Paypal reporting income to IRS

This is some bullshit! I was really hoping this would never happen.

 

Well nobody is holding a gun to you head demanding you use Pay Pal there are plenty of other services you can use

also

http://blog.webdistortion.com/2010/07/28/paypal-alternatives-e-commerce/

 

Western Union takes an unreasonable fee for their service, it's really much worse than paypal.

But really, from what I see this situation is akin to the US gov coming to your garage sale and trying to tally up your sales of your used shit that you originally purchased new (paying sales tax) with money you worked for (and got only 1/2 to 2/3's of after TAXES)........... now when you sell the bloody used shit it's INCOME??? fuck me

 

Just keep track of what you pay for stuff. You don't have to pay income tax on things you're selling at a loss. I report all my PP income anyway.

 

So extreme! Who even suggested such a thing?

You can still be upset about services that started decent and always progressively get worse and worse. Ebay used to be way cooler too.

 

eBay used to be kickass. I picked up PC games dirt cheap back around 2003/4. Now it's just full of overpriced shit in terms of video games. The fees have fucked paypal up pretty badly. That and the fact chargebacks can occur with no real evidence and difficult to get the money back.

 

That's why I don't use them any more. Got burned twice.

 

Maybe as soon as PayPal is under FDIC and treated like the bank they are I'll trust them with my social.

 

I simply don't understand what the issue is..
If yo make money. you report said money and pay taxes on it.
If you sell at a loss then you report ad do not pay taxes..

Is there really such a general consensus amongst us that we should dodge income taxes simply because they are begotten through the internet?

If I started a thread about cheating on my base income taxes because I hate the government would so many of you agree with me?

We want all of these social programs and socialized medical systems yet we don't want to pay our fair share of taxes into the system to cover said expenses?

Odd.

 

Paypal isnt that bad with charge backs - you just need to know how to play their game.

Get proof of delivery on everything. If the user admits to you that they got the item, but you do not have proof of delivery - paypal will refund the guy no question. Even if you have proof of shipping (which is completely useless)

I learnt that the hard way too. But after that, everything goes recorded/tracked. I even had paypal refund a guy but also let me keep the money as it was clear he was being a retard - hebought a replacement drive PCB from me, couldnt fit it and claimed it was broken. Then later he managed to get it working, but then said the drive wouldnt read disks..... which is not the PCB, it was his laser.


The fees do suck greatly tho

 

I do love the reactions of people, a lot of people do sell a lot of stuff on Ebay and do make an income on it, there were sensational newspaper stories a few years ago in the UK where some people who were on benefits were making (an allegeded) 5 grand a week and so nearly 2 to 3 years ago, various tax offices of the UK, Europe and Australia did impose rules on Paypal which meant that they reported sales over a certain threshold or a large number of sales per year, which are generally going to be traders.

I mean how many people here sell over $20,000 of goods per year ot over 200 items a year? As Gaijinpunch says as long as you have a paper trail, you will probably report a loss which is good for you.

Although Ebay and Paypal register in countries that they pay little to no tax on their profits and a government does need to show some balls and force Paypal to be regulated the same way as banks and for Ebay to be treated as an auction site rather then the place of a sale, I don't know about you but most places where you sell something just ask you for a fee to sell stuff and do not come back and demand a cut of everything you have sold...

 

Before I begin my rant, let me state that selling used goods today at a loss and paying taxes is now in the same vein as property taxes and car registration. Essentially its a new form of double tax, backed by and interpreted by government double speak.

Its $20,000 gross if I recall, and it INCLUDES money that does not originate from ebay sales (money going both in and out is also calculated in some way, so I have heard deposits from your own bank account may end up in the total). Some people use paypal for other transactions like: paying a friend back, craigslist, or family currency exchanges. The IRS wants people to pay taxes on all of this, period. I know, I know, you get a business tax ID, write it off, yada, yada, yada. The reality for most folks is that paypal is a way for them to informally exchange money, which does not always include taxable services and goods. However we have reached a point where the IRS does not care about that fact. Mark my words, be prepared to see news articles about people being audited, losing and having to pay IRS taxes despite having proof that the paypal exhanges were non-taxable.

