I Received My 1099k Today

Have any Family members been receiving 1099k's from PayPal? This is new and are we obligated to report this. It only delineates how much we received; not what our gain is, if any.

Jack Kelley

I've been receiving them for a few years and I believe about 3 years ago Paypal began submitting them to the IRS. I don't think you can ignore it. You can download the raw data and check what's included. Obviously they only report income and no expenses are netted out. Strangely this year my Paypal income is 20% higher than my sales shown on ebay, I'm pretty sure the ebay numbers are wrong but it's nerve- wracking!

There must be a $1,000 threshhold. This is the first one I've ever gotten.

Jack Kelley

I think there is a threshold. I received my first one last year and I did get one yesterday. It's a 1099 so it only records income received, which in this context is revenue.

The threshold was $20,000 and 200 transactions when PayPal first started sending them out. I don't know if that changed. Since the twins were born I haven't received one from PayPal, but still pay taxes.

Here's the latest rule from Paypal;

I know they include any shipping costs you charge but every year I have to figure out if they net out refunds and if the total shown is net of Paypal fees. I have never found a written explanation, if anyone else has I'd like to see it,

So it hasn't changed. You can download monthly reports from PayPal that shows gross, refunds and fees paid to PayPal. It doesn't separate out postage/shipping. I've always used what I've paid out in postage and not what buyers have paid.

The thresholds above are for federal reporting. Several states have much lower thresholds, in which case you may receive a 1099-K from PayPal even if your transactions and amount received fall below the federal thresholds.

There is a discussion on ebay about this as well. See below.

Bottom line coming out is all income needs to be reported and it is up to the seller to keep track of expenses, COGS, etc to calculate taxes.

https://community.ebay.com/t5/Selli...d-p/28114440

Here is the website link to the IRS's take on receiving a 1099-K from the IRS regarding Paypal. Be sure to keep a detailed list of ALL of your expenses. https://www.irs.gov/businesses/unde...-your-1099-k

One thing to keep in mind about the wording on that page is to not take literally the IRS's use of the word "business". I've seen many posts on many collectibles forums from people with the incorrect take that "I'm not doing this as a business. It's only a hobby, so this doesn't apply to me."

Whether you are "operating as a business" or "doing this as a hobby" makes no difference with respect to 1099-K other than what you can ultimately deduct on your tax return. If you are receiving income, it is still reportable regardless.

Technically, by the letter of the law, if you hold a garage sale one weekend, or a buddy buys an old TV set you had in the basement, you should be reporting that income on your tax return and then deducting any original basis, etc.

The requirement technically exists down to that level... there's just no feasible enforcement.

However, once you receive a 1099-K, a 1099-MISC, or any other indication of federal or state income reporting, you're now in an entirely different ball game.