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PayPal Strikes Again

Started by Doug Rose, February 04, 2018, 07:42:16 AM

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Doug Rose

It you live in MA or VT you got a surprise yesterday, a 1099 from Paypal. All money  over $600, sent to you via Paypal is considered taxable income in MA and VT.

What does that mean? You pay state income tax on anything over $600.

When did this bill pass?  We are now out thousands.

You cannot sell on eBay without taking Paypal or some other electronic payment which will will look into.

Not like the old days when a money order or check was sufficient.

I am sure this will spread like wildfire to other states. At least you have been warned in advance, we had no warning until yesterday and that was too late. Horse was already out of the barn!!

Happy Super Bowl Sunday!
Kidphone

TelePlay

Isn't it the case that a hobbyist or eBay seller and deduct the original cost of the item, the cost of parts that may have been added, shipping and fees yielding net income which, yes, if a positive number, is indeed income and taxable under Schedule C?

I've been reporting net sales income from eBay sales for years - lets me sleep better at night. I also pay state sales tax, Wisconsin has a line on the state return, for such purchases that are not taxed by the seller, and, of course, less shipping paid (shipping is not taxable).


Doug Rose

nope.....Income to be taxed  just like your paycheck. Nothing to written off, that's the Feds, this is State. No warning, just came in the mail yesterday. Paypal said they been getting "hammered" from MA and VT.
Kidphone

paul-f

It seems to me that you can deduct costs as mentioned previously plus many other relevant expenses on Schedule C, which you should probably be filing with both the IRS and MA if you are receiving more than $600 per year.

Having 1099s simply gives the feds and state the ability to verify that you have claimed at least enough income on Schedule C to cover the sources that report to them.
Visit: paul-f.com         WE  500  Design_Line

.

AE_Collector

What is the change from the way it has been the last couple of years now? There was something that started a couple of years ago where total sales over what...was it $20K brought a income tax receipt of some sort to your inbox. Is the $600 figure a total per year or just each individual "sale" that is over $600? Just trying to understand the scenario.

I also wonder how PayPal Friends & Family transfers fit into the scenario. I know that isn't really possible with eBay sales but doesn't stop me from asking if I sell to some of my friends here on the forum (sorry in advance!).

Terry

Doug Rose

A few years ago Paypal put a 20K cap, even states it on the 1099 I just received. Stay under 20K you are free from Federal Taxes.

New this year MA and VT only over $600 is included as taxable state income.


I will check with my accountant on Monday. Hopefully some can be written off. What a mess!....Doug
Kidphone

twocvbloke

Simply put; Government's broke, so open your wallets!!! :P

Doug Rose

Kidphone

AE_Collector

I like the new Canadian Income Tax Form:

Line 1 - How much did you make.

Bottom line - Send it in

Doug: Yes it means you will have to spend even more time tracking expenses and doing paperwork but you will have to be able to write off what you pay for everything PLUS a percentage of your homes expenses from property taxes to electricity to phone and internet costs. It is possible to come out reasonably okay.

Terry

Doug Rose

We did it before when the Cap of 20K came on in late November of the year, We will have to go back and do it again for 2017 if we can have deductions, it will be great....Doug
Kidphone

Slal

IN Texas, no state income tax, so they too their cue from airlines.  State, county, and city fees for everything. 

"Death and taxes" I guess.  ; ) 

twocvbloke

Quote from: Slal on February 04, 2018, 07:33:40 PM"Death and taxes" I guess.  ; ) 

It's a guarantee in life...  ;D

kleenax

Don't know if you other eBay sellers got a notice from them, but eBay is going to distance themselves even further from PayPal by changing their "payment intermediation" (their term, not mine) to some payment processor called "Adyen".

They say that PayPal will still be an option that you will have to choose if you don't want their new payment processor, Adyen. Sounds like PayPal is going to lose a big chunk of business.
Ray Kotke
Recumbent Casting, LLC

Doug Rose

Ray....only  option eBay gave me was Propay. I couldn't go back to the old days of MO or check. I am sure all electronic options will now report 1099 to the offending states. Another bump in the road ......thx ....Doug
Kidphone

WEBellSystemChristian

It looks like PayPal will remain a payment option for eBay, but only until 2023.

So it looks like you will only be able to use PayPal with eBay for another 5 years! >:(
Christian Petterson

"Whether you think you can or think you can't, you're right" -Henry Ford