mathfalterd View Post :
$20k AND 200 transactions
Quote from NFS4 View Post :
So if I sell $25,000 worth of stuff and only have 50 transactions, I would be safe?
according to Mathfalted you would be safe.
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#187
Quote from NFS4 View Post :
Quote from daniel32 View Post :
Is it $20k AND 200 transactions

OR

$20k OR 200 transactions.
So if I sell $25,000 worth of stuff and only have 50 transactions, I would be safe?
No you still pay taxes and watch the money disappear to the gov.



Quote from daniel32 View Post :
Is it $20k AND 200 transactions

OR

$20k OR 200 transactions.
It's you pay taxes on whatever you made and watch money vanish.



Quote from bunnyeric View Post :
Does anybody know the limit will be the same for 2013 calender year? $20k AND 200 transactions?
TIA
The limit of how much money vanishes when you pay taxes in whatever you sell?
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L10: Grand Master
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#188
Just as a FYI, if you didn't file your 2011 1099-K from Paypal in your 2012 taxes, you may be getting a letter.
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#189
Man. I am selling my game collection this year (something I didn't intend on selling and will generate tens of thousands of dollars, especially when shipping is added to that total) so I'm really sort of stressed about how I'm going to calculate the amount I should pay in taxes next year. Guess I'm just gonna have to take a best guess at it.
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L10: Grand Master
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#190
Quote from Friend of Sonic View Post :
Man. I am selling my game collection this year (something I didn't intend on selling and will generate tens of thousands of dollars, especially when shipping is added to that total) so I'm really sort of stressed about how I'm going to calculate the amount I should pay in taxes next year. Guess I'm just gonna have to take a best guess at it.
Paypal provides various reports that you can use to do your tax calculations.

Monthly financial summary
Annual financial summary
1099-K Reconcilation
Custom reports by date range with choices to include/exclude data.
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L10: Grand Master
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#191
Quote from getdealsonline View Post :
EBay sellers:

Has any of you sold over 20k on eBay? If yes, how much tax are we expected to pay to IRS?

Apparently PayPal reports to IRS when you have sold over 20k or more than 200 items

One obviously has to report the income while filing taxes...any advises or information, appreciated!
hey GDO, were you able to get up to speed on the 1099-K for this year?
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#192
Quote from blackblaze View Post :
hey GDO, were you able to get up to speed on the 1099-K for this year?
hey - nah, not this year as didn't make enough in the past year Big Grin

but for the upcoming year, I surely wud be getting the 1099 Wink

ps: on a sidenote, I didn't mind getting the 1099 for the last yr as it got pretty good return considering a lot of stuff was taken as *business* expense Wink I used a tax consultant to file it last yr to help and it worked great!
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L10: Grand Master
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#193
Quote from getdealsonline View Post :
hey - nah, not this year as didn't make enough in the past year Big Grin

but for the upcoming year, I surely wud be getting the 1099 Wink

ps: on a sidenote, I didn't mind getting the 1099 for the last yr as it got pretty good return considering a lot of stuff was taken as *business* expense Wink I used a tax consultant to file it last yr to help and it worked great!
Really, do tell, would like to know ALL business expenses that are being used, or can/should be used. Don't want to give the government more than what they want to take shake head
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#194
what if using somebody else's ssn and set up a new paypal and linked to the same ebay account? will both paypal account gets the 1099? TIA.
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L10: Grand Master
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#195
Quote from ahk167 View Post :
what if using somebody else's ssn and set up a new paypal and linked to the same ebay account? will both paypal account gets the 1099? TIA.
I don't think eBay allows you to link multiple Paypal accounts. However, you can have one paypal account linked to eBay and use another Paypal email address where payments are received on listings. So JoeSmith@paypal can be the account linked to eBay, but JodySmith@paypal can be the payment address used on the listing. eBay will recognized if JodySmith is an acceptable account and send payments for purchases there.
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