New Law related to PayPal and other payment Apps

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Viewing 15 posts - 16 through 30 (of 36 total)
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  • #1653199
    Ela_Hara
    Participant

    Yeah, I believe it started with Wayfair and Amazon where those companies didn’t have physical brick and mortar stores but sold solely online – and the online internet craze started and caught fire big-time.
    Then the Fed and State governments figured out all the great taxes they were missing out on …

    That’s what will catch me – I’m downsizing about 1/2 of my Windstone collection. More to post soon!

    IN SEARCH OF MY NEXT GRAIL: A Kickstarter 'Rainbow Tiger' Bantam Dragon!

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

    #1653296
    Landipan
    Participant

    Okay so I’m not the best at figuring out these sorts of things, but is there a straight forward(i.e for dummies) sales tax calculator that can tell me how much I’d be paying when making a sale? I figure It’s something I need to learn so when I price a pyo or anything else I know how much to bundle into the overall price or put away for later tax paying ??

    My brain hurts, I wanna plan ahead so if I go over the $600 I’ll have an idea of what to expect come the following tax season. I don’t know about you guys but I need all the handholding I can get lol.

    Btw, $600 feels like such a low threshold!

    *Formerly meowmix101
    Not currently open for PYO commissions.

    #1653297
    Ela_Hara
    Participant

    I think it’s going to depend on what your final tax bracket falls into for the year – remember this 1099 will be added to any other 1099 and W2 forms you receive for your total yearly earnings. I believe the IRS may have a tax table that lists those tax bracket amounts. For example, if your total earnings for the year with sales included, puts you in the 29% tax bracket, that’s what you would pay in taxes. However there are different laws that go into figuring what your actual bracket(s) may be, so it’s not that cut and dry. Someone else’s bracket may be lower or higher depending upon total earnings in a year. The most you make, the more you’re taxed Tax preparers need to learn many different new laws each year about tax changes. I’d speak to your tax accountant (if you have one) to be sure about your potential/specific situation. Also – don’t forget that your Federal taxes are used to base your State taxes on, at least in my State. So this may also figure into your State tax overall yearly income as well. Just may not be as much.

    IN SEARCH OF MY NEXT GRAIL: A Kickstarter 'Rainbow Tiger' Bantam Dragon!

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

    #1653301
    Landipan
    Participant

    Ela_hara – Thank you for the replu, it’s too bad it’s not as simple as I had hoped lol, so I’m still a bit unsure what to expect next tax time!

    I was talking to my sister(she makes and sells earrings) earlier about this subject and she was telling me that I should sell my stuff through etsy, that they take the sales taxes out for you or something to that effect, I have no clue if how accurate that is since I’ve only ever bought things off etsy I have no experience about what the selling side is about. I’m still trying to learn more about that to see if that’s a better option going forward, if it simplifies anything.

    *Formerly meowmix101
    Not currently open for PYO commissions.

    #1653304
    GardenNinja
    Participant

    That is a completely separate issue. This is income tax, not sales tax. The way the income tax will work is that if you sell $700 worth of goods, it will be taxed as if you had a $700 raise on the job. I highly doubt that Etsy witholds income tax for you.

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

    #1653305
    Landipan
    Participant

    Ah! I didn’t realize that and now I’m wondering if my sister knows that, I’ll have to let her know asap!

    *Formerly meowmix101
    Not currently open for PYO commissions.

    #1653315
    etruscan
    Participant

    The other aspect of this is that you need to know how much things cost you to buy or to produce. If you make and sell a PYO I expect that you can deduct the price of the blank from the sale price when figuring your taxes.

    In prior years if you sold collectibles that you had bought, or had a small business selling things that you make, you pay tax on the gains, not on the gross income. Or, you can deduct any losses.

    I would expect this to be the same situation.

    So, most likely, you could choose to buy and paint PYOs and sell them for what they cost you. You wouldn’t owe any additional tax as long as you could document the cost of the PYOs (had the Windstone invoices showing the prices you paid for the blank sculpts).

    #1653317
    Ela_Hara
    Participant

    I think at this point any PYOs I paint will be either ones I want to keep or those I give as gifts to people, or for Swaps.

    But good point on the materials you buy for doing a PYO before your ‘profits’ at sale. However, that opens up another can of worms – do you need to declare yourself a ‘business’? There are costs associated with doing that as well – and also pre-paying your estimated taxes every quarter in the year to the IRS.

    IN SEARCH OF MY NEXT GRAIL: A Kickstarter 'Rainbow Tiger' Bantam Dragon!

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

    #1653323
    etruscan
    Participant

    Disclaimer – I have worked with some of these forms at times over the years but am not an expert!

