Received a 1099-K - Didn't meet thresholds? (MA/VT)

Dunroamin3
Contributor
Contributor

$1700 in ebay sales for the year and 52 transactions...

Why the 1099-k...both are WAY below the thresholds...any thoughts...not a busuiness...just and individual

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108 REPLIES 108

Semi888
Contributor
Contributor
If I was informed of this I would not have sold my items on eBay.....
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Saturn4ce
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Contributor

Paypal is including Refunds / Fraud

 

So here is the Scoop on 1099k for PayPal. I want to be a bit clearer. I called the Department of Revenue today and explained the PayPal situation. Look at your transaction for the year in 2017 on paypal, if its a refund PayPal did not add it on your 1099k as Gross (although some are claiming), they did however add anything called payment received as gross. (Which Some are refunds – I’ll explain)

 

So if you look at your dates of transactions for the whole year, check the seller on the left and underneath you will see either refund or Payment received, or just payment. You’re looking for Payment Received. Click Payment Received then "Details" on the right, now it shows it as a Refund in your Detail section page.   (if it was a refund)

 

However, PayPal is adding Refunds to your Gross if under Payment Received. PayPal said because the Merchant seller did not click through the eBay website for a refund and paid a refund through only the PayPal site itself this allows PayPal to put it on the 1099k. (That doesn't make sense) When talking to the DOR they said PayPal could not do this as it was Not gross income. I talked with two PayPal managers and they said they have a 1099k cheat sheet which states refunds can be put on the 1099k, the DOR says otherwise. Again not all Refunds are on the 1099k only ones marked Payment Received under Details. The DOR told me to demand to speak with a PayPal manager and have them fix the 1099k form as this would be considered fraud/incorrect;

 

Both PayPal Managers told me they cannot fix what’s already been done, although on the 1099k tax website it clearly states they can.

 

This is a programming error on PayPal’s end and they are unwilling to fix this situation. Thus myself and a huge portion of the state are having issues.

 

I was advised to talk with the Attorney General’s Office by the DOR. –Fun.

 

I sold ONE Expensive Camera Item on eBay this year to a women in Florida during the Hurricane cheap so she could take the last pictures of the house her husband built before it was destroyed. Sold for 392 dollars. Now I have to deal with my taxes over refunds put as Gross……. So it went over 600…. Unbelievable.

 

Take a look online, there are thousands of ppl complaining about this. Nothing is being done. Complete thievery. Never thought someone would try and make me pay taxes on money that was already mine on Refunds. I guess the days of buying from online Yard Sales is over.

 

Contract the (Dor) Department of Revenue and Attorney Generals office, paypal is sending out fraudulent 1099k papers to the state.   Wouldnt hurt to jump on Charlie Bakers page and start up a whole lot of complaints.

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dgoodhue
Contributor
Contributor

Some are complaining about not being notified in advance about change in reporting.  The MA technical information release was dated 11/29/2017 and law was back dated to be effective 1/1/2017. It isn't PayPal fault for not notifying you. Any 3rd party settlement organization is suppose to be giving these form out to MA and VT residents with $600+ 'sales', so using a different credit card service isn't going to avoid this they are all under $600. This isn't a PayPal rule. Some of you looking like you actually have small side businesses that were below the 20k/200 Fed IRS limit, technically you have always been liable for reporting income for any of your sales. If ones have rebates or refunds, just list the rebate & refunds as an expense to offset the 1099-K income from them. 15 years ago I worked as tax preparer for couple years, but I personally don't think Schedule C small business are not that hard to fill out. Some who do their own taxes may want to try that rather than paying an accountant. I am not giving Tax advice and I am not CPA, so you should consult your own tax professional for advice.

 

In my case and some of the others, I sold used items I had bought and sold for less than I paid for them. I don't have a business, but I think the easiest way for me to file them on my taxes is put them on a Schedule D and list my cost basis with the original cost and fees to offset my 1099-K income.  I will document for my files my fees, shipping and purchase date and prices incase I am audited. In the future it may not be worth my while to sell items if I am going incur additional cost and effort to sell item I am losing money especially with the eBay/PayPal fees already taking a cut.

 

Some are claiming PayPal did not report the 1099-K to the IRS for under $20k/200 transaction limit.  I have not confirm this is true, I am probably going to wait a while to see how this shakes out.  I already filed my taxes in TurboTax already, they aren't allowing amendments until after February 9th so I can't do anything until next week anyways. If PayPal did only report my 1099-K to MA I am not sure if I can that in TurboTax either. If the 1099-K was reported to IRS, I would not recommend ignoring it, the Federal Government pretty much check all income forms and that is sure way to get audited or an automatic tax bill with penalty/interest on the full amount.  

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prezdrovini
Contributor
Contributor

It's not complaining it's legitimate issues with the way they are computing their item count by filling it with bogus numbers forcing people to file a Federal return in addition to the state.  I get the state law changed, got it...but I should not have to file the 1099k for Federal on non Ebay items, refunds, and rebates from coupon cabin in addition to an achievement award from fitbit.  33 bogus entries brought my count from 170 to 203 forcing me to file with the federal government, losing a thousand dollar return, hiring an accountant for a business that I don't have nor should I even have to report on since my count is 170 under the 200 count limit. Its their bogus count that they refuse to fix that is the issue. It is Paypals fault, and they told me they have a program to tell you the right number but won't update the count to that number as they keep saying we report on total transactions..  The issue is theirI gross negligence and totally inaccurate reporting to the IRS on their behalf not the Paypal user complaining.... 

