New Law related to PayPal and other payment Apps

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  • #1652897
    Ela_Hara
    Participant

    I just heard/read this for USA sellers on the ‘Rosen Reports’ feature on WBAL-TV here in Maryland – it mentions this for users selling stuff online.

    “This year’s tax season comes with a new change for payment apps such as Venmo, PayPal, Zelle or Square.
    Those apps will have to start reporting business transactions if they’re $600 or more per year. If you have a side hustle like selling goods or services on Etsy — this means you.”

    I just looked on the IRS FAQs about this – take a look at the New 2022 rule adjustment: “if the aggregate amount of payments for goods and services exceeds $600 during the calendar year.” SO, it looks like we’ll get a 1099-K form to account for sales as income for 2022 and beyond. If I read this correctly, this means that if I sell some of my Windstones and make a total of $600 or more doing this within 2022 (Yes the entire year of 2022!) I’m going to owe the IRS – CRAP! More government types picking my pocket! The aggregate amount WAS 20,000! This rule is going to catch ALL of us! So – when is the IRS going to start trolling yard sales?????

    IRS FAQs: https://www.irs.gov/payments/general-faqs-on-new-payment-card-reporting-requirements
    If you accept payment cards as a form of payment, you will receive a Form 1099-K for the gross amount of proceeds for the goods or services purchased from you through the use of a payment card in a calendar year. Further, if you accept payments from a third-party settlement organization, you should receive a Form 1099-K from that organization only if:

    The total number of your transactions exceeds 200 AND The aggregate value exceeds $20,000 in a calendar year.

    >>>>>> Effective for returns for calendar years beginning in 2022: <<<<<<
    If you accept payment cards as a form of payment, you will receive a Form 1099-K for the gross amount of the payments made to you through the use of a payment card during the calendar year. Further, if you accept payments from a third-party settlement organization, you will receive a Form 1099-K from that organization only if the aggregate amount of payments for goods and services exceeds $600 during the calendar year.

    *~*~*~* Ela_Hara: The DragonKeeper *~*~*~*
    *** Come visit me on deviantArt at http://ela-hara.deviantart.com

    #1652903
    GardenNinja
    Participant

    Thank you Ela_Hara for this important information.

    My keyboard is broken. I keep pressing "Escape", but I'm still here.

    #1652911
    sherry10151982
    Participant

    OMG!!! Well, there goes my time selling on eBay! This is ridiculous just as ridiculous as them implementing the sales tax to online purchases. I feel sorry for businesses that rely on selling online to survive.

    #1652912
    Ela_Hara
    Participant

    It’s worse than you think! You don’t need to use eBay or Etsy… It’s related to using PayPal, Vimeo, Square, Zelle, etc. to get paid for your stuff – period.

    I’m not using eBay or Etsy to sell my stuff, such as the Windstone I currently have on FB or the WS Classifieds for sale. This will affect my FB and WS Classified sales, and most likely anyone’s here, because I use PayPal to get paid. And anything I use PayPal’s ‘Goods and Services’ payment option to be paid with is going to be reported to the IRS. THAT’S the crappy part! If my incoming PayPal funds to my account go over $600 TOTAL for ALL of 2022 it will be reported and I’ll receive a 1099-K from PayPal for my ‘earnings’.

    Remember, this law has always been on the books, just that the ceiling for 200+ transactions used to be at $20,000 Total for a year. Now it’s at $600 which will catch just about anyone who does causal selling as well as the online businesses – That’s the sucky part!

    *~*~*~* Ela_Hara: The DragonKeeper *~*~*~*
    *** Come visit me on deviantArt at http://ela-hara.deviantart.com

    #1652917
    Mika
    Participant

    Time to go back to paper checks and PO boxes!

    $600 is nothing. What an absolute sham.

    Thanks for the info!

    #1652918
    Ela_Hara
    Participant

    USPS Money Orders work better than paper checks, they are more reliable as payment …. just saying.

    *~*~*~* Ela_Hara: The DragonKeeper *~*~*~*
    *** Come visit me on deviantArt at http://ela-hara.deviantart.com

    #1652920
    Kujacker
    Participant

    I was wondering if anyone would mention this here.
    The friend I’m staying with for the time being told me about it about a week ago. I would have never known had he not said anything.