    Last I knew (but I haven’t looked at it for several years) you could file Schedule C if needed without being an official business. Profits reported on Schedule C do trigger reporting on Schedule SE (the self-employed equivalent of Social Security contributions) if over a certain amount. However, I doubt that would affect anyone here.

    I’m guessing that a lot of this will be addressed in various articles over the next year. There was a Washington POST article about it this week. It explains the new rule but doesn’t really explore the ramifications.

    https://www.washingtonpost.com/business/2022/01/21/venmo-paypal-new-income-reporting-requirement/

    #1653325
    etruscan
    Participant

    P.S. I think that if you are selling your collection, that would fall under selling collectibles. As of last year, and probably into the future, that is treated as capital gains or losses not as a business.

    #1653376
    GardenNinja
    Participant

    What about shipping costs? Those would be deductible, wouldn’t they? At least, if you do Schedule C?

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

    #1653496
    Ela_Hara
    Participant

    Damn! I guess PayPal isn’t waiting for 2022. I got a 1099-K for items I sold in 2021

    IN SEARCH OF MY NEXT GRAIL: A Kickstarter 'Rainbow Tiger' Bantam Dragon!

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

    #1653516
    etruscan
    Participant

    Damn! I guess PayPal isn’t waiting for 2022. I got a 1099-K for items I sold in 2021

    Thanks for the heads up. There actually is a “Tax Documents” section on the Paypal website (who knew?). To find it go to Activity, then click on “Statements” and then choose “Tax Documents”).

    The drop-down box on my “Tax Documents” page has options for 2019 and 2020 as well as 2021. Both 2019 and 2020 say “Less paperwork for you. You don’t have any tax document on PayPal yet.” I do have a 1099-K for 2021.

    #1653585
    Kujacker
    Participant

    Damn! I guess PayPal isn’t waiting for 2022. I got a 1099-K for items I sold in 2021

    Thanks for the heads up. There actually is a “Tax Documents” section on the Paypal website (who knew?). To find it go to Activity, then click on “Statements” and then choose “Tax Documents”).

    The drop-down box on my “Tax Documents” page has options for 2019 and 2020 as well as 2021. Both 2019 and 2020 say “Less paperwork for you. You don’t have any tax document on PayPal yet.” I do have a 1099-K for 2021.

    Same, no tax documents. I wonder what the cut off point was? I sold a lot of windstones last year. I think my last sales were in the August area.

    #1654376
    etruscan
    Participant

    These items are quoted from the ebay information page for sellers titled “2022 Changes to Ebay and Your 1099-K”.

    Ebay’s information:

    Here’s what you need to know

    * Starting on Jan 1, 2022, eBay and other marketplaces are required by the IRS to issue a Form 1099-K for all sellers who receive $600 or more in sales.
    * The new tax reporting requirement will impact your 2022 sales and taxes that you file in 2023—it will not apply to your 2021 sales and taxes that you file in 2022. Throughout 2022, look for updates from us that will help explain what’s changed and what you need to do next.
    * If you haven’t already given us your Social Security number (SSN) or Individual Tax Identification Number (ITIN), we’ll ask you to provide it once you reach $600 in sales.
    * No need to worry— you only pay taxes on profits. You won’t owe any taxes on something you sell for less than what you paid for it. For example, if you bought a bike for $1,000 last year and then sold it on eBay today for $700, that $700 you made would generally not be subject to income tax.
    * While eBay is unable to give tax advice to our sellers, we want to help make dealing with taxes as easy as possible. Our goal is to help all sellers, casual or those selling as a business, with these new requirements.

    Form 1099-K thresholds for your 2021 sales

    For the tax year 2021, you may have recently received a Form 1099-K for selling more than $20,000 and 200 transactions.

    Some states have lower reporting thresholds for 2021. Check with your state’s tax or revenue department to confirm the 1099-K threshold.

    Here’s how you can help

    We’re lobbying Congress on your behalf to raise the $600 threshold. Help us stop overtaxation and the avoidable disclosure of private information.

    You can share your story about the importance of online selling, or send a letter to members of Congress.
    [then there is a link titled “Act Now!”]

    From the section called “Changes for You in 2022” – it sounds as though ebay will only send tax forms for money received under “Ebay Managed Payments”. Paypal will send forms for payments made through them.
    Quoting ebay question and answer: “I received payments in 2021 from PayPal as well as eBay Managed Payments. Who will provide a Form 1099-K to me?

    eBay will calculate the reporting threshold only for the payments you received from eBay Managed Payments and we will send you a Form 1099-K if you exceed the 2021 reporting threshold with eBay payments. PayPal will calculate the reporting threshold separately.”

Viewing 15 posts - 16 through 30 (of 36 total)
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