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PayPal 1099-K changes

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

  1. Gabe Walters

    Gabe Walters Forum Resident

    If you read the thread, you'll see a post explaining all the costs I've deducted on my Schedule C. No, I didn't include mileage to the post office.
     
  2. aoxomoxoa

    aoxomoxoa Play that fast thing one more time

    Location:
    Dayton Ohio
    Well, without documentation, one could just say he bought a collectible record at the peak of it's commanding sales price then. How would one know?
     
  3. Combination

    Combination Forum Resident

    Location:
    New Orleans
    Are you talking about this post? No details in that one.

    PayPal 1099-K changes
     
  4. Gabe Walters

    Gabe Walters Forum Resident

  5. Combination

    Combination Forum Resident

    Location:
    New Orleans
    Gabe Walters likes this.
  6. bamaaudio

    bamaaudio Forum Resident

    Location:
    US
    This is a bit confusing. Is it $600+ for EACH payment processor like Paypal, eBay, etc? Also, if something sold and was paid in late December but it didn't post to your bank until early January with the delay holds for weekends and holidays, that would count towards this as well?
     
    Last edited: Jan 5, 2022
    AL01 likes this.
  7. uzn007

    uzn007 Pack Rat

    Location:
    Raleigh, N.C.
    You have to be able to provide documentation that is acceptable to the IRS in the event that you get audited. It's up to them to determine what is acceptable. So you could claim that you spent $1,000 for a single record but they'd likely demand proof. Conversely, if you have a document (could be just your own ledger entry) that says "All these records cost me an average of five bucks each," they're unlikely to ask for additional documentation IMO because that's a reasonable figure.
     
  8. Yes $600 per Payer, PayPal won't tell eBay and eBay won't tell PayPal what their respective amounts are. As a cash basis taxpayer, payment receipt date is the deciding factor, you sold something in December, 2021 and the payment was made in January, 2022 that will be included in the 1099 for 2022. Not sure what you mean by post to your bank, the payment doesn't have to be posted to your bank at all for the amount to be included on a 1099. If your PayPal account has posted notification of receipt, that is the date for a PayPal receipt.

    If a Payer has sent a check or other payment in 2021 and you received it after the first of the year, as a cash basis taxpayer, you can defer that income until the next year by indicating that on your tax return. There will be a reconciling item between the 1099 and tax return, I think there is a line item on the Schedule C to identify that.

    Thinking about this, it may be that people annoyed because of this change in 1099 reporting will set up multiple ways to get paid and keep all below $600. I have only ever used PayPal and eBay and don't know other options but if there aren't many now, that will likely change.
     
  9. jvc444

    jvc444 Well-Known Member

    Location:
    CA, U.S.A.
    The guy in this video has the right attitude about this new law:

     
    yesstiles, Jim N. and Dave like this.
  10. kwadguy

    kwadguy Senior Member

    Location:
    Cambridge, MA

    Yes, this is correct. Basically, you are at the mercy of the auditor if you are unfortunate enough to get audited. At the very far end of things, they can require proof of purchase price for every item you sell, and otherwise provide you with a $0 cost basis for all of it. If you were really unlikely and got a forensic audit, something like that can happen. But more likely, unless it's quite obvious you're trying to rip off the system by claiming a cost basis of $500 for records you sold for $500 without receipts, they'll accept some sort of explanation.

    The key is to not file a return that sets up red flags in the first place.
     
    uzn007 likes this.
  11. bamaaudio

    bamaaudio Forum Resident

    Location:
    US
    eBay's 'managed payments' system has a delay where payments can take a few days to post to your bank account. For example, I noticed I sold several things on December 31, which was on a Friday. So payment didn't actually deposit into my bank until January 3, 2022. And the shipping charges are factored as well? ie, sell something for $10 and it's $4 to ship. So $14 will be the amount considered? I may already be over $600. This is all pretty frustrating since I'm trying to get rid of music and movies that is cluttering the house and I have receipts for nothing.
     
