PayPal and the 2020 Taxes 1099-K Form Reporting - IL, VT, MA, VA, MD 1 1

[jimjum12]

On 1/25/2021 at 12:33 PM, Mutant Manatee said:

I will have my accountant/tax preparer look into this, but according to a post above hobby expenses are no longer tax deductible as of 2017.   I don't know if I can report this income as a business and therefore deduct my expenses.  I have never had a tax ID number.

Probably not this year. You absolutely need to get a business license if you want to continue. That would be around here, anyway. In my area the Business license is what separates you from a hobby and a business. With a license you can avoid some sales tax on purchases and you can write off many things, even your Internet service. I was sent my first unexpected 1099 in 2011 because of some sort of agreement I made to accept merchant cards... still don't know exactly what one of those is. I had to scramble, but luckily had some co-workers in Accounting to help keep the insanity at bay. The license around here is very reasonable until you reach 50K in gross sales. This might sound weird, but when I see the roads around here getting a new paving it makes me proud to be a small business owner. Last year was my best ever due in large part to a consignment collection. I  claimed everything, even personal checks, which were the lion's share of my receipts. I keep photocopies of each check and deposit them in a separate account.  State and Federal were over 10K in taxes this year .... you just have to make sure you have or can quickly raise the funds at tax time. With all the new sales tax requirements from 50 different States, I admit I'm thinking about retiring from it... but I'll definitely miss the hustle of it. It doesn't have to be a bad thing. If you do shows, you can write off Hotels, restaurants while on the road, gas, etc,,,, GOD BLESS....

-jimbo(a friend of jesus)

Edited January 26, 2021 by jimjum12

[jimjum12]

On 1/25/2021 at 2:14 PM, comicdonna said:

I usually lose money on every book I sell so, I shouldn't have to pay too much in taxes.

"How to Lose Money and Win Friends" ... that's the working title anyway .... it'll probably lose money too. GOD BLESS....

-jimbo(a friend of jesus)

[PopKulture]

On 1/25/2021 at 9:33 AM, Mutant Manatee said:

I got a 1099 from PayPal also and it was a shock.  I now owe about $3,000 in taxes that I wasn't expecting.  (I'm in Illinois.)  Now eBay wants to force everyone into "Managed Payments" and you must give them your Social Security number or Tax ID.  I will have no choice but to stop selling on eBay and stop accepting PayPal payments for online sales.  

This really sucks.   

Similar situation and outcome for me.

It's just not worth the accounting headache and, truth be told, after the state and federal bites, I'd rather just give away my undercopy of Blackhawk 168 for example than to try and sell it for $8.  

[FlyingDonut]

1 hour ago, jimjum12 said:

Probably not this year. You absolutely need to get a business license if you want to continue. That would be around here, anyway. In my area the Business license is what separates you from a hobby and a business. With a license you can avoid some sales tax on purchases and you can write off many things, even your Internet service. I was sent my first unexpected 1099 in 2011 because of some sort of agreement I made to accept merchant cards... still don't know exactly what one of those is. I had to scramble, but luckily had some co-workers in Accounting to help keep the insanity at bay. The license around here is very reasonable until you reach 50K in gross sales. This might sound weird, but when I see the roads around here getting a new paving it makes me proud to be a small business owner. Last year was my best ever due in large part to a consignment collection. I  claimed everything, even personal checks, which were the lion's share of my receipts. I keep photocopies of each check and deposit them in a separate account.  State and Federal were over 10K in taxes this year .... you just have to make sure you have or can quickly raise the funds at tax time. With all the new sales tax requirements from 50 different States, I admit I'm thinking about retiring from it... but I'll definitely miss the hustle of it. It doesn't have to be a bad thing. If you do shows, you can write off Hotels, restaurants while on the road, gas, etc,,,, GOD BLESS....

-jimbo(a friend of jesus)

That's not exactly true. I don't have one. I file everything on my Schedule C on my 1040. Tons of receipts.

[NP_Gresham]

1 hour ago, jimjum12 said:

you can write off Hotels, restaurants while on the road, gas, etc,,,, 

..., a camera...., 

[jimjum12]

22 minutes ago, FlyingDonut said:

That's not exactly true. I don't have one. I file everything on my Schedule C on my 1040. Tons of receipts.

It's that way around here.... if you want to deduct anything and claim a loss ... which I had to a few times in the early years. This was relayed to me by the Office of The Commissioner of Revenue. This is for State filing... and again, around here, you don't want to be on their bad side. We live in a Commonwealth State, so maybe it's different for us. GOD BLESS...

-jimbo(a friend of jesus)

Edited January 26, 2021 by jimjum12

[justafan]

On 1/26/2021 at 5:33 PM, jimjum12 said:

It's that way around here.... if you want to deduct anything and claim a loss ... which I had to a few times in the early years. This was relayed to me by the Office of The Commissioner of Revenue. This is for State filing... and again, around here, you don't want to be on their bad side. We live in a Commonwealth State, so maybe it's different for us. GOD BLESS...

-jimbo(a friend of jesus)

Correct.  Every state is different.  If your state taxes income, you will need to look up the requirements for your state.  Some states require a business license to itemize.  Others don't. Federal has its own requirements.  If you're filing in a state that taxes income don't forget to look into the requirements for both federal and state income tax as there may be other hoops to jump through on the state return.  I'm going to try and itemize as a business for mine and review with my CPA and see what she thinks.  For now I may have to jack up the prices on all my sales to account for a potential 21-24% hit next year. 

