Other Paypal 1099 Question

[Wakerider26]

I've done a little research online, but I have not found the exact answer. Does anyone know if PayPal sends you a 1099 at tax time for money received throughout the previous year? Whether through "friends and family" transfers, or standard transfers with PayPal fees?

It may not seem like a huge deal to some, but if you have made several transactions, or transferred significant amounts of money, an unexpected 1099 from PayPal could really hurt around tax time.

 

[Fro Diesel]

Isn't it up to the parties involved to be responsible for paying their respective tax share?

Paypal is just a third party handling the transaction. Now if you paid over $600 in fees to paypal I just don't know. I think the fine print they have would exclude them from you being able to 1099 paypal.

 

[Matt_E]

They don't send you anything.

 

[Wakerider26]

I hope you're correct. That would be ideal. My main concern is, I have sold a couple skis and parts this year, and buyers paid using PayPal (which works very well). I would just hate to get a 1099 in the mail next year, and have to pay a large percentage on that $.

 

[SuperJETT]

As mentioned, Paypal is just like a bank, you aren't making money because of them. They do not send a 1099 unless you are a heavy user, like over 200 transactions and over $20,000 in payments.

 

[Wakerider26]

I sold a Freak for over 20k, but nowhere near 200 transactions. You think I would fall into that category?

 

[Harbor]

I can see why you'd have a concern I would suggest calling PayPal themselves and ask them directly. Short of doing that I would say they do not, they are a third party handling a financial transaction and have no way to know how much of your transactions contain any profits. My business takes credit cards but the credit card companies do not issue 1099's. I'd give Paypal a call it could give you some peace of mind

 

[4SeasonsPower]

PayPal issues a 1099-K if you have over 200 transactions totaling more than $20,000. This has been in affect since 2011. I receive this from both PayPal and my credit card merchant processor.

 

[Harbor]

Thanks for the info 4 Seasons, you da man! IRS form 1099-k Payment Card and Third Party Network Transactions
A payment settlement (PSE) must file Form 1099-k for payments made in settlement of reportable payment transactions for each colander year. APSE makes a payment in settlement of a reportable payment transaction, that is, any payment card or third party network transaction, if the PSE submits the instruction to transfer funds to the account of the participating payee to settle the reportable payment transaction. This info from IRS web site.

 

[Vumad]

As mentioned, Paypal is just like a bank, you aren't making money because of them. They do not send a 1099 unless you are a heavy user, like over 200 transactions and over $20,000 in payments.

Banks send forms if you either paid interests on a home or if you earned interest on accounts. I get one every year from both my banks even if I have very small yields.

 

[retroicon]

4Seasons has it right... you'll get a 1099-K for anything over 200 transactions AND totaling $20,000 or more a calendar year.

If you have 199 transactions totaling $5,000,000.00 they won't send you one. And if you have 2,000 transactions totaling $10,000.00 you won't get one. You must meet BOTH thresholds in order to be issued a 1099-K.

That said, if you get audited you're going to get screwed if you don't claim income from PayPal... even if the totals don't earn you a 1099-K.

If you do more than 200 transactions totaling more than $20k, you're in business whether you think you are or not. Just make sure you're keeping accurate records if you're one of those people... or if you sold a few big ticket items through PayPal.

 

[Wakerider26]

Thanks for all help. I totally get it now.