    Chris Gerhard likes this.
  12. That's right, with eBay now, it always takes days for eBay to send payment. When eBay makes the payment to your bank account, that will most likely be the payment date for 1099 purposes. I am hoping eBay will use the net payments for the 1099, not gross including sales tax they collect but I haven't seen anything from eBay on that. The $4 shipping fee will be paid to you and you pay the shipping service, therefore that will be included in 1099 totals. Hopefully net of the 15% or so they deduct in fees as well. If you have eBay deduct an amount for federal and state income tax, that amount would of course be included in the total 1099 payment, that would be paid on your behalf. Those details will become clear soon if eBay hasn't already explained it.

    PayPal will surely use gross payments since the payments are made to your PayPal account in your name and the set fee deducted.
     
  13. bamaaudio

    bamaaudio Forum Resident

    Location:
    US
    Chatter online looks like eBay designates for 'payout' dates and not 'transaction' dates. So it's looking like I've already crossed the threshold and am already kind of stressing due to the hassle /paperwork of clearing clutter from my house. Kind of wish I'd just taken them to a local bookstore.
     
  14. jvc444

    jvc444 Well-Known Member

    Location:
    CA, U.S.A.
    When did you make those sales?
     
  15. bamaaudio

    bamaaudio Forum Resident

    Location:
    US
    I had a lot of stuff listed in December but they didn't really pick up until after xmas and into early January. The biggest 'payout' was on January 3 from transactions that sold Dec 31. And some of the 'big ticket' items as far as music/movies go that I had listed for months suddenly sold out of nowhere in the last few days. I've really been wanting to have fewer material possessions, but like a lot of people the whole idea of treating it like a business is not entertaining and instead is stressful.
     
    Last edited: Jan 7, 2022
  16. teag

    teag Forum Resident

    Location:
    Colorado
    Does PayPal now require your SSN before they put money from a sale towards your balance?
     
  17. jvc444

    jvc444 Well-Known Member

    Location:
    CA, U.S.A.
    I'm not sure, but I believe the new 1099-k law is for sales made on 1/1/2022 and after. You might have to check your eBay account and add up the sales you made this year. If the gross sales exceeds $599, you are getting a 1099-k next January.
     
  18. bamaaudio

    bamaaudio Forum Resident

    Location:
    US
    As far as I know, they've required ssn for quite a while now. I remember having issues with PP a few years ago and not having my ssn on file was a hurdle.
     
  19. teag

    teag Forum Resident

    Location:
    Colorado
    They don't have mine and I made a sale in December. Just wondering if its required now before they give you the money.
     
  20. jvc444

    jvc444 Well-Known Member

    Location:
    CA, U.S.A.
    According to some new sellers posts on the eBay forums, they will require the SSN before you can list anything for sale in 2022.
     
    uzn007 likes this.
  21. Quakerism

    Quakerism Monk

    Location:
    Rural Pennsylvania
    Has anyone mentioned self employment tax? Doesn’t filing a schedule C make you a sole proprietor in the eyes of the taxing authority. And don’t sole proprietors also pay social security/Medicare taxes? Unless of course you show a loss.
     
  22. Lord Hawthorne

    Lord Hawthorne Currently Untitled

    Location:
    Portland, Oregon
    For federal tax I think it's a profit of $500 or more.
     
    Quakerism likes this.
  23. teag

    teag Forum Resident

    Location:
    Colorado
    Yes, but thats EBay not PayPal. Don’t need EBay to sell.
     
  24. Spitfire

    Spitfire Senior Member

    Location:
    Pacific Northwest
    I'm already over the $600 threshold and it's only January 12. I am finding the extra record keeping to be a big pain. I'm sure doing taxes next year is going to be a blast too.
     
    Swordsandchains likes this.
  25. Quakerism

    Quakerism Monk

    Location:
    Rural Pennsylvania
    I expected this to be as you said, “a big pain”. Prior to my retirement I created and filed boat loads of reports on everything I did and everyone I talked to.

    When I retired I promised myself to never create another spreadsheet, report or document if it wasn’t absolutely necessary. That’s why I stepped back from this.

    No doubt many will see this as a simple inconvenience. If it works for them, I think that’s great. It doesn’t work for me.

    I don’t like agencies creating work for me that takes me away from activities I enjoy. That would depreciate the value I place in the enjoyment of music.

    I’m glad you decided to stick it out, you offer a nice inventory at nice prices and the classified community here would miss your presence. Best of luck in the coming year.
     
    no.nine likes this.

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