Paypal & Taxes

[wingzrow]

So I got a form today from paypal saying they reported that I made over $20,00 gross in the year.

My question is, what exactly do I have to do from here? Do I need to fill out a tax return form or something?

I'm totally clueless when it comes to this sort of thing.

[ownerizer]

My question is, how the HELL does Paypal know this, unless it's connected to your eBay account somehow.

[wingzrow]

Well all of my ebay sales are tied to my paypal account, so after a certain amount of sales ( $20,000) they report that to the IRS.

I've got a ridiculousness amount of expenses though so even if I have to report something I think I should be fine.

I really hate that ebay started taking fees from the entire cost of items because if they didn't take anything out of my shipping cost then I don't think I would have nearly as much of a "gross" reported since I was forced to make all my items free to ship or I wouldn't get a discount from paypal.

TLDR: What should I do and does anyone else here have experience with this?

[VertigoProcess]

My question is, how the HELL does Paypal know this, unless it's connected to your eBay account somehow.

paypal is owned by ebay and of course its connected...

I was just reading about this on AA... im just gonna take my company's taxes to a pro... I don't have time to deal with all that stuff... I suggest you do the same, unless we got some tax masters around...???

[Bojay1997]

So I got a form today from paypal saying they reported that I made over $20,00 gross in the year.

My question is, what exactly do I have to do from here? Do I need to fill out a tax return form or something?

I'm totally clueless when it comes to this sort of thing.

It's really not tough, you take whatever the gross amount is and you subtract the costs of selling (actual shipping, packaging materials, Paypal and Ebay commissions and the cost of the goods originally) and whatever is left you report on your individual income tax form as income. Be sure to have receipts for the shipping and packaging materials in case of an audit. You can print various reports on Ebay to show what commissions you paid last year. You then pay taxes at your individual rate on this income.

[Ryaan1234]

Well all of my ebay sales are tied to my paypal account, so after a certain amount of sales ( $20,000) they report that to the IRS.

Actually it works a little differently. They report you if you have received over $20,000 IN PAYMENTS. That means if you happen to sell something off of eBay for $100 it will be counted on the 1099K. This is why Paypal is reporting instead of eBay itself.

I have all my information on the online program called "outright" (which I highly suggest if you are self-employed and sell online like me), and that program has kept up with all my sales, and my expenditures for shipping and etc. You give them your Paypal and eBay account info and they import all the proper information automatically. You do need to manually put in other expenses like what you paid for things, and the amount you spent on gas if you are driving around specifically to find things.

[wingzrow]

Ok i just signed up for "outwrite". Hopefully this helps.

I really really appreciate the tip.

Does anyone else have experience with this? Any other ebay sellers would really help if they could chime in here and give some advice.

[wingzrow]

Actually it works a little differently. They report you if you have received over $20,000 IN PAYMENTS. That means if you happen to sell something off of eBay for $100 it will be counted on the 1099K. This is why Paypal is reporting instead of eBay itself.

I have all my information on the online program called "outright" (which I highly suggest if you are self-employed and sell online like me), and that program has kept up with all my sales, and my expenditures for shipping and etc. You give them your Paypal and eBay account info and they import all the proper information automatically. You do need to manually put in other expenses like what you paid for things, and the amount you spent on gas if you are driving around specifically to find things.

Ok, i've entered everything into outwrite. What do I do from here? How do I actually report and do my taxes? I have the form paypal sent me, I have outwrite verifying what I made. now what?

I literally have no idea what to do from this point on.

I don't have any physical form to send out.

Is this the right form to print and fill out?

http://www.irs.gov/pub/irs-pdf/f1040sc.pdf

[Ryaan1234]

Ok, i've entered everything into outwrite. What do I do from here? How do I actually report and do my taxes? I have the form paypal sent me, I have outwrite verifying what I made. now what?

I literally have no idea what to do from this point on.

I don't have any physical form to send out.

Okay. First of all you shouldn't be asking us this. I'm not a CPA and as far as I know there are no tax professionals around here. I told you about Outright, which will help you keep track of your profits and expenses, but it's your job to figure out what to do with those numbers. You should see an accountant, because it's not my job nor my responsibility (nor anyone else here's) to instruct you on how to do this.

[wingzrow]

Yikes, sorry.

Guess i'll just do this on my own then.

Thanks for the help.

[brykasch]

Well he was telling the truth there are places online where you can ask questions for free to tax folks do some research, heck try the ebay forums as well I am sure there are folks there as well. But were not going to be responsible for any issues with things like that.

[Jaruff]

PayPal started reporting this year (I actually thought it started in 2013 but oh well) due to some federal law changes. At least that's what I remember.

As others have said, you're best off taking everything to a tax professional and letting them sort everything out. I keep receipts and store expenses/revenue in a spreadsheet. It's just a smart way to do things, tax issues or not.