PayPal 1099 - bad news for MA and VT residents

[scooter729]

I kept checking all year during 2017 to maintain my PayPal transactions to well under the $20K and 200 transaction thresholds. So I was quite surprised today when a 1099 showed up from PayPal for my sales of well under $20K.

I just got off the phone with PayPal - apparently Massachusetts and Vermont passed regulations late in 2017 that required PayPal to send out 1099's to residents of their states, for transactions totaling over $600. WTF?? Apparently this can be done with no notifications??

Did anybody else get blindsided by this turn of events? Hopefully for the rest of you - this isn't the start of this becoming the norm for all states.....

[rats60]

What is the issue? Do you not report all of your sportscard sales?

[scooter729]

Originally Posted by rats60

What is the issue? Do you not report all of your sportscard sales?

I also sell a bunch of other household stuff - tools, kids stuff, etc. - never really kept any records on any of that stuff. Could've found other methods of selling had I known.

I'm mad that the rules changed during the course of the year with no advance notice - you'd be cool with that if you were impacted?

[rats60]

EBay has sent those to me in the past. I don't care. All the sales go to PayPal then to my bank account and are reported as income on the tax return.

[Jeffrompa]

The wife and I have 5 eBay stores and have to pay tax on every sale . Just a reminder the penalty for underpaying the IRS is $ 25000 . I don’t think it’s worth the risk .

[Exhibitman]

Every year regular as clockwork someone whines about 1099s from paypal.

You're supposed to pay your taxes; do that and you won't have to get all bunged up about paypal 1099s. I track my sales and pay my taxes and I could not care less whether paypal sends my state a 1099.

[slidekellyslide]

I fly past $20,000 in PayPal before February every year. I don’t have to worry about my state passing any regulations.

[savedfrommyspokes]

For many years, my expenses far surpassed my income while buying-selling cards for my collection. If your expenses offset your income, which it will for many collectors, it is simply a matter of documenting the said expenses and including them on your return to offset your gains.

[BobC]

Originally Posted by Jeffrompa

The wife and I have 5 eBay stores and have to pay tax on every sale . Just a reminder the penalty for underpaying the IRS is $ 25000 . I don’t think it’s worth the risk .

Just out of curiosity, where did you hear/get that $25K figure from? I know the IRS can charge you penalties and interest for underpaid taxes but, $25K?!?!?!? Been a CPA and doing taxes for about 40 years, and this would be a new one to me. Normally if you underpay your federal taxes there can be an underpayment of estimated taxes through the original due date of the return, which is basically an interest rate charged by the IRS that changes quarterly. It is based on the short term federal rate, plus 3% I believe. Once the return due date has passed, you could potentially get hit with an underpayment of tax penalty of up to 20% of the tax found to be due, plus they can also charge you interest on any amounts due until they are finally paid in full. Any amount of penalty due for not properly paying your correct income tax on time would be based on the amount of underpaid tax, not a flat $25,000 figure. So I'm curious to hear who told you that!

[calvindog]

Originally Posted by BobC

Just out of curiosity, where did you hear/get that $25K figure from? I know the IRS can charge you penalties and interest for underpaid taxes but, $25K?!?!?!? Been a CPA and doing taxes for about 40 years, and this would be a new one to me. Normally if you underpay your federal taxes there can be an underpayment of estimated taxes through the original due date of the return, which is basically an interest rate charged by the IRS that changes quarterly. It is based on the short term federal rate, plus 3% I believe. Once the return due date has passed, you could potentially get hit with an underpayment of tax penalty of up to 20% of the tax found to be due, plus they can also charge you interest on any amounts due until they are finally paid in full. Any amount of penalty due for not properly paying your correct income tax on time would be based on the amount of underpaid tax, not a flat $25,000 figure. So I'm curious to hear who told you that!

Agreed

[Jeffrompa]

Take it as word . I would of hate to say who had to pay it .