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Old 01-27-2018, 08:55 AM   #1
VinnyH
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Exclamation Got a 1099-K tax form from Paypal, what now?

I’d appreciate any thoughts on how to counter $20,118 worth of sales in pp last year. I never got this form before. Seems I just went over the 20k limit, lucky me. The majority of sales were for another person where I made about 10% for myself.
I usually use Turbotax.

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Old 01-27-2018, 10:30 AM   #2
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Receipts for wax purchases is the easiest way to offset this.
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Old 01-27-2018, 10:30 AM   #3
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You can also use box break purchases if you paid with PayPal
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Old 01-27-2018, 10:47 AM   #4
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Check the tax thread in the ebay/Paypal section. The only way you're going to be able to counter all of it is if you decide to call yourself a business for a year and file a Schedule C. Otherwise you're paying at least some tax on that. The real kicker is that if you don't itemize and don't file as a business, you're paying tax on that entire amount.
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Old 01-27-2018, 11:08 AM   #5
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you will need the turbo tax business version, costs some cash. You are probably going to have to file a schedule c and declare a business. Hobby at that level will cost you thousands in taxes.

you will need to offset every sale with acquisition price and shipping fees. supplies (card protectors, tape, bubble mailers, ink, paper, etc) and eBay fees can be deducted if you have receipts. Many add mileage to and from PO but I don’t do that as I find it sketchy.

I filed a schedule c last 3 years on around 10k in sales despite not hitting 20k. I always end up showing some profit which I pay tax on. You will be paying taxes on any profit or whatever you can’t offset with write offs which could be substantial if you don’t have receipts.

If you don’t report it on your taxes your going to get a huge tax bill in the mail for probably 5-6k.
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Old 01-27-2018, 11:08 AM   #6
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Default Thanks for all the thoughts so far

Iím hoping thereís a field to enter that there was only $2K of profit. Itís mostly militaria stuff and I could get receipts saying I bought $15K worth of items to sell if I need them. Probably $5K sold was my own fun stuff.
Just a pain in the neck as we all know.
Thanks,
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Old 01-27-2018, 11:19 AM   #7
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Quote:
Originally Posted by VinnyH View Post
Iím hoping thereís a field to enter that there was only $2K of profit. Itís mostly militaria stuff and I could get receipts saying I bought $15K worth of items to sell if I need them. Probably $5K sold was my own fun stuff.
Just a pain in the neck as we all know.
Thanks,
Vinny
They don't really care what the profit was. PayPal gives them your income, now you have to figure out if you can justify any expenses. Keep in mind that even if you find $15K in expenses, none of this matters if you don't itemize. And even then, you can only count expenses that go above 2% of your AGI.
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Old 01-27-2018, 11:27 AM   #8
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I would suggest you seek out a local tax professional, they will set you on the right path so it gets handled correctly.
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Old 01-27-2018, 12:04 PM   #9
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Well.. if you have been selling for years and just hit $20k this one year, good luck if audited. Not sure why people think $20k is some magic number and everything under that is just unreportable.

Reporting as a business you'll be able to write off all the Ebay expenses (fvf, listing, store fees), paypal fees, shipping costs, supply costs, cost of goods and mileage (most of the big ones).

You can pull the data from Ebay and Paypal in spreadsheet form to get the PP and Ebay stuff. Receipts to reduce cost of goods, supply and shipping well.. hope you have those. You can't just ballpark it and throw a number down.

Good luck.
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Old 01-27-2018, 12:05 PM   #10
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Old 01-27-2018, 01:13 PM   #11
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Where is asujbl when you need him?

