F&F and IRS income limits

[Heirphoto]

Current info on Paypal:

All US payment processors, including PayPal, are required to provide information to the US Internal Revenue Service (IRS) about customers who receive payments for the sale of goods and services.

Accordingly, PayPal tracks the total payment volume on your account to determine whether it meets the IRS threshold in a calendar year.

Customers will be required to provide tax information like an Employer Identification Number (EIN), Social Security Number (SSN), or an Individual Taxpayer Identification Number (iTIN), if they haven’t already provided it when they approach $600.00 USD for the sale of goods and services during 2022.

 

[madcap_magician]

The little guy is the one most easy to catch with an audit as they are more likely to make mistakes or not fully understand the requirements (like many posting here).

On the Paypal website if you go to the Help link and type 1099K into the search box and look for the "will Paypal send a 1099K" it will show you the new $600 limit.

Yeah the people saying "Oh I just won't report it" are the ones going to be crying and whining next April for sure. The IRS probably doesn't even need to lift a finger here, the discrepancy between income reported on the filer's combined W-2s and 1099s and what is claimed on their return will probably just get flagged for audit by computer.

 

[sharp_edge]

And for those saying the IRS won’t go after the little guy; then why did the politicians knowingly set the threshold so low at a measly $600? I can understand $6,000. But $600!

And for one to think the IRS wasn’t involved in the decision making process is just flat out naive. I believe they are setting traps as so many people are still unaware of this new tax law.

This^.

I don't think the IRS will have to manually go through the tax files they received to figure out who is not reporting if they PayPal G&S goes over $600. It perhaps takes a short and simple IRS computer program to get that done on millions of tax payers within a few seconds.

 

[Peter Hartwig]

Ignoring the 1099 would be at the very bottom of the list of possible decisions
Use money orders
Don't sell
Even pay the tax (even if you did'nt profit )or file without full documentation to back it up(which if reasonable likely goes no further-but no guarantee).
Would all be before ignoring the 1099. It will almost certainly generate a letter of inquiry and maybe a harder look at the rest of the return.

 

[josiahg52]

They won't. It's very basic. The threshold was set so low so EVERYONE will be "caught" and flagged. Everyone saying, well, this was just to catch those with side gigs and such are fooling themselves. How will the IRS know unless they audit or at least further investigate the return? The audit would be rudimentary.

"We notice there was additional income that you didn't characterize or otherwise report. Can you explain?"

"Oh, you can't?"

"You owe us $X.XX."

AUDIT OVER. 20 minutes spent.

Tell me again why they can't afford the time or money to audit us?

When this rule and effort doesn't rake in the dollars, they'll start monitoring our bank accounts and then there will be no avenues left.

 

[badcow47]

I'm not paying with F&F.

What if you trust the seller, but PO loses package. You have no recourse against them, it’s like sticking cash in the mailbox. Not wit it! Why are us small timers paying tax at this low level of $$?! We don’t have loopholes!!

 

[Peter Hartwig]

What if you trust the seller, but PO loses package. You have no recourse against them

If they are honest, you should'nt need recourse. They will still do what is right and cover the item. It is those that are not completely trustworthy that a problem may develop. I have been using money orders for years and the buyer would not be covered any more with PP G&S. I personally would not pay for or accept F&F, for IMO using it on a sale already shows some lack of honesty-others may disagree(right or wrong), but that is my opinion.
Even when I used PP I never filed a claim or had one filed against me. We should be able to handle our transactions properly without someone looking over our shoulder. Unfortunately that is not always how it goes, but it should be that way. There is some risk on every transaction, but most here are honest, and are not going to trade their reputation for the price of a knife.
As for the PO, insurance (and signature)may help, but that also needs proper documentation to collect.

 

[josiahg52]

If they are honest, you should'nt need recourse. They will still do what is right and cover the item. It is those that are not completely trustworthy that a problem may develop. I have been using money orders for years and the buyer would not be covered any more with PP G&S. I personally would not pay for or accept F&F, for IMO using it on a sale already shows some lack of honesty-others may disagree(right or wrong), but that is my opinion.
Even when I used PP I never filed a claim or had one filed against me. We should be able to handle our transactions properly without someone looking over our shoulder. Unfortunately that is not always how it goes, but it should be that way. There is some risk on every transaction, but most here are honest, and are not going to trade their reputation for the price of a knife.
As for the PO, insurance (and signature)may help, but that also needs proper documentation to collect.

The IRS doesn't care about reputation or honor. All they care about is tax revenue.

 

[000Robert]

What if you trust the seller, but PO loses package. You have no recourse against them, it’s like sticking cash in the mailbox. Not wit it! Why are us small timers paying tax at this low level of $$?! We don’t have loopholes!!

Yep. There are a few people here that I would trust. But sometimes UPS claims that my package was delivered to me when it had been delivered to the wrong address. The seller will probably think that I'm trying to scam him. Most of the time I do receive the package, though.
This "pay only F&F" benefits wealthy people because they can afford to take a chance of losing the money. I can't afford to take a chance of losing hundreds of dollars. So most of the time I look for that first and if I see F&F only, I don't read any farther or even look at the photos.