Yes, they want this money now. The burden is now on us to PROVE the item was sold at a loss. Get ready to start holding recipts for 30+ years

You can't do this indefinately, the IRS will eventually deem your "business" a "hobby" and then you will be on the hook for taxes until you can prove its a viable business with profits.

Much easier said than done, you will need to do a lot more than that if you get audited by mail (the first step in audit the process). Its my opinion that being truly organized when filling for tax losses and deductions, costs money and time. The reality is that it has NEVER been easier for the IRS to instigate an audit. Paypal is just a tip of the iceburg in a grand plan to squeeze EVERY penny from laymen without legal representation and whom do not have the money to use a real accountant with audit experience. If you think about it Paypal is essentially a big database for the IRS to justify audits. I keep reading articles and forum posts from tax pro's and other folks talking about "properly" filing taxes and claiming loses on Ebay due to the new paypal IRS rule, but the reality is that the IRS is READY for this guns drawn and I'd bet my house paypal/ebay deductions are going to be very closely looked at and may even now be added to the "flagged" items the IRS uses to determine if an audit warranted.

Here is another website I posted comments on a similar discussion:

http://www.blowoutcards.com/forums/off-topic/125363-irs-paypal-questions-help-us.html

These guys were already filing as a business and had real experience doing so, yet were somewhat surprised by the ramifications of the new policy. We haven't got a prayer really. Just assume selling used items at a loss in 2012 and beyond "may" be considered taxable income by the IRS. I just wish they would come clean and state how it is.

Here is another site, which I think is actually affiliated with the feds. They give very conservative tax advice. It would be interesting to hear what they would "advise" in this situation. In my experience on this forum listed below, if many different people keep a post going, they will be inclined to keep responding to hypotheticals. So if some gives it a go, I would also post comments to keep the thread alive (as I would recommend to anyone interested in the details of this topic). Here is the site:

http://www.taxforum.us/f-individual-income-tax-forum-18.html/

 

best bet

Paypal sucks, as usual.

 

Doesn't matter, Moneybookers is under the same federal law as paypal:

http://www.moneybookers.com/app/help.pl?s=mterms

A new US law now requires income received through credit and debit card transactions to be reported to the Internal Revenue Service starting in the year 2011. Banks and merchant services must report annual gross payments processed by credit or debit cards to the IRS and to merchants for the financial year starting in 2011. In other words, we will be required to provide these reports by end of January 2012 for the payments made in 2011. The format of these reports must resemble the 1099 forms that report certain type of income in the US

 

I'm all for paying taxes and will pay my fair share, but it is MY job to file MY taxes. The money going through my PayPal account isn't always mine, sometimes I'm accepting/sending a payment for someone else where I earn 0%. PayPal will apparently report that as income.

I've also done middleman work for Europeans here where I'll purchase an item here in the states for them and they pay me. I also earn 0%. PayPal will tell the government I have income.

If it is income I will calculate and report it on my taxes come next year. If it is not income I will report it as such IF it is something on my end. Simply because money goes through my PayPal account doesn't mean it is income and I refuse to have PayPal not only have my social security number but tell the IRS about money that goes into and out of my account without any context.

What I don't need (and I'm sure someone will get bitten in the ass for this eventually) is the IRS auditing my broke college ass because of PayPal reporting a bunch of numbers that I didn't put down on my tax return.

 

What... the fuck.

 

Hawanja said it best about taxes
http://www.youtube.com/watch?v=-mXmZSSKSbw&feature=related

 

I stopped reading here since you DON'T have to do that. Reporting revenue and paying taxes are not the same thing.

Revenue. Not income. Nobody, especially Uncle Sam, is assuming the goods you sold came into your possession for free.