Paypal asking for your SSN for a possible 1099 k form at the end of the year !!!

[HoustonCollector72]

Did anyone else got an email about this from Paypal?? Has anyone received the form 1099 k in previous years??

[kakenterprise]

No and no.  If you do a certain amount of business with them they tend to send you one.

[ponylady]

IRS Form 1099-K came into existence as part of the 2008 Housing Assistance Tax Act -- even though it has nothing to do with housing. This form endeavors to ensure that all online retailers are reporting sales for tax purposes. It requires credit card companies, such as MasterCard and Visa, and third-party processors, such as PayPal and Amazon, to report the payment transactions they process on behalf of retailers. Therefore, if you accept credit card payments online, you may end up with a 1099-K at the end of the year that summarizes all of your sales transactions with each processor.

Basically, the government has always had a problem with people who make money but fail to report that income on their tax returns. They noticed that online sales, especially, seemed to be falling through the cracks.  Since electronic income is easily traceable, they passed this law.

In short every retailer/seller who accepts online credit card payments from customers will receive a 1099-K if its annual processing activity has met the following guidelines:

1.)Through credit card companies: If the sales volume is over $600 per year

2.)Through third party processors, i.e. PayPal, if the volume is over $20,000 and if there were more than 200 individual transactions.

 If you have met these criteria, you will receive a copy of the 1099-K in the mail by January 31 of the following year.

 
Now keep in mind since the form only reports how much you made you still have to figure everything else out. If you want to take deductions, you have to calculate them. If you don’t include it thinking the 1099-K will cover it, you’ll end up owing more than you should – which is never a good thing! The best thing to do if you do receive one is to talk to an accountant or a trusted tax professional. They will be able to better explain it and also make sure your taxes are done correctly.

[kitkatvintage]

I got a similar notice last year when I was selling at a higher volume. Once your total dollar intake & transaction numbers reach a certain point, Paypal requires your SS#. If you stop selling for the rest of the calendar year & don't hit the reportable requirement of $20K/200 transactions, they will not actually file the form even though they have your SS# on file.

It's important to remember that shipping costs are part if that $20K, so if you sell a lot of lower value items the shipping money eats up that total pretty quick. It's not unreasonable to have $13K in sales income & $7K in shipping income, for example.

[StarGleamer]

YIKES! thats kinda scary if your income is only through online sales, which mine has been for several months. more and mre reasons to just sell all my stuff at the flea market. This is just nuts! for $20k?? Do they have ANY idea how expensive it is to live in NJ? itd take up so much time, energy and money just for me to prove I shouldnt be paying taxes cuz of shipping, fees, cost of the item ect

[HoustonCollector72]

Wow  , well explained  every Pony

I  have some transactions left for the year , I think is time to take a brake from ebay then

it only counts what you sell ,right ,??  I mean I use paypal to pay for other things , so the 200  transactions are only the incoming payments  ,right /?

[NoDivision]

Well, 20k may not seem like much to some people, but 20k a year is a pretty sizable income to come from selling online (more than I make in a year, and more than the national poverty threshold for a family of 3 .) I know that part of that is shipping costs and other expenses, but business expense deductions are part of the process for any business when it comes to tax time. So if a good potion of your income is through online sales and you do enough business to get tagged by the IRS then you should be conducting yourself like a business anyway and should be keeping track of those things.  People have been lucky that online sales went unchecked for so long, but the IRS has every right to tax you for that income.

[achab1984]

I think that I remember reading something about this before. 

[StarGleamer]

I don't think I will reach anywhere near the 20k mark but if I did, of course Id probably get flagged by the IRS, knowing my luck and id get screwed once again. 20k is just above the poverty level where i live, take a look at NJ property taxes and then tell me how its fair. I think a lot more things need to be regulated, including who to go after when it comes to the IRS... and btw, a friend of mine works for H&R block, its totally random who gets audited!