My question is....would you have opted to not claim the income has you not rcvd a 1099?
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Old 01-27-2018, 01:48 PM   #12
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Quote:
Originally Posted by Bassman2014 View Post
I would suggest you seek out a local tax professional, they will set you on the right path so it gets handled correctly.
Yes, this might be worth a trip to someone’s office compared to my desktop.
Thanks,
Vinny
PS: my research seems to say that the IRS isn’t prone to audit me unless I make some outrageous claims. Also, being semi-retired, I’m a low income target. They tend to audit over 100K types. Not worth it for the small fish.
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Old 01-27-2018, 01:53 PM   #13
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You can go onto paypal if thats what you use mostly and go into statements and pull up a year end summary of sales, purchases, and fees overall thats probably everything you might have associated with this. I am no expert just saying this is one road you can checkout, but talk to your tax person.
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Old 01-27-2018, 02:44 PM   #14
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Quote:
Originally Posted by nera20 View Post
You can go onto paypal if thats what you use mostly and go into statements and pull up a year end summary of sales, purchases, and fees overall thats probably everything you might have associated with this. I am no expert just saying this is one road you can checkout, but talk to your tax person.
Thanks, Iíll be printing that out today.

Vinny
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Old 01-27-2018, 02:48 PM   #15
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Offset total with cost of inventory, current inventory, shipping costs, paypal fees, etc.

You may want to have an accountant do the the return for you.

Best advice I can give you is show some profits and pay the taxes on it (offsets your return a bit). You don't need the IRS man knocking at your door.
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Old 01-27-2018, 02:55 PM   #16
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The cutoff amount for having to file taxes is still $20k during the tax year correct?
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Old 01-27-2018, 02:58 PM   #17
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Quote:
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The cutoff amount for having to file taxes is still $20k during the tax year correct?
Not sure if serious.
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Old 01-27-2018, 02:59 PM   #18
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Quote:
Originally Posted by gottagitdemjs View Post
The cutoff amount for having to file taxes is still $20k during the tax year correct?
That is the cut off for receiving a 1099 from paypal

Paypal and the IRS are not the same thing.
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Old 01-27-2018, 03:25 PM   #19
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Quote:
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Not sure why people think $20k is some magic number and everything under that is just unreportable.
Yes you are. Trillions of dollars are exchanged without a paper trail to the IRS, most of it unreported. Right or wrong, most people don't claim every dollar that enters into their possession if the IRS is never going to know about it.
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Old 01-27-2018, 05:29 PM   #20
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Get all receipts from wax
PayPal has a section you can find fees
eBay account shows month by month fees
Bubble mailers tape ink etc

I have been doing it since irs started doing it

Really simple.

I had buddy who did 22k a few years back
He said screw um they will never notice
Weeks after he filled he got audited because of it

Also note to all who have a tax Id and sell over 20k

You need to start filling quartly state tax
Meaning if you live in Illinois or whatever state
You will need to start keeping track of that

They have been not to hard on checking on people

But that is changing .. be careful with that also
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Old 01-27-2018, 05:53 PM   #21
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Another thing: this is the last time you'll be able to deduct hobby expenses. Next year you're either a business or you pay tax on the entire hobby income.
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Old 01-27-2018, 05:58 PM   #22
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Vinny,

Make sure you take records of all the payouts to the person you consigned for and if you have not already enter into a signed agreement with them. That way you have a paper trail
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Old 01-27-2018, 07:50 PM   #23
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Quote:
Originally Posted by JMarchand1981 View Post
Where is asujbl when you need him?

My question is....would you have opted to not claim the income has you not rcvd a 1099?
Oh Iím here. Just enjoying as always.

I want to rubber stamp the post a few above me saying that 20,000 isnít some magic number

Itís a completely made up number by PayPal.

Which isnít the IRS. Weird.

Everything needs reported unless youíve taken appropriate steps... which 99% of Blowout hasnít
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Old 01-27-2018, 07:57 PM   #24
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Quote:
Originally Posted by JMarchand1981 View Post
Where is asujbl when you need him?

My question is....would you have opted to not claim the income has you not rcvd a 1099?
I’m pumped for when I finally sell 10x $10,0000 cards so I have $100K of sale but only 10 transactions

Golden.
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Old 01-27-2018, 08:07 PM   #25
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Damn, when I look at completed auctions for Babe Ruth or Michael Jordan and see dozens of $20,000+ sales I guarndamntee 75% those people aren't paying taxes on such a big ole lump sum of cash they just got via ebay auction. Meanwhile I'm here looking for a receipt for a $20 packing tape purchase to knock down what I owe....
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