[rogue14]

Great! I already filed, and I’m just seeing this thread. Novice here. How do you find out if PayPal sent a 1099, do they contact us directly? And, how would I add this to my already filed taxes? Thanks in advance.

[ADAMANTIUM]

oh I thought this was about reporting for the 2022 year my bad  

 

Edited May 10, 2021 by ADAMANTIUM

[rogue14]

1 minute ago, ADAMANTIUM said:

oh I thought this was about reporting for the 2022 year my bad  

Any idea if this qualifies for the 2020 tax season that’s due next week if we fall under one of the 4 states that have the lower threshold? I’m confused.  

[rogue14]

On 1/24/2021 at 3:15 AM, masterlogan2000 said:

PayPal just sent me a notice stating that my 1099-K tax form was ready.  This clearly had to be a mistake.  I'm certain I was well under the threshold for reporting ($20,000 in sales AND 200 transactions).

So, after doing some digging, I found that the residents of the wonderful state of Illinois have their own tighter reporting numbers, as does VT, MA, VA, and MD. 

I just wanted to give anyone in these states a heads up, as it took a little bit of digging on my part to find this info.

 

Why did I receive a 1099-K if I didn’t meet the IRS reporting threshold?
Some states (VT, MA, VA, IL, MD) have reporting obligations at a threshold lower than the federal reporting thresholds:

• Vermont, Massachusetts, Virginia, and Maryland: $600 USD in gross payment volume from sales of goods or services in a single calendar year regardless of the number of transactions.
• Illinois: $1,000 USD in gross payment volume from sales of goods or services in a single calendar year with at least 3 payment processed.

 

I'd be interested to know if eBay is also reporting this revenue with their new payment systems (I would imagine they are).

Funny enough, I was planning on having my first sales thread of the year here, but now I may hold off, as I'm certain I'll hit my $1000 limit for the year between that and my recent sales outside of the boards.  It doesn't look like PayPal is going to be a good option for me personally.  (And yes, I realize that this is not PayPal's fault).

 

 

I haven’t received anything from PayPal about a 1099, so I guess I don’t qualify even if I’m in one of the 5 states you mentioned. Any chance you have a link so I can read up on it more? 

[ADAMANTIUM]

4 minutes ago, rogue14 said:

I haven’t received anything from PayPal about a 1099, so I guess I don’t qualify even if I’m in one of the 5 states you mentioned. Any chance you have a link so I can read up on it more? 

this year to receive a 1099 from ebay, you have to have at least 200 transaction sales, then if the total of those transactions equal $20,000 + in sales not sure if it is ebay specific or paypal

Edited May 10, 2021 by ADAMANTIUM

[Ryan.]

Just now, ADAMANTIUM said:

this year to receive a 1099 from ebay, you have to have at least 200 transactions, then if the total of those transactions equal $20,000 + in sales not sure if it is ebay specific or paypal

This is not necessarily true depending on the state you live in. Here in MA, $600 in total transactions, regardless of the number of transactions, equals 1099K

[rogue14]

1 minute ago, Ryan. said:

This is not necessarily true depending on the state you live in. Here in MA, $600 in total transactions, regardless of the number of transactions, equals 1099K

I think I qualify for the $600 threshold. Does this mean PayPal and eBay would send me a 1099? I haven’t received anything from either to date.

[Ryan.]

7 minutes ago, rogue14 said:

I think I qualify for the $600 threshold. Does this mean PayPal and eBay would send me a 1099? I haven’t received anything from either to date.

You would have gotten a hard copy in the mail, notification via email, and both of those accounts will have links to the 1099s in your profile.

[masterlogan2000]

1 hour ago, rogue14 said:

I think I qualify for the $600 threshold. Does this mean PayPal and eBay would send me a 1099? I haven’t received anything from either to date.

If you're still not sure, you can find any tax forms within your PayPal account.  Here's a quick link that should work for you:
https://www.paypal.com/cgi-bin/webscr?cmd=_tax-statements

Now, if you signed up for eBay's Managed Payment system in 2020, then it's possible that eBay would be sending you those forms.  Below is a link to eBays tax form center:
https://www.ebay.com/sh/fin/taxforms

 

If you had sales in both systems, you may have forms on both sites.

Edited May 10, 2021 by masterlogan2000

[rogue14]

On 5/10/2021 at 2:43 PM, masterlogan2000 said:

If you're still not sure, you can find any tax forms within your PayPal account.  Here's a quick link that should work for you:
https://www.paypal.com/cgi-bin/webscr?cmd=_tax-statements

Now, if you signed up for eBay's Managed Payment system in 2020, then it's possible that eBay would be sending you those forms.  Below is a link to eBays tax form center:
https://www.ebay.com/sh/fin/taxforms

 

If you had sales in both systems, you may have forms on both sites.

Awesome! Thanks! Checked and don’t have forms on either. Phew!

[jimjum12]

On 5/10/2021 at 1:37 PM, Ryan. said:

You would have gotten a hard copy in the mail, notification via email, and both of those accounts will have links to the 1099s in your profile.

They haven't sent me a hard copy in a while ... I have to print my own. GOD BLESS....

-jimbo(a friend of jesus)

[WoWitHurts]

This is where my OCD helps out. That and an IT background in databases lol. I literally know where every comic I bought came from, how much, when purchased, etc. 

Though I rarely sell anything so on second thought my OCD is just wasting my time and my IT background is enabling it.