PayPal 1099 Tax Return....

[bsr2430]

Let’s start asking everyone!!!

Just got an email saying I’m getting a 1099. I only use PayPal for R2R.
I don’t think I’ve done 200 goods and services transactions? Have no idea why the heck I’m getting this.
Anyone else getting this and questioning it?

There’s zero chance I took over $1,500 last year. I spent over.... maybe $6k, IRS really want to go down that path?

Seriously, is this happening to anyone else?

 

[Sailingeric]

Normally income you received totaling over $600 for non-employee compensation (and/or at least $10 in royalties or broker payments) is reported on Form 1099-MISC. If you are self-employed, you are required to report your self-employment income if the amount you receive from all sources equals $400 or more.

However, any amount received on this form will be reported to The IRS as income and should be included on your tax return.

More information about Form 1099-MISC can be found here: https://turbotax.intuit.com/tax-tools/tax-tips/General-Tax-Tips/How-to-File-Taxes-with-IRS-Form-1099...

View solution in original post

 

[dmy535]

Let’s start asking everyone!!!

Just got an email saying I’m getting a 1099. I only use PayPal for R2R.
I don’t think I’ve done 200 goods and services transactions? Have no idea why the heck I’m getting this.
Anyone else getting this and questioning it?

There’s zero chance I took over $1,500 last year. I spent over.... maybe $6k, IRS really want to go down that path?

Seriously, is this happening to anyone else?

Yep! How else they gonna pay all the “Covid stimulus”?

 

[homer1475]

I only use paypal to pay for goods on the net, never got a 1099. But then again, I do not take any money in with paypal.

 

[sharpimage]

The irs does want to go down that path. Make sure it is included with your income. If you spent 6k on purchases, these can most likely offset the income. Your tax adviser can give you the vest answer

 

[Sailingeric]

I only use paypal to pay for goods on the net, never got a 1099. But then again, I do not take any money in with paypal.

A 1099 is for other types of non wage income, similar to a W-2 so if you are spending money you won't get one.

 

[bsr2430]

Anyone else get a 1099 from PayPal?

 

[Sailingeric]

Here is some info from the IRS.
Form 1099-K, Payment Card and Third Party Network Transactions, is an IRS information return used to report certain payment transactions to improve voluntary tax compliance. You should receive Form 1099-K by January 31st if, in the prior calendar year, you received payments:

• from payment card transactions (e.g., debit, credit or stored-value cards), and/or
• in settlement of third-party payment network transactions above the minimum reporting thresholds of –
  • gross payments that exceed $20,000, AND
  • more than 200 such transactions

If you are doing more than $20k in gross sales, you might want to consult a book keeper or CPA to make sure you are accounting for business expenses so you dont end up paying taxes than necessary.

 

[PicassoClown04]

Here is some info from the IRS.
Form 1099-K, Payment Card and Third Party Network Transactions, is an IRS information return used to report certain payment transactions to improve voluntary tax compliance. You should receive Form 1099-K by January 31st if, in the prior calendar year, you received payments:

• from payment card transactions (e.g., debit, credit or stored-value cards), and/or
• in settlement of third-party payment network transactions above the minimum reporting thresholds of –
  • gross payments that exceed $20,000, AND
  • more than 200 such transactions

If you are doing more than $20k in gross sales, you might want to consult a book keeper or CPA to make sure you are accounting for business expenses so you dont end up paying taxes than necessary.

So what you’re saying is that in 2020 if I sold frags/equipment to 200 people and they spent $20,000 with me for that stuff then I would get the 1099 form from the IRS? That seems like an unreasonably high number of transactions and earnings for just a hobbyist seller

 

[Sailingeric]

That is what it seems like but not sure at what level PayPal is sending them and how they know what is a business vs friend sending a friend money. I just got curious of what the IRS was saying as build furniture and other small wood working projects on the side and have taken a couple of PayPal payments.

 

[PicassoClown04]

That is what it seems like but not sure at what level PayPal is sending them and how they know what is a business vs friend sending a friend money. I just got curious of what the IRS was saying as build furniture and other small wood working projects on the side and have taken a couple of PayPal payments.

I would guess that friends and family transactions don’t count? I’m just a little concerned about this because I’m on track to do 200 transactions this year but there’s no way I’ll end up with 20,000 because of it. Even so, with the 200 transactions I’m worried, but 80% of my PayPal earnings are through friends and family because I’m selling locally so they can just see the coral in person and don’t need the buyer safety stuff.

 

[Opus]

Let’s start asking everyone!!!

Just got an email saying I’m getting a 1099. I only use PayPal for R2R.
I don’t think I’ve done 200 goods and services transactions? Have no idea why the heck I’m getting this.
Anyone else getting this and questioning it?

There’s zero chance I took over $1,500 last year. I spent over.... maybe $6k, IRS really want to go down that path?

Seriously, is this happening to anyone else?

It is your state forcing the 1099. They require it at sales over $600 with no minimum transaction limit.

"PayPal will track the payment volume of your account to check whether your payment volume exceeds both of these levels in a calendar year:

• $20,000 USD in gross payment volume from sales of goods or services in a single calendar year
• 200 payments for goods or services in the same year

Some US States require merchant reporting at a lower threshold:

• Vermont, Massachusetts, Virginia, Maryland: $600 USD in gross payment volume from sales of goods or services in a single calendar year regardless of the number of transactions;
• Illinois: $1,000 USD in gross payment volume of goods or services in a single calendar year with at least 4 payment transactions processed."

 

[Sailingeric]

If you end up filing a self employed sched C, you can write of your expenses , supplies and depreciate your equipment and tanks so you could almost make it a wash come tax time.

 

[Fezbearer]

Anyone else get a 1099 from PayPal?

Never