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PayPal 1099-K changes

Discussion in 'Marketplace Discussions' started by markshan, Aug 23, 2021.

  1. sons of nothing

    sons of nothing Forum Resident

    Location:
    Illinois
    Bad idea is right. I've never done a schedule c. I have to read up. Thank you for the help.
     
  2. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
    I'll have to find a tutorial. I use Google Docs but didn't know that it did that.
     
  3. uzn007

    uzn007 Pack Rat

    Location:
    Raleigh, N.C.
    DarkSideOfTheMoo and R. Totale like this.
  4. bru87tr

    bru87tr Forum Resident

    Location:
    MA
    I think a lot of people don't even realize their SSN has been leaked. I would guess more people than anyone thinks.

    A Company I worked for (which was very very secure and won't get into that) was hacked and my SSN was leaked and used to open CC and bank accounts on the very same day. This isn't the first time and why I keep my credit reports locked now.

    The company I worked for denied anything was leaked, but they were hacked, sent an email on it and said but we believe no info was leaked. Let's just say, when I presented a letter of proof and email explaining, they had no interest in talking to me about it. Not even a reply.

    So, if anyone thinks their SSN is safe these days, if you have ever given it up, even to the most trust worthy of a company on a form, I would bet there is a good chance your info has been leaked and you don't even realize it.

    Even though I got that email from the company I worked for, I wasn't worried. If I had not signed up for protection and email alerts for credit changes, I would never have known my SSN was being used to open accounts.
     
    Last edited: Dec 3, 2021
    Joseph.McClure likes this.
  5. bru87tr

    bru87tr Forum Resident

    Location:
    MA
    I live in Mass, so this is no news to me. I didn't read my emails and was surprised one year after having $3k in sales, that was a pain for taxes. I unloaded a lot of used stuff (that year) I had bought over the years, it added up and not in my favor after the new law.

    I do not or rarely ever use PayPal for sales anymore. No eBay, none of those services. I sell locally or usually not at all. Not worth it to try and get back a little money on what I purchased full price for.

    One thing I don't like about PayPal, there is no accounting for refunds and other money received, so it all counts. Usually I just give stuff away for free to friends or co-workers if I really want to get rid of it. Not worth the hassle to track and report.

    I thought this was America, but now it seems they want to pick on the little guys. Plain and simple, just don't sell anything if your a hobbyist.
     
    Dave likes this.
  6. glide

    glide Forum Resident

    Location:
    NY, NY, USA
    It’s not eBay or PayPal doing this. It’s the state you live in.

    Massachusetts has not been part of America since probably the 1960’s. The state is in a seemingly endless race to the bottom with California.
     
    bru87tr likes this.
  7. bru87tr

    bru87tr Forum Resident

    Location:
    MA
    As stated a million times over and over and I already know.

    They send it out, I get it. Thank you very much!
     
  8. quicksrt

    quicksrt Senior Member

    Location:
    City of Angels
    Well, there are a couple of things.

    1. First off the 1099 that will get issued from PayPal, etc. is not a "written in stone" amount that you are on the hook for. So if an item was refunded in full you subtract that amount from your grosses (on your very detailed spreadsheet). Not a problem, it would be up to the audit people to go over your books and prove it was not refunded. If you say refunded, then it is refunded and deducted - plain and simple.

    2. The SACDs I bought to support AF in 4.0 and 5.1 were sometimes titles I did not fall in love with, but I wanted to support the label's forward excavation of older surround mixes - liking them or not. So now 5 or more years later, almost all of them are going for three times their original retail cost, I can't just say "oh well here have them for free", and hand them over to friends and forum members. Not practical for the collector who likes to spend on more things. This is how I was able to amass a good collection over the years since the mid-70s. I bought and sold, and sold and bought more. Always making some profit here and a bit there, especially the thrift store finds. So for you, this thread is perhaps meaningless. For the active collector who sells what they no longer want, and buys other things they think that they now do, it is important to get something back on the investment. In fact for most of us not-rich guys, we must get our money back on this stuff. But I have slowed down in the last few years, and have not made as many purchases. And selling off more things as I don't need so many dupes, and certain titles are not so interesting to me anymore.
     
    riverrat, bru87tr and Dave like this.
  9. quicksrt

    quicksrt Senior Member

    Location:
    City of Angels
    The schedule-c is where you get to deduct your costs from the gross sales. You would be glad to get your tax liability reduced with the schedule-c. Might seem like more work (it is more work), but not so much when it comes down to the bottom line on what you owe.
     
  10. Gross sales, sure but in my opinion, my gross sales are what I collect and payments eBay collects without my involvement such as sales tax and fees charged and deducted from eBay collections and not paid on my behalf are not gross sales. Sales tax and other fees that never hit my account and I am not required to collect, are not gross sales.

