Paypal and the IRS

[Wookie]

An article in the Seattle Times mentioned that next year, Paypal would be required to report "merchants" incoming transactions to the IRS. That was about all the detail the article gave, unfortunately, so I'm hoping someone has more detailed info. Does this apply to everyone, or is there a dollar limit? If I sell a computer monitor for $20 and shipping amounts to $40, will the IRS treat this as $60 of income?

[Icarus Moonsight]

Paypal membership has levels... I have a personal account. I'd think this only applies to the merchant level. Texas has already ruled that selling online is the same as a garage sale. The funds are not taxable or even considered income here. I'm not going to worry about it until I hear something to actually worry about.

[ryborg]

I have a feeling nothing will become of this. A friend's mother runs her own tax office and says private sellers have nothing to worry about unless some stronger laws go into effect and ebay starts keeping better records. I honestly have no problem paying taxes on ebay sales, but ebay/Paypal makes that impossible with their current setup. (Not to mention my ebay account is registered to a Bay Area gas station)

[gum_drops]

An article in the Seattle Times mentioned that next year, Paypal would be required to report "merchants" incoming transactions to the IRS. That was about all the detail the article gave, unfortunately, so I'm hoping someone has more detailed info. Does this apply to everyone, or is there a dollar limit? If I sell a computer monitor for $20 and shipping amounts to $40, will the IRS treat this as $60 of income?

For 2011, anyone who reveives 20,000+ AND 200+ transactions will be reported to the IRS. That effects a small majority of us, but is something to pay attention to for larger online sellers. It was a provision in the Housing and Economic Recovery Act of 2008.

For your viewing pleasure jump to page 257 for all the juicy details.

[Ye0ldmario]

I guess Darkslime's days are numbered now.

[Bojay1997]

An article in the Seattle Times mentioned that next year, Paypal would be required to report "merchants" incoming transactions to the IRS. That was about all the detail the article gave, unfortunately, so I'm hoping someone has more detailed info. Does this apply to everyone, or is there a dollar limit? If I sell a computer monitor for $20 and shipping amounts to $40, will the IRS treat this as $60 of income?

No, because you paid more than $20 for that computer monitor originally and $40 is not profit, it is a cost of the sale for which you are out of pocket. Even large sellers will only be taxed on profits and the IRS will just compare the Paypal statement to what you self report on your taxes to see if there is a huge difference and even then only if you are in the group that gets computer audited.

Frankly, big sellers are just as much at risk now if they don't accurately report income as banks provide the IRS with financial info on request.

[darkslime]

I guess Darkslime's days are numbered now.

I actually pay taxes already.