 

[Peter Hartwig]

Duplicate post

 

[Peter Hartwig]

The IRS doesn't care about reputation or honor. All they care about is tax revenue.

True, but the responce I made was referring to the use of payment methods on the sale not the taxes. You technically owe (and are suppose to report) the taxes on a profit (that qualifies,and most do) no matter what method of payment you use (including money orders and cash) even if you don't get a 1099. But with a 1099 issued we are past the honor system of reporting.
Since I use money orders and don't make a profit(I don't even try-it's purely a hobby for me) there is little need to report the transaction.

 

[Peter Hartwig]

Yep. There are a few people here that I would trust. But sometimes UPS claims that my package was delivered to me when it had been delivered to the wrong address. The seller will probably think that I'm trying to scam him. Most of the time I do receive the package, though.
This "pay only F&F" benefits wealthy people because they can afford to take a chance of losing the money. I can't afford to take a chance of losing hundreds of dollars. So most of the time I look for that first and if I see F&F only, I don't read any farther or even look at the photos.

PP G&S is still the best payment method for buyers, not so much for sellers and sellers without receipts. It is a problem the buyers and sellers will just have to work out. Some will be flexible others won't.
As for delivery to wrong address, signature requirement and insurance help a lot.

 

[000Robert]

PP G&S is still the best payment method for buyers, not so much for sellers and sellers without receipts. It is a problem the buyers and sellers will just have to work out. Some will be flexible others won't.
As for delivery to wrong address, signature requirement and insurance help a lot.

I'm just not going to take the chance. If I see F&F only, I'm gone.

 

[josiahg52]

True, but the responce I made was referring to the use of payment methods on the sale not the taxes. You technically owe (and are suppose to report) the taxes on a profit (that qualifies,and most do) no matter what method of payment you use (including money orders and cash) even if you don't get a 1099. But with a 1099 issued we are past the honor system of reporting.
Since I use money orders and don't make a profit(I don't even try-it's purely a hobby for me) there is little need to report the transaction.

And I like paying with money orders, actually! Have to trust the seller, as always.

I recently sold some watches that I bought used years ago and wasn't wearing at all and took payment via Zelle. Like you, I wasn't looking for profit. I just wanted them gone - to make room for others! - and didn't want to just give them away. The guys got good watches at a good price and I was happy someone else is going to enjoy them.

 

[nbp]

I'm just not going to take the chance. If I see F&F only, I'm gone.

Not to mention selling things via FF to avoid paying the fees on the sale violates PP’s terms of service. I’m actually surprised that over the years I haven’t heard of more sellers having their PP accounts shut down for persistently doing this.

 

[000Robert]

Not to mention selling things via FF to avoid paying the fees on the sale violates PP’s terms of service. I’m actually surprised that over the years I haven’t heard of more sellers having their PP accounts shut down for persistently doing this.

Maybe that's why they "decided not to use" PP anymore?

 

[madcap_magician]

Not to mention selling things via FF to avoid paying the fees on the sale violates PP’s terms of service. I’m actually surprised that over the years I haven’t heard of more sellers having their PP accounts shut down for persistently doing this.

They do, that's why so many people in the Facebook and Instagram knife groups are only using Zelle and CashApp now. They all say it's because PayPal is anti-Second Amendment, which is almost certainly true, but really, which is more likely, that PayPal banned you for buying knives, which is not explicitly against their TOS, or that PayPal banned you for getting $10,000 in varying amounts of one-time F&F payments from people all over the world because you were selling knives through F&F, which is explicitly against their TOS.

 

[Peter Hartwig]

Not to mention selling things via FF to avoid paying the fees on the sale violates PP’s terms of service. I’m actually surprised that over the years I haven’t heard of more sellers having their PP accounts shut down for persistently doing this.

I don't know about shutting down the account, but a number of years ago, I spoke to a few members that had their accounts restricted to G&S only

 

[Quiet]

They won't. It's very basic. The threshold was set so low so EVERYONE will be "caught" and flagged. Everyone saying, well, this was just to catch those with side gigs and such are fooling themselves. How will the IRS know unless they audit or at least further investigate the return? The audit would be rudimentary.

"We notice there was additional income that you didn't characterize or otherwise report. Can you explain?"

"Oh, you can't?"

"You owe us $X.XX."

AUDIT OVER. 20 minutes spent.

Tell me again why they can't afford the time or money to audit us?

When this rule and effort doesn't rake in the dollars, they'll start monitoring our bank accounts and then there will be no avenues left.

Actually, this will cause a heavy return to a cash-based economy. You get paid, and take our your whole paycheck in cash, then they can't track what you spend it on, as they'll just depend on all the ways we're taxed when buying goods and services to pick up the slack.

Once they realize that folks are doing this in order to try to minimize their overwatch, that's when they'll try to move the country to a digital currency only model.

 

[Danke42]

I went to digital currency years ago when I had a family. Any real dollars in Dad's wallet were open game.

Now it's all virtual and if anyone asks me I just open an empty billfold.