    We'll see what eBay includes on 1099s but after being responsible for 1,000s of 1099s in my life, I don't believe it would be against IRS rules to only include my gross payments, payments to me and deposits made on my behalf such as federal and state income tax withheld from my payments.
     
  11. Combination

    Combination Forum Resident

    Location:
    New Orleans

    Schedule C forms are for business owners.

    So if you're not a business owner - which applies to a zillion people who belong to Ebay & Paypal - how are they going to fill this thing out?
     
  12. Spitfire

    Spitfire Senior Member

    Location:
    Pacific Northwest
    This is going to cause a big mess especially for those who don't know about it. $600 is a pretty low threshold
     
    bru87tr likes this.
  13. uzn007

    uzn007 Pack Rat

    Location:
    Raleigh, N.C.
    If you're selling on ebay, you're a business. You don't have to be an officially registered company, but you're still a business. You can fill out a Schedule C.
     
    quicksrt likes this.
  14. sons of nothing

    sons of nothing Forum Resident

    Location:
    Illinois
    Biggest problem is lack of receipts for many of the cds as they come from my personal collection.
     
  15. Spitfire

    Spitfire Senior Member

    Location:
    Pacific Northwest
    How does FICA come into this? Do we have to start paying that too if we fill out a Schedule C?
     
  16. R. Totale

    R. Totale The Voice of Reason

    Just as the instructions for it say to do. One field is for your SSN. That will also be on your 1099-K if you get one. Nowhere does the form say it's for "business owners". If you received income not from an employer that's where you report it - just like it's always been, no change.

    FICA comes in if you have employees which you would know if you did so you don't.
     
    uzn007 likes this.
  17. Spitfire

    Spitfire Senior Member

    Location:
    Pacific Northwest
    Self-Employment Tax (Social Security and Medicare Taxes) | Internal Revenue Service

    Makes it sound like self employed would need to pay this too if you have at least $400 in net earnings. To be honest I don't know anything about this so that's why I am asking questions.
     
  18. quicksrt

    quicksrt Senior Member

    Location:
    City of Angels
    The other issues about this income are all addressed on your 1040 form and are not to be concerned with on the Sced-C income form. If the income on sales is very low, one might not even bother with the C form, just add the amount into misc. taxable income.

    It is those of us who plan on flipping 5 or 10k or more of merch that needs to be concerned about each and every step, receipts, expenses fees, etc.
     
  19. Combination

    Combination Forum Resident

    Location:
    New Orleans
    From the horse's mouth:



    {2020 Instructions for Schedule C

    Profit or Loss From Business

    Use Schedule C (Form 1040) to report income (or loss) from a business you operated,
    or a profession you practiced as a sole proprietor.

    An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit, and you are involved in the activity with continuity and regularity.

    For example, a sporadic activity, not-for-profit activity, or a hobby does not qualify as a business.

    To report income from a non-business activity, see the instructions for Schedule 1 (Form 1040), line 8.}
     
    Last edited: Dec 3, 2021
  20. uzn007

    uzn007 Pack Rat

    Location:
    Raleigh, N.C.
    You can estimate the original purchase price. As long as it's a reasonable figure, and you document it somewhere, and you can produce that documentation on the off-chance that you're ever audited, you should be fine.
     
  21. Gabe Walters

    Gabe Walters Forum Resident

    You understand I just did this for tax year 2020, right? Consult your CPA.
     
  22. Combination

    Combination Forum Resident

    Location:
    New Orleans
    Please. :rolleyes: Most people affected by this do not have CPA's and don't have any plans to retain the services of one.

    What we're driving at here is how the average person is going to figure this out on their own - meaning, without hiring a professional to do their taxes. Even if you can't relate, this must make sense to you on some level?
     
    Last edited: Dec 3, 2021
  23. Gabe Walters

    Gabe Walters Forum Resident

    I’m an average person, and I know how to keep records, make spreadsheets, and do addition and subtraction. That’s all it takes. Make your spreadsheet, calculate the total profit or loss, put that number on the right spot on your tax form, subtract it from the revenue reported on the 1099.

    If you’re completing your tax paperwork without a CPA, this isn’t hard. It’s just a pain to keep track of through the year or to go back after the fact and find your receipts.
     
  24. I have a question concerning transactions on this forum. No tax has ever been included in any of the sales (buyer or seller) that I've been involved in. What's the deal? Are sellers suppose to get tax from buyers or what? Thanks for any info!
     
  25. Combination

    Combination Forum Resident

    Location:
    New Orleans

    No, you're not supposed to be collecting any tax.
     
    DarkSideOfTheMoo likes this.

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