Bad Paypal 1099

Crag the Brewer said:
Yes, but idk what that means, or if that's "scary"?
I'm not a self employed person.
My income is because I work for a company.
My income taxes are (were) easy.

Am I going to have to hire an expensive account, keep track of all my receipts, shipping, insurance, gas mileage maybe????

Cause I made a couple hundred dollars in profit?
........or more likely, Far less. :/


It Might be more economical just to GIVE my knives away?
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You'll want to start keeping records/receipts of what you buy, so that if you later sell, you can prove the profit/loss (via the Schedule C). Also keep records of your expenses, which would mainly be shipping costs and PP and/or ebay fees. Otherwise, they assume the entire 1099 amount is profit, so you'd pay tax on the entire amount.

In my case, MA started this in late 2017, but made it retroactive for the whole year. And no one knew about it. So come 2018, we all got blindsided with 1099s and had no idea what was going on. Mine was something like $3000, but by going through ebay, pp, and usps records, I was able to get the taxable amount down to around $600.

The Schedule C isn't too bad to fill out...can check it out online. Have done it twice so far, and will again for 2021. Part I-Income is where the 1099 amount goes. Part II-Expenses is where any fees would go (would think shipping costs would go here too, but that wasn't one of the categories, which is strange). Part III-Cost of Goods Sold is where you put how much you paid for what you sold. And then Part V-Other Expenses is where I put shipping costs.
 
jlauffer said:
You'll want to start keeping records/receipts of what you buy, so that if you later sell, you can prove the profit/loss (via the Schedule C). Also keep records of your expenses, which would mainly be shipping costs and PP and/or ebay fees. Otherwise, they assume the entire 1099 amount is profit, so you'd pay tax on the entire amount.

In my case, MA started this in late 2017, but made it retroactive for the whole year. And no one knew about it. So come 2018, we all got blindsided with 1099s and had no idea what was going on. Mine was something like $3000, but by going through ebay, pp, and usps records, I was able to get the taxable amount down to around $600.

The Schedule C isn't too bad to fill out...can check it out online. Have done it twice so far, and will again for 2021. Part I-Income is where the 1099 amount goes. Part II-Expenses is where any fees would go (would think shipping costs would go here too, but that wasn't one of the categories, which is strange). Part III-Cost of Goods Sold is where you put how much you paid for what you sold. And then Part V-Other Expenses is where I put shipping costs.
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I'm assuming that's totals we are talking about.....
Bought knives for a total of 3k dollars.
Sold knives for a total of $3286......

Not listed individually?
They don't care if it's one or a hundred?

Profit of $286 we only need to pay tax on?


I can't believe this post isn't humming with a billizion pages!
 
Crag the Brewer said:
I'm assuming that's totals we are talking about.....
Bought knives for a total of 3k dollars.
Sold knives for a total of $3286......

Not listed individually?
They don't care if it's one or a hundred?

Profit of $286 we only need to pay tax on?


I can't believe this post isn't humming with a billizion pages!
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Right, they only care about totals. And in your example, yes the taxable profit would only be $286, assuming that's after taking expenses (pp fees, shipping) into account. Otherwise it would be even lower.
 
jlauffer said:
Right, they only care about totals. And in your example, yes the taxable profit would only be $286, assuming that's after taking expenses (pp fees, shipping) into account. Otherwise it would be even lower.
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Ok..... This doesn't sound as scary, I'm sure I lose money over time with my sales........ Another stupid question, we don't need proof of anything, unless we are audited?

Idk how long paypal saves the transactions...... What if sold knives were bought ages ago
 
Crag the Brewer said:
Ok..... This doesn't sound as scary, I'm sure I lose money over time with my sales........ Another stupid question, we don't need proof of anything, unless we are audited?

Idk how long paypal saves the transactions...... What if sold knives were bought ages ago
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Right, so far I haven't been required to submit anything to prove the numbers, but as part of the records I keep, I include the ebay item #, or pp transaction #, just in case they come knocking. For stuff that I have no record of, I just accept that it's going to be considered pure profit, and hope I have other losses to help offset it.
 
Crag the Brewer said:
Another stupid question, we don't need proof of anything, unless we are audited?
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While true, if you don't have the receipts when audited, they are going to hit you with penalties and interest from the date of filing. Even if they don't get around to questioning it for years. This can add up to big money.
 
Peter Hartwig said:
While true, if you don't have the receipts when audited, they are going to hit you with penalties and interest from the date of filing. Even if they don't get around to questioning it for years. This can add up to big money.
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I can Only imagine..... Lol
$2,000 fines for $20.00 profit.
🙃
 
Boru13 said:
Time to go back to M/O's for payment.
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Yep. Folks are going to have to get comfortable with not having that “Well PayPal can just get my money back” situation protecting them anymore because I’m one of the folks who refuses to start keeping detailed records for the several knives I might sell in a year. Not doing it, and I’m not paying extra taxes on things I’ve already purchased. Nope.
 
Quiet said:
Not doing it, and I’m not paying extra taxes on things I’ve already purchased. Nope.
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Totally agree. Maybe PayPal should add the tax to the G&S total...their parent auction company does. Then the buyer will be paying the tax, just like I did when I originally bought the knife.
 
More sellers may start asking for PayPal F&F, which has the same lack of protection as a money order, but which PayPal is not required to report.
 
stonesell said:
More sellers may start asking for PayPal F&F, which has the same lack of protection as a money order, but which PayPal is not required to report.
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Very possible. The protection part of PP is rarely needed, but people love the ease of use and speed compared to money orders. With the added hassle of keeping receipts and filing tax work, some of that ease is now gone.
I will note though that only the buyers side takes any risk with USPS money orders. It is pretty darn safe on the sellers side.
I haven't used PP in years and the only problem I have had is with willingness of some to do the transaction. Personally would never go with F&F. With F&F it already is a flawed transaction IMO.
 
Paypal allows me to overspend by having my CC linked to it.

I'm fine with deleting my Paypal app. because it will "hurt" more to pay cash, thereby keeping my spending more reasonable.
 
Paypal asked for tax ID the other day. I've got my collection down to where I won't be doing much selling anyway so they can piss off. If I do end up needing to sell anything, I'll use another way to collect payment. This is a hobby for me, not a business. I don't make money selling things, quite the opposite.
 
So all of this silliness starts 01/01/2022?

I certainly enjoy the hunt but usually loose in flipping to chase the next dumb purchase. This new PayPal issue sounds like it is going to kill any fun for me in this "hobby".
 
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