#76
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Lot of good info here:
IRS - General FAQs on Payment Card and Third Party Network Transactions Do payment settlement entities adjust the "gross amount" to account for fees, refunds, charge-backs or other costs and refunded amounts? No. The "gross amount" is the total unadjusted dollar amount of the payment transactions for a participating payee. This amount is not to be adjusted to account for any fees, refunds, or any other amounts. I occasionally sell items on an Internet auction site and accept payment cards. How do the payment settlement entity reporting rules affect me? If you accept payment cards as a form of payment, you will receive a Form 1099-K for the gross amount of proceeds for the goods or services purchased from you through the use of a payment card in a calendar year. Further, if you accept payments from a third party settlement organization, you should receive a Form 1099-K from that organization only if: The total number of your transactions exceeds 200 AND The aggregate value exceeds $20,000 in a calendar year. What do I do with the information on Form 1099-K? The Form 1099-K is an information return. Use this information return in conjunction with your other tax records to determine your correct tax. To get further information on record keeping, check out Publication 552, for individuals or Publication 583, Starting a Business and Keeping Record. |
#77
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For those who are annoyed at PayPal, that annoyance is displaced. This is an IRS rule, and PayPal is just doing what the IRS requires them to do. If you are a salaried employee, this is like getting angry at your employer for withholding taxes.
No doubt, it is a huge PITA, but PayPal doesn't know whether you are a business, a hobbyist, downsizing to a smaller home and selling off a bunch of stuff, etc. The 200+ transactions + $20K+ income cutoff is set by the IRS (with lower thresholds set by certain states, e.g., MA and NH). The presumption is that anyone engaging in that volume of activity is engaged in a business. Once one trips the threshold, it is that person's burden to rebut the presumption (i.e., prove that one in not engaged in a business). As NYCfixie pointed out, that's a facts-and-circumstances determination. In general, if you engage in that level of activity year after year and run a loss (or just do it for one year), you are not considered to be engaged in a business, and the losses are not deductible. Otoh, if you by some chance turn a profit (don't know the rule, but from what abguff noted, it would appear to be 3 out of 5 years), the IRS may deem you to be engaged in a business and require you to pay taxes on your gains (and you'd be able to deduct your losses). Not sure how that works exactly—if one hasn't been paying taxes all along and then it turns out that one is deemed to be engaged in a business retroactively, does one have to restate one's past taxes? What a nightmare... Turning to Venmo or other online payment methods may work in the short term, but I wonder how long it will take for the IRS to require Venmo and others to start tracking what payments are for. Of course there's always cash and checks, but that's one reason why governments want to get rid of cash... |
#78
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They cant track cash.
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#79
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Checks are easily trackable . An audit of a bank account will immediately raise the question of why/where the checks came from.
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#80
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For those who have been reading all posts and taking notes, it appears the Massachusetts (aka Tax-achusetts) has a much lower threshold so more of us lucky enough to live in MA are getting the form. I had 1 transaction that was under 2k and cancelled/refunded but still got the form.
I am just sending it off to my accountant with the backup documentation when I send him all my other 2017 documents/information. Let it be his PITA to figure it out....that is what I pay him for anyway. Once more form is not going to add that much to the bill. Quote:
Last edited by NYCfixie; 02-04-2018 at 03:07 PM. |
#81
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Also, I’m assuming 200 transactions means recovering payment on 200 transactions, not just paying for 200 items on PayPal correct?
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#82
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this only applies to receiving payments, not sending them.
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#83
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And only Goods n Services.
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Io non posso vivere senza la mia strada e la mia bici -- DP |
#84
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Yeah of course schedule C turbo tax is $50 more.
I'm going to see if a local tax guy will do it for me. |
#85
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How will you prove what you paid for item you sold?
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#86
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Quote:
emails, invoices, screenshots, etc only necessary if the IRS comes knocking...which they likely wont. |
#87
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Anyone done it yet? I'm going to be waiting until my 1099-K comes in again. Tax guy says schedule C no problem.
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#88
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I just got one, and I'm way below the 200 transaction/$20,000 threshold. But I'm in Vermont. Figured I got it just to make sure I pay state sales tax on those items. Can't remember the total $ amount and number of transactions. Not sure what I'll do with it, other than pony up VT sales tax.
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#89
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Quote:
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#90
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just got mine in the mail yesterday. . . apparently "made" just over 4k. mostly due to a sale of my ex's bike .....
Im not surprised PP and the like are moving like this. Makes legal etc sense. I just don't have the time or know how to finagle myself out of paying taxes on a recreational activity, more so the majority vehicle ive commuted over the past 10 years! At least its something like 19 transactions.
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Ride always, Ride Often |
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