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Does anyone know where to find the PayPal tax info?

by AFI
27 replies
I wanted to read up exactly on the new tax laws regarding PayPal, but I couldn't find it on their site. Anyone know the link?
#find #info #paypal #tax
  • Profile picture of the author Tim_Carter
    Tax Laws regarding Paypal? Why would there be tax laws for Paypal? They are just a payment processor.
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  • Profile picture of the author Joe Mobley
    Jennifer,

    I'm not sure there are any tax laws specific to PayPal. Did you have a specific question or did you hear something?

    Just asking.


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    • Profile picture of the author AFI
      You guys don't know? PayPal is reporting all income earned in 2011 as a 1099. In other words, they're reporting us to the Feds.

      It used to be on their front page but I can't find it now.
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      • Profile picture of the author AFI
        I found it:
        https://www.paypal.com/helpcenter/ma...333&isSrch=Yes
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      • Profile picture of the author Kay King
        From what I've read you must meet both these qualifications before any paypal reporting is done.

        1. process at least $20,000 in gross income through paypal

        2. process at least 200 transactions

        BUT - these new regulations have not yet been finalized so it could change or be dropped altogether or postponed.

        This is not a standard 1099 but a version that alert the IRS that you are processing significant funds. Paypal income has never been a secret as paypal will provide documentation any time the IRS requests it just as a bank will.

        kay
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        • Profile picture of the author Kay King
          The taxes you are doing now are for last year - and the new paypal reporting is proposed to go into effect NEXT year. Doesn't apply to this tax season.

          I may be totally wrong about the timing - if you do a google search for

          paypal 1099

          you'll a page on paypal that explains how to find your 1099. Who would have thunk it? Now I'm confused....

          kay
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        • Profile picture of the author AFI
          Then why are they saying $10 or more?

          Originally Posted by Kay King View Post

          From what I've read you must meet both these qualifications before any paypal reporting is done.

          1. process at least $20,000 in gross income through paypal

          2. process at least 200 transactions

          BUT - these new regulations have not yet been finalized so it could change or be dropped altogether or postponed.

          This is not a standard 1099 but a version that alert the IRS that you are processing significant funds. Paypal income has never been a secret as paypal will provide documentation any time the IRS requests it just as a bank will.

          kay
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  • Profile picture of the author sandrax
    Do you mean if you create a "Buy now button" ? You can insert the % of sales tax you have to charge your customer there.
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    • Profile picture of the author AFI
      Originally Posted by sandrax View Post

      Do you mean if you create a "Buy now button" ? You can insert the % of sales tax you have to charge your customer there.
      No I mean I'm trying to do my taxes and I need my PayPal 1099 that they are reporting to the government. I guess it started in 2010 not 2011. If you made more than $10 in PayPal this year, they're reporting it to the government.
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  • Profile picture of the author Tim_Carter
    What does it mean by dividends? Doesn't affect me in Canada - but curious anyway.

    "You will receive a 1099 tax statement if you earned more than $10 in dividends in the previous calendar year."
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  • Profile picture of the author GuruGazette
    Its a bit more complicated than that actually.

    As of jan 1st 2012 all business that pay $600 or more in goods or services must issue a 1099 to the provider. This literally means if you buy $600 worth of printer paper from Office Max for your office during the course of a year, the new law would require you to issue a 1099 to Office Max.

    Not sure why Paypal would do this though, unless you are paying over $600/yr in processing fees. Even then you would issue them the 1099 not vice versa.

    Btw, this new requirement was buried in the health care reform stuff and there is talk of repealing this portion before it goes into effect.
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    • Profile picture of the author AFI
      Where can you confirm this? Their site says nothing about this.

      Originally Posted by GuruGazette View Post

      Its a but more complicated than that actually.

      As of jan 1st 2012 all business that pay $600 or more in goofs or services must issue a 1099 to the provider. This literally means if you buy $600 worth of printer paper from Office Max for your office during the course of a year, the new law would require you to issue a 1099 to Office Max.

      Not sure why Paypal would do this though, unless you are paying over $600/yr in processing fees. Even then you would issue them the 1099 not vice versa.

      Btw, this new requirement was buried in the health care reform stuff and there is talk of repealing this portion before it goes into effect.
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      • Profile picture of the author GlobalTrader
        Please go back and re-read the Paypal Help page you reference - it begins with this statement:

        Will I receive a 1099/e1099 statement for tax purposes?
        Question :
        Answer :
        You will receive a 1099 tax statement if you earned more than $10 in dividends in the previous calendar year. There are two ways you can receive a 1099 statement:

        My comments: This is about "dividends" if you have your money sitting in a PayPal Money Market account. It absolutely has nothing to do with the money you earned if someone sent you money via paypal.