    I’m not sure if this is correct, but it is believed that if you use the “friends and family” option on paypal, this will not count towards your $600 a year. However, if that does work, not everyone is comfortable sending money to people like that (and whos to say paypal might very well figure that out and start charging on that). Also doesn’t help if you do sell on etsy or ebay etc.
    (I made a ton of pokemon keychains/buttons a number of months ago… I was trying to figure out where to best sell them but now this popped up and I’m not sure how to proceed. I just wanted the occasional pocket change, not a self owned business with taxes).

    You could charge people more to cover those taxes (like charging more to cover paypal fees), but then you run the risk of not selling your items. Sigh.
    If money orders or what have you become the new norm, shipping will slow down and payments will likely be lost in the mail.

    The government really doesn’t like people keeping their money.

    #1652921
    Ela_Hara
    Participant

    It would be I’ll advised to use ‘Friend and Family’ payments for selling. You risk getting caught and kicked off PayPal. I wouldn’t do that.

    *~*~*~* Ela_Hara: The DragonKeeper *~*~*~*
    *** Come visit me on deviantArt at http://ela-hara.deviantart.com

    #1652922
    Bodine
    Participant

    Yeah,I heard too but thank you for clarifying Ela_Hara.Appreciate it.

    Every act matters,no matter how small.
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    #1652935
    Ela_Hara
    Participant

    Who’s that rooting around in my back pocket?

    *~*~*~* Ela_Hara: The DragonKeeper *~*~*~*
    *** Come visit me on deviantArt at http://ela-hara.deviantart.com

    #1652947
    GardenNinja
    Participant

    It would be I’ll advised to use ‘Friend and Family’ payments for selling. You risk getting caught and kicked off PayPal. I wouldn’t do that.

    Also, you have no protection if the seller doesn’t follow through.

    My keyboard is broken. I keep pressing "Escape", but I'm still here.

    #1653088
    Jennifer
    Keymaster

    I know it’s not great news for you all, since buying/selling Windstones is a hobby for most of you. But please do remember that using “friends and family” to pay for goods/items is not only against Paypal’s rules, but against forum rules too, because it offers no protection to the buyer at all (we hate seeing people getting ripped off!!!). It can also get your Paypal account flagged even if no one reports you, as Paypal’s system seems to sometimes auto detect this if someone uses it for goods/items. I’ve had a few artist peers I know get their account banned for this, and in one case I remember, the artist couldn’t even get their money from their Paypal balance back, when it happened. Use care.

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    #1653093
    Ela_Hara
    Participant

    I echo Jennifer –
    DO NOT USE (OR ASK THE BUYER TO USE) the “Friends and Family” payment option if you are selling OR if you are buying any goods/services, such as purchasing Windstones from the Classifieds, Facebook sellers, etc.

    I’ll be paying taxes next year for what I sell in 2022. I am glad that PayPal will send a 1099-K to keep everything honest and accurate.

    *~*~*~* Ela_Hara: The DragonKeeper *~*~*~*
    *** Come visit me on deviantArt at http://ela-hara.deviantart.com

    #1653094
    Ela_Hara
    Participant

    It would be I’ll advised to use ‘Friend and Family’ payments for selling. You risk getting caught and kicked off PayPal. I wouldn’t do that.

    FYI – I meant to say “You would be ill-advised to use the ‘Friend and Family’ option…” Damn auto-correct on my phone!!!

    *~*~*~* Ela_Hara: The DragonKeeper *~*~*~*
    *** Come visit me on deviantArt at http://ela-hara.deviantart.com

    #1653195
    Kujacker
    Participant

    I don’t have friends or family to use it with anyway, hah. I also don’t sell anything anymore, for the time being. That was just something that has been circulating since all this has come up.
    As for money orders, you don’t exactly get buyers protection with that either if it gets lost in the mail.
    The long and short of it all is, you can’t really escape the new taxes. Is what is it. The only annoyance is if you’re just trying to downsize your collection (or “yard sale” stuff) and you’re going to get taxed on it.
    I’m sure glad I decided to sell most of my collection before now…
    (Rumor has it, this was implicated to attack one kind of “service”. Now everyone must suffer)

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