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

i worked for the irs for 10 years as a tax examiner and i still don't understand or like the organization.:weirdface

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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Good thing my household makes under $400k so I don't have to worry about another tax....


This is garbage. My wife will sometimes sell clothes and accessories she is no longer using, enjoying, or needing. So stuff she.....or I......have already paid tax on can now be taxed if she recoups some money out of the items? Like I said.... GARBAGE!

The tax law changes in one week!

https://www.taxjar.com/blog/2021-11-...rting-for-2022

Still think it's garage. That article is hilarious starting with,

"Starting in 2021, the IRS is making some changes to bring efficiency and increased accuracy to its reporting and compliance processes. This brought a few updates to the 1099-K reporting, notably, a lower threshold that will have a big impact on sellers."

How is making the IRS monitor and process more information going to "bring efficiency and increased accuracy?"

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. =/

Quote:

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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. =/

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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.

Quote:

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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.

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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".

Agree to disagree I suppose.

Reselling is it's own monster and business so *shrug*
Plenty of people recently making money by buying things and selling them for more. Look at any high end graphics card or PS5 for a while there... Or look at things like garage sale resellers.
Sure it's not what your wife means to do. But she is making a business transaction when selling online. Paypal needs to be held responsible as a payment processor. If she was doing this with hard cash? Then whatever I guess.

I'm mostly worried about PayPal doing away with friends and family, policing it more or changing it soon because this new tax issue is going to cause even more people to use it to get around this new limit. Or more sellers using it as an excuse and scamming people since it won't allow charge backs or disputes. I rarely use it myself, but it will be sad to see what happens in the future.

And like... I'm not a tax expert by any means.
I say this as someone who up until recently was only doodling things here and there for a few extra bucks on the side. I was working a full time job and doing art as a hobby to buy nice things here and there. Still reporting that income.

Selling a snake this year on morph market for 300$ through PayPal is still something I am reporting as well. It's income that I have made regardless of the amount.
Donations for my dogs medical bills this year...? Getting reported as it's through PayPal.
People should be paying more attention to how they are processing money online.


If you want to stop dealing with this sort of thing go the phone scammer route and start asking for payments in Visa gift cards. Lol.

Quote:

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Originally Posted by Armiyana

Agree to disagree I suppose.

Reselling is it's own monster and business so *shrug*
Plenty of people recently making money by buying things and selling them for more. Look at any high end graphics card or PS5 for a while there... Or look at things like garage sale resellers.
Sure it's not what your wife means to do. But she is making a business transaction when selling online. Paypal needs to be held responsible as a payment processor. If she was doing this with hard cash? Then whatever I guess.

I'm mostly worried about PayPal doing away with friends and family, policing it more or changing it soon because this new tax issue is going to cause even more people to use it to get around this new limit. Or more sellers using it as an excuse and scamming people since it won't allow charge backs or disputes. I rarely use it myself, but it will be sad to see what happens in the future.

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I'm more into holding people responsible for their actions. Not big brother watching everything and being overwatch on everything.

I'm not cool with paying taxes on taxed items. She's not making money on the items. So her "business" would be in constant loss. With the standard deductions the way they are we would never be able to come out ahead.

I'm expecting their users like my wife will be greatly reduced. It could actually hurt their business and possibly create less taxes. Time will tell.