        You must still report the revenue you earn that was paid to you "thru" Paypal but PayPal is nothing more then a vehicle for you to receive that money from your customers.
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    • Profile picture of the author cashcow
      Originally Posted by GuruGazette View Post

      Its a bit more complicated than that actually.

      As of jan 1st 2012 all business that pay $600 or more in goods or services must issue a 1099 to the provider. This literally means if you buy $600 worth of printer paper from Office Max for your office during the course of a year, the new law would require you to issue a 1099 to Office Max.
      .
      I believe that was repealed (thankfully) Senate Passes 1099 Repeal Amendment

      But the 1099 thing for paypal is still on as far as I know. That comes into effect for this year (so no 1099 until 2012).

      The $10 dividend is perhaps for something else? Maybe on your paypal cashback?

      Lee
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  • Profile picture of the author AFI
    I'm beginning to think no one knows the exact laws. I just don't want to get in trouble. I have no idea what to do.
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    • Profile picture of the author PhotogJohn
      Originally Posted by AFI View Post

      I'm beginning to think no one knows the exact laws. I just don't want to get in trouble. I have no idea what to do.
      What are you worried about?

      Report your income and pay your taxes like a reputable business. You shouldn't need a tax attorney to figure that out.
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      • Profile picture of the author Kay King
        I think we are talking about three different things in this thread.

        The link AFI gave to paypal is about dividends paid by paypal. That is not the same as the reporting for money paid through paypal for goods or services.

        The earnings reports are at the $20k and 200 transaction limits - but that's a different thing entirely and isn't fully law yet and wouldn't affect this tax season anyway.

        And then there are the massive numbers of 1099's proposed that look like they will be struck down before they ever go into effect.

        kay
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        Saving one dog will not change the world - but the world changes forever for that one dog
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        Dear April: I don't want any trouble from you.
        January was long, February was iffy, March was a freaking dumpster fire.
        So sit down, be quiet, and don't touch anything.
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        • Profile picture of the author Mystery777
          Ok, this issue is giving me headaches.

          I live in a country not supported by paypal. I've been using my friend's paypal for years. He is American.

          Well, last Dec, he informed me of this new issue and that paypal income will be reported, starting from Jan 2011, when it reaches $20k (within 200 transactions or something).

          Thing is, I can reach that amount within one month and I did my best to change the payment method in as much companies and networks I'm affiliated with, from paypal to checks via mail. However, some of them have no other payment option available but paypal. Despite this, I'm still quickly approaching the $20k mark.

          I don't wanna pay taxes, since I'm not an american citizen. Furthermore, after researching online, I found out that US taxes are extremely high compared to other countries. In my case (above average income), it can be as much as 54% of income? Is this true?

          I have to go open up my own paypal from outside the country soon, but at the mean time, I'm looking for someone who can step in to help.

          Would prefer if they are not based in the US. Also, not from a country where currency conversion goes through 2 phases, resulting in great conversion loss (like some EU countries).
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  • Profile picture of the author GuruGazette
    Ok completely different issue dividends are interest payments from the pp money market account. Not sure but it might also include cash back from debit card use.
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  • Profile picture of the author AFI
    I think I'm going to have to consult a tax attorney.
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  • Profile picture of the author Rob Howard
    Jennifer,

    The new 1099 reporting requirement comes from the Health Care bill as a way to increase tax revenue (by catching people not reporting income from a business)

    However, it's looking like, at least this portion of the law, will be thrown out due to the massive amount of paperwork that is required.

    Rob
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  • Profile picture of the author Tim_Carter
    It also has this - so obviously it is talking about dividends not sales:

    "Click PayPal Money Market Fund under the More products and services section"
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  • Profile picture of the author GuruGazette
    Thanks Lee, haven't had a chance to look for updates on it since the SoU address.
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  • Profile picture of the author GuruGazette
    I'm mobile and slow with responses today

    AFI: Definitely consult a professional if you're new to all this. Business income received through PayPal has to be reported. Even if you get a 1099 for dividends, you still have to report income they don't issue 1099s for liked product payments on sales or services. Depending on who you get payments from there may even be overlap. I get 1099s from stock photo agencies for example, but they pay me through PayPal so I have to adjust for that in my PP totals each year.

    It gets complicated So when in doubt, talk to a tax professional and learn the ropes or just hand it all to them each year and save yourself the headache.
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