USA: Read If You Accept Electronic Payments (e.g PayPal) - IRS Law Change
The COVID relief bill that passed in the US reduced the reporting threshold for the IRS 1099K from $20,000 and 200 transactions per year to $600 per year if you use an electronic payment system like PayPal. Even if you are just keeping and breeding as a hobby SAVE YOUR RECEIPTS so you can offset that 1099K with your expenses.
https://www.twrblog.com/2021/03/amer...mis-threshold/
https://www.ecommercebytes.com/C/abb...615153514.html
Re: USA: Read If You Accept Electronic Payments (e.g PayPal) - IRS Law Change
From the excerpt below I guess any previous year we are ok to continue to use paypal. I'm reading this a little late but thanks for the heads up.
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The new law replaces this two-step de minimis standard with a single $600 reporting threshold effective for 2022.
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Re: USA: Read If You Accept Electronic Payments (e.g PayPal) - IRS Law Change
Quote:
Originally Posted by
Armiyana
I think the thing most people are failing to realize with this change is that the average taxpayer was always required to claim any income you make over 400$ anyway. So honestly, this isn't changing much. Most people don't even realize that the self-reporting threshold was so low. At least from some of the things I was researching. It seems to vary depending on where you look.
As a newbie self employed artist, it personally makes my job easier cause now paypal is going to issue me a handy dandy tax form instead of me having to do it myself in the future. =/
If it's a business I agree. A person like my wife that just sells some things to buy other things I don't agree. She's not running a business. She's selling things we already paid tax for with money that was already taxed. In my opinion that's not fair.
Re: USA: Read If You Accept Electronic Payments (e.g PayPal) - IRS Law Change
Quote:
Originally Posted by
Armiyana
I think the thing most people are failing to realize with this change is that the average taxpayer was always required to claim any income you make over 400$ anyway. So honestly, this isn't changing much. Most people don't even realize that the self-reporting threshold was so low. At least from some of the things I was researching. It seems to vary depending on where you look.
This payments don't necessarily count as income though, it's for any payment received from a third-party processor. So, if you have a garage or estate sale and accept PayPal, let's say you sell a sofa for $50 when it retailed for $700... that $50 would get included in the $600 total threshold. It would be up to you to keep track of what each payment was for and your original cost of the item.
There are plenty of hobbyists who lose money year after year on their snakes, and that's fine, but up until now they've been accepting third-party processor payments. This is a reminder that they need to be tracking their expenses so that when doing their taxes (starting in 2023 for 2022) they can offset any 1099-K's they receive to show they don't owe tax on the "income".