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    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

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

    ++
    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!
    Last edited by Bogertophis; 06-03-2021 at 12:51 PM. Reason: This is not a forum for political rants, see TOS
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    Reminder!!!


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  9. #6
    BPnet Royalty KMG's Avatar
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    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?"
    Last edited by Bogertophis; 12-26-2021 at 12:19 PM. Reason: too political & previously warned!
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    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. =/
    Last edited by Armiyana; 12-25-2021 at 10:14 PM.

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  12. #8
    BPnet Royalty KMG's Avatar
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    Re: USA: Read If You Accept Electronic Payments (e.g PayPal) - IRS Law Change

    Quote Originally Posted by Armiyana View Post
    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.
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  13. #9
    bcr229's Avatar
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    Re: USA: Read If You Accept Electronic Payments (e.g PayPal) - IRS Law Change

    Quote Originally Posted by Armiyana View Post
    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".

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    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.
    Last edited by Armiyana; 12-26-2021 at 12:25 AM.

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