OT: IRS Paypal Tax Situation

[birdman42]

Originally Posted by yanks12025

I just want to Make sure, so you only get tax papers if you do over $20,000 and 200 transactions?

To clarify the discussion here (or maybe muddy it), there are lots of different "1099" forms. There's 1099-INT used to report interest income, 1099-DIV for dividends, etc. The 1099 of interest here is the 1099-K used to report credit card transactions. (Another in the 1099 series is the 1099-MISC. That's the form that's issued for contractor work, rental income, etc.)

PayPal will issue you a 1099-K, not a -MISC. Here's the threshold for issuing the document, quoting from the IRS instructions for the form:

Exception for de minimis payments. A TPSO [third-party settlement organization; that's PayPal] is required to report any information concerning third party network transactions of any participating payee only if for the calendar year:
The gross amount of total reportable payment transactions exceeds $20,000,
and
The total number of such transactions exceeds 200.

However, I've seen 1099-Ks issued to people who were under that threshold. Uber and AirBnB, for example, send the doc to anyone who has any payment run through them.

The amount on the 1099-K shows the gross amount of the transactions. It's up to you to keep track of any fees.

As has been stated earlier, it's your responsibility to report all your income, from whatever source. Even if the money comes to you as cash or check, it's still reportable income.

Bill