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1099 K From PayPal -

BostonJazz72

BostonJazz72

Nov 30, 2010
1,201
1,917
Chicago
#1
So today I received an email from PayPal saying my 1099K was available for download and that they would send it also to IRS. I don't recall this being a thing in the past. So basically, I need to pay taxes for any gains I received from selling gear in 2020? Does anyone have experience with reporting their 1099s? Does it mean I pay Federal and State tax on it? I briefly looked at Illinois tax law and says anything gained over 1K needs to be reported.
 
#3
Subbed. No 1099 emails, but I’ve gotten some scam “PayPal account locked” emails lately. When logging in directly, everything was fine. I’ve changed my password a bunch this year, just in case.

I didn’t make a ton on PayPal this year, definitely spent more than earned, but I did have a few sales and gig payouts.
 
#5
I just found this - 'Sold goods aren't taxable as income if you are selling a used personal item for less than the original value. If you flip it or sell it for more than the original cost, you have to pay taxes on the surplus as capital gains.Jul 12, 2019'. In my case - I have not sold anything for more than I bought it. I wish, but that is not the case. Seems like I need a tax accountant to understand this more.
 
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#6
BostonJazz72 said:
The 1099 Form sees authentic to me. I logged into my PayPal account and downloaded it directly where they told me to. My main question is how much percent do I need to pay on my earings? Is it the same as the sales tax which in Illinois is very high. Or is it another amount?
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Great question. Now I’m self employed and all that crap goes through my account lol. I’ll check back if I learn/ see anything, but I’m in NY state so IDK if it’s different state to state. I’m actually meeting with him tomorrow, I’ll see what he says.
 
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#7
BostonJazz72 said:
I just found this - 'Sold goods aren't taxable as income if you are selling a used personal item for less than the original value. If you flip it or sell it for more than the original cost, you have to pay taxes on the surplus as capital gains.Jul 12, 2019'. In my case - I have not sold anything for more than I bought it. I wish, but that is not the case. Seems like I need a tax accountant to understand this more.
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Also, if that is the case then why is PayPal sending a 1099 to IRS when they don't have the full details?
 
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#10
BostonJazz72 said:
I just found this - 'Sold goods aren't taxable as income if you are selling a used personal item for less than the original value. If you flip it or sell it for more than the original cost, you have to pay taxes on the surplus as capital gains.Jul 12, 2019'. In my case - I have not sold anything for more than I bought it. I wish, but that is not the case. Seems like I need a tax accountant to understand this more.
Click to expand...

Actually it looks like you understand it perfectly.

Sold goods aren't taxable as income if you are selling a used personal item for less than the original value.
 
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#11
I used to 1099 my gig earnings as that was my job. Taxable amounts and such were included in the booklet you’d get with the forms. That was in NY. Nowadays, my accountant does it for me. I would assume the old booklets are now PDFs. Each state would have its own set of tax rules and federal is the same across the board.
Don’t forget to save all original supporting docs for 7-10 years jic
 
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#12
3rd party payment processors (i.e. PayPal) may produce a 1099-K if you received gross payments > $20,000 and 200 or more transactions. It does not necessarily mean you owe taxes on any of the proceeds, just that you might owe taxes on the proceeds. The volume and amount signals to the IRS that you might be operating as a business. 1099-K is reported on Schedule C. You'll have to do some research or talk to a tax expert on how to handle. Pretty certain if the IRS doesn't see a matching amount somewhere on your return, they'll send you a notice of unreported income.
 
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#13
Pretty soon, all states will be doing this and they're hoping that you don't look into it and just pay the tax. IANAL, and maybe different states do things differently, but if you sell a personal item for less than you paid for it, you don't need to pay tax on the amount you received. We're getting close to the point that it might be better to just sell it to Guitar Center.
 
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#15
Just hope it doesn't mean that I have to use the next version up of Turbo Tax for small business to file that and say that it does not apply. Looks like Maryland enacted it too. Basically they're trying to tell small businesses - we see you. And get some free money from people that will just pay.
 
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#16
PayPal is reporting to the IRS where their funds went.
They're simply denoting transactions and movement of funds, like an employer reports your income to the IRS. Your tax liability is completely dependent on your personal situation.
Whether you owe short, or long term capital gains tax on these transactions is dependent on your basis in said items, and how long you owned them.
Go to IRS.gov and search for publications on capital gains and 1099k reporting. It's in PDF form, and they're usually very explanatory.
 
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#17
BostonJazz72 said:
So today I received an email from PayPal saying my 1099K was available for download and that they would send it also to IRS. I don't recall this being a thing in the past. So basically, I need to pay taxes for any gains I received from selling gear in 2020? Does anyone have experience with reporting their 1099s? Does it mean I pay Federal and State tax on it? I briefly looked at Illinois tax law and says anything gained over 1K needs to be reported.
Click to expand...

Happens when you take too much in via PayPal. I got this when I had an eBay business. Just one of those things.
 
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#18
2tonic said:
PayPal is reporting to the IRS where their funds went.
They're simply denoting transactions and movement of funds, like an employer reports your income to the IRS. Your tax liability is completely dependent on your personal situation.
Whether you owe short, or long term capital gains tax on these transactions is dependent on your basis in said items, and how long you owned them.
Go to IRS.gov and search for publications on capital gains and 1099k reporting. It's in PDF form, and they're usually very explanatory.
Click to expand...
So if you are selling at a loss than what you bought then you should be ok? I wonder how it works for something that was gifted to you and then you decided to sell it. Thus, maybe someone gave you a coffee maker and you sold it for 50 bucks. Would the capital gains on that be a straight 50? ~Thanks!
 
#19
BostonJazz72 said:
So if you are selling at a loss than what you bought then you should be ok? I wonder how it works for something that was gifted to you and then you decided to sell it. Thus, maybe someone gave you a coffee maker and you sold it for 50 bucks. Would the capital gains on that be a straight 50? ~Thanks!
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The value was given to you, as long as it's under the gift tax limit, it's yours. I used to be straight-laced on taxes until something happened that I can't talk about due to forum rules. If there are gray areas, I'm not paying it.
 
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