Kinda OT: PayPal 1099-K - it’s a doozy!

[oldpotatoe]

Originally Posted by zzy

200+ transactions, and/or $20K in total gets you a 1099. Maybe don't buy a new halo bike every few weeks?

whew..gotta watch that...

[charliedid]

Originally Posted by Clean39T

Probably true.

I have a friend who had to go to a counselor to help with his record buying problem. He had 12,000 LP's and many were duplicates.

I feel for ya :-)

[eBAUMANN]

Just got a 1099-K in the mail...this is some bull****.

"You have received this form because you have either a) accepted payment cards for payments, or (b) received payments through a third party network that exceeded $20,000 in gross total reportable transactions and the aggregate number of those transactions exceeded 200 for the calendar year."

According to this form, I have $16,327 over 72 transactions in 2017...which means that I am getting this because people paid me using "payment cards." Which means, in theory, anyone who accepted a payment with a "payment card" should also be getting a 1099-K? Which I assume is the majority of people who use paypal?

W T F

So what I have to go back through every one of these 72 transactions, then somehow prove how much profit/loss came from each?

Wow.

[tuscanyswe]

What is a payment card?

[PSJoyce]

It looks like a Massachusetts and Vermont thing. I'm in the same boat, having sold bike parts for about 1/3 of what I paid. Any guidance for this in Turbotax?

[eBAUMANN]

Originally Posted by PSJoyce

It looks like a Massachusetts thing. I'm in the same boat, having sold bike parts for about 1/3 of what I paid. Any guidance for this in Turbotax?

My plan is to treat it like I would if I was self employed or if this was the "small business" they seem to think it is. That is, go through all 72 transactions that a fee was paid on, find some sort of evidence of what was paid for the items sold...add up all of what I paid and subtract from the total gross amount as a write-off "business expense"...then report the difference, which would either be profit or loss.

Its such a small amount of money I really cant see them coming after me no matter what I end up filing...especially with the state of the gov't/IRS these days...

I plan on calling PP on monday to explain the situation and see what they recommend.

That number is 1-866-455-7438, for all of you in the same boat.

[Clean39T]

I went through the almost 200 transactions I had that were “goods and services” yesterday and noted the good that was sold and the PP fee. I intend to estimate what I paid for the good and net everything out to even. If I get audited, I’ve got more than enough evidence that I wasn’t running a business for profit, and I’m not going to show a net loss because that just reinforces their point. I see why they need to do this, but there needs to be a hobby exemption or such. And also, when going through all the line items, I found numerous mistakes where PP didn’t track the return/refund, and other oddities (recorded my rewards cash-back from ActiveJunky as a sale).

Also, I gave y’all some screaming deals last year!

[eBAUMANN]

Its just so. damn. annoying.

I think we all have better things to be doing than combing through dozens of paypal transactions...

All this is really going to do for me is solidify a shift over to venmo...and postal money orders ha

[NYCfixie]

I think you meant to write "Tax-achusetts".

Originally Posted by PSJoyce

It looks like a Massachusetts thing. I'm in the same boat, having sold bike parts for about 1/3 of what I paid. Any guidance for this in Turbotax?

[nmrt]

I agree with you. It is damn annoying.
But I also get why paypal is doing this. You sold goods. You received payment. You need to pay taxes on this income. They do not care whether what you sold was new or used. Or whether it was sold at a profit or loss. They do not care. And I understand that.
They just threw you (and me) under the bus. And we need to crawl from underneath it.

Lesson for future: when one sells an item on paypal, also keep a spreadsheet where it mentions how much you bought it for initially and how much you sold it for. FOR EVERY ITEM!

Originally Posted by eBAUMANN

Its just so. damn. annoying.

I think we all have better things to be doing than combing through dozens of paypal transactions...

All this is really going to do for me is solidify a shift over to venmo...and postal money orders ha

[eBAUMANN]

Originally Posted by nmrt

Lesson for future: when one sells an item on paypal, also keep a spreadsheet where it mentions how much you bought it for initially and how much you sold it for. FOR EVERY ITEM!