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prezdrovini
Contributor
Contributor

They are not only adding refunds to the 1099K they added coupon cabin rebates to mine.  By them doing that..I had 32 coupon cabin rebates bringing my EBAY 170 count, plus 7 refunds, and 1 get this $10.00 credit from fit bit as an award, up and over the 200 threshold to 203, I know have to file Federal Taxes, lose a thousand return, pay an accountant 500.00 to file for a business that I don't have due to 33 bogus entries added to my box 3 transaction count. I called three times talking to stepford wives reciting their scripts they refuse to fix the count to just be Ebay items.  I am well below the threshold of 20K, for sales so I would of never had to file my federal return for a 10k I only now have to because they refuse to do any thing about this . You better believe I am getting an attorney...and I will call the attorney general too. Thank you for your post!

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sdolen
Contributor
Contributor

Additional food for thought, using a theoretical example.

 

I get 1099K for $3000.  I then proceed to redo my taxes to resubmit my return.  Figuring the items I sold on eBay and other places I had taken a loss on I would be OK.  Then I realize as I'm adding up the Cost Of Goods Sold, most of the items I bought online.  Some had no sales tax paid on them because of this.  So should I then pay the state the 6.25% sales tax so that I can then write of the item to save the 5.1% State Tax?  Basically your **bleep** is what I'm getting at.  If audited, they will most likely make sure you paid the sales tax on the items you sold and if not, your going to get hit with a double whammy. 

 

For my own personal situation, I might just pay the tax on the 1099K and call it a day.  Time is money and spending hours redoing my taxes and digging through receipts going years back is just not worth it for $!00.  Shame on us Mass tax payers for allowing this law to get passed.  It's our own fault.

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Semi888
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wrote:

Additional food for thought, using a theoretical example.

 

I get 1099K for $3000.  I then proceed to redo my taxes to resubmit my return.  Figuring the items I sold on eBay and other places I had taken a loss on I would be OK.  Then I realize as I'm adding up the Cost Of Goods Sold, most of the items I bought online.  Some had no sales tax paid on them because of this.  So should I then pay the state the 6.25% sales tax so that I can then write of the item to save the 5.1% State Tax?  Basically your **bleep** is what I'm getting at.  If audited, they will most likely make sure you paid the sales tax on the items you sold and if not, your going to get hit with a double whammy.  

 

For my own personal situation, I might just pay the tax on the 1099K and call it a day.  Time is money and spending hours redoing my taxes and digging through receipts going years back is just not worth it for $!00.  Shame on us Mass tax payers for allowing this law to get passed.  It's our own fault.


I don't think we have to pay MA state sales tax on items we purchased from another state. I don't think there is a risk to get double hit. I also got a 1099k for just over $3000. Spent the morning finding my old purchase price "receipts", ebay fees, paypal fees, and shipping fees. Turns out I took a loss of $650, and maybe will pay less taxes?

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johncurious
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I also received one and looked into it since I too sold my old "stuff" and well below the IRS minimum. Turns this is not Paypals fault but of course the CORRUPT DEMOCRATICALLY CONTROLLED Commonwealth of MA - they changed the law on November 29, 2017. My question is how is that possible? How can a law be enacted in November that affects your taxes starting in January of that tax year? Answer, DEMOCRATS - pure and simple. Their greed has no  bounds....years ago the auto insurance companies claimed they didn't make enough money and were allowed to RETROACTIVELY send bills out to customers the following year. Only in the CORRUPT COMMONWEALTH of MA. 

 

So if you live in MA try and figure out what you sold, what is originally cost (who actually has receipts for small household items/clothes/etc from years ago?) and all fees (including shipping/handling plus eBay and Paypal) and come up with a number real Net number - not Gross as on the 1099K. If you did sell things to make a profit - that's different. You probably do owe tax - 

 

I'm having a special meeting with my accountant on Thursday - not taking any chances with the MA DOR.

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dgoodhue
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Contributor

wrote:

I also received one and looked into it since I too sold my old "stuff" and well below the IRS minimum. Turns this is not Paypals fault but of course the CORRUPT DEMOCRATICALLY CONTROLLED Commonwealth of MA - they changed the law on November 29, 2017. My question is how is that possible? How can a law be enacted in November that affects your taxes starting in January of that tax year? Answer, DEMOCRATS - pure and simple. Their greed has no  bounds....years ago the auto insurance companies claimed they didn't make enough money and were allowed to RETROACTIVELY send bills out to customers the following year. Only in the CORRUPT COMMONWEALTH of MA. 


This was republican governor Charlie Baker's budget idea for $600 1099-K requirement.  I am not sure who decided to make it retroactive.

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moonbeam28
Member
Member

You might want to do a bit more research before you blaming Democrats. You can thank MA Republican Governor Governor Charlie Baker for this change in reporting requirements.

"Governor Charlie Baker of Massachusetts released his budget proposal for FY 2018 back in January 2017, which includes a requirement for credit card companies to report 1099-K income to the state when an individual earns more than $600 from credit or debit card transactions in a calendar year. Governor Baker seeks to close the reporting hole left by the high 1099-K threshold, thus increasing reported income."

https://sovos.com/blog/sharing-economy-tax-gap-reporting-requirements/

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