I actually DO do this! Its the evidence (beyond your spreadsheet) that becomes hard to keep track of...ebay/paypal notes, receipts, etc etc.

Just a huge PITA. Im just going to wash my hands of them, there are so many other easier/better options these days for receiving payment, ill just use those instead.

Or just claim a $0 profit on it all and hope they have bigger fish to fry come audit season.

[NYCfixie]

It may be annoying but it is the law.

PayPal did not throw you under the bus. They are now being forced by states and the federal government to legally provide information that may result in better tax enforcement. Remember those roads we love to ride our bikes on, they get maintained, for better or worse, with tax dollars...but let's not turn this into a political thread.

Spreadsheets will not cut it. You need the backup receipts or other documentation. Even an email exchange with a fellow paceliner and the resulting matching Paypal transactions can be that documentation.

Rather than us all get angry about this being the "new norm" why not be happy that we were able to get away without having to do it for so long.

Is your glass half empty or half full?

Originally Posted by nmrt

I agree with you. It is damn annoying.
But I also get why paypal is doing this. You sold goods. You received payment. You need to pay taxes on this income. They do not care whether what you sold was new or used. Or whether it was sold at a profit or loss. They do not care. And I understand that.
They just threw you (and me) under the bus. And we need to crawl from underneath it.

Lesson for future: when one sells an item on paypal, also keep a spreadsheet where it mentions how much you bought it for initially and how much you sold it for. FOR EVERY ITEM!

Originally Posted by eBAUMANN

I actually DO do this! Its the evidence (beyond your spreadsheet) that becomes hard to keep track of...ebay/paypal notes, receipts, etc etc.

Just a huge PITA. Im just going to wash my hands of them, there are so many other easier/better options these days for receiving payment, ill just use those instead.

Or just claim a $0 profit on it all and hope they have bigger fish to fry come audit season.

[nmrt]

of course, it is obvious it is the law. but it is, nonetheless, an annoying law.
i abide by laws. i do not have to love them.

Originally Posted by NYCfixie

It may be annoying but it is the law.

PayPal did not throw you under the bus. They are now being forced by states and the federal government to legally provide information that may result in better tax enforcement. Remember those roads we love to ride our bikes on, they get maintained, for better or worse, with tax dollars...but let's not turn this into a political thread.

Spreadsheets will not cut it. You need the backup receipts or other documentation. Even an email exchange with a fellow paceliner and the resulting matching Paypal transactions can be that documentation.

Rather than us all get angry about this being the "new norm" why not be happy that we were able to get away without having to do it for so long.

Is your glass half empty or half full?

[akelman]

Originally Posted by Clean39T

With a little distance from this, I’ve adjusted my viewpoint to roll with the tide.

It really is what it is - PayPal obviously has no way to sift through who is doing what. And if someone does run a side-hustle flipping bikes and turns a net-profit on the year, then they deserve to be taxed just like I’m taxed for my day job.

In my case though, I choose to be a hobby tinkerer and try a bunch of bikes and parts this past year by buying used stuff and then reselling it. I’ve expressly NOT tried to flip things or turn a profit, ie. I ain’t running a side-hustle.

But the law is the law, and so now I gotta sort things out and recreate my year of the payables side so I don’t get stuck paying taxes because the IRS can only see the receivables side of the ledger so far.

I actually think it’s going to be kind of fun to look back through everything - a trip down memory lane if you will.

And I’ll be sure to keep records this year - even though I don’t plan to do 1/10th of the churning and burning I did in 2017.

I do have a small pile to move along first though...

This is a seriously excellent way of thinking about it.

[54ny77]

yet another reason i hate paypal.

much prefer checks, and thankful some paceliners from whom i've purchased stuff don't mind checks either.

have used paypal too, but it's a rarity and will only use if it's a screaming deal or an item i literally can't find anywhere new online or at lbs.