NEW 2011 IRS PAYPAL LAW, 200 TRANSACTIONS HELP

[Dynamite_Deals]

HI,

I am just wondering what they mean by each transaction, does this includes all bank transfers? Personal payments? ATM withdrawalS, ETC. . . .? Or only counts towards the 200 transactions for only money received for an sale and a fee have been deducted, for instance a sale through eBay?  I transfer funds into my bank account weekly sometimes twice a week.  I just want to make sure if these count towards the transaction count or not.  Also same for the ATM withdrawal does it count towards the 200 limit as well?

Thanks!

[BigKahuna97]

From my understanding the 200 transactions are only counted from the number of payments you receive from other PP members.  This does not include transfers to your bank account or ATM withdraws.  

Be warned that Dem's want anyone making over $2200-2400 a year on PP to be taxed on it, even if it's Intl.  If you earn over that amount on PP a year just be warned that it will be submitted to IRS anyway so don't worry about the K9.  This means keep 25% Fed plus 8%-12% State (depending on your state and NY and CA will be slightly higher) for tax purposes.  This is the amount you must pay in taxes only from profit so don't count the amount you were paid.

Wish the news sounded better but considering how many new taxes the Dems have pushed.....it could be worse.

[Dynamite_Deals]

Thats for the quick response, 1 more question. How does paypal decide what ia profit and lost? My total amount of transactions last year (2009) was 50 some odd thousand, and i didnt receive any extra tax forms.

[BigKahuna97]

Prior to today, all PP users who made over (I believe this number is correct) $2600 were supposed to claim their PP profits on their yearly tax returns.  Starting today all transactions and yearly reports will be sent to the IRS automatically.  You will need paperwork showing prices paid for inventory and you will be charged according to the profit between price paid and sold minus operating cost, shipping, and associated money.  Keeping invoices and proper paperwork will make or break most sellers.

If you sale intangibles and not a tangible product, the 25% Fed plus 8%+ for state from the total amount of the purchase would come into play.  As I mentioned, even if you did not get hit with a K9 it would only be a matter of months before the IRS would have an audit letter at your door if you fail to file properly for the 2011 year.

[Dynamite_Deals]

Is 2600.00 per month? If i received more than that per montly its automatically reported right? So what is the 200 transaction/20,000.00 come in play?

[BigKahuna97 · Accepted solution]

$2600 a year is about the minimum you are allowed to earn per year without filing taxes.......

$2600 and over a year is the new norm for auto reporting....

The 200 transactions or 20K is a pretty open statement by PP.  

If you are having this many questions over this topic I would highly urge you to speak with an accountant.  Most people scoff me when I recommend this but the reality is paying for advice now is much cheaper than paying back interest and penalties imposed by the IRS.  

[zachary1988]

When I read the IRS law, It said "200 transactions AND $20,000.00.

Please not the word AND,, Not (OR).

Thanks

James

[MissThings]

What about the VAST majority of people on eBay that sell older family items?? These were in many cases paid for many years ago- and now are worth a fraction of what was paid? Can we deduct the losses then? That is not primarily a business where people buy inventory and sell at a profit- what about those looking to recoup just a little extra money from unwanted stuff from our garages and closets?

This is all so stupid. How could most of possibly find a cost-basis for anything we sold that has been owned by us for so long? Who on earth keeps a receipt for a sweater or a cocktail table from 20 years ago- just to make a common point?

[adisservice]

yes what about those of us reselling items we already paid taxes on, used(or didn't use) and now are selling for less than what we paid for them

[slogg9]

What about refunds, eBay fees, PayPal fees, shipping costs?

Are all of these going to be taken off my total yearly 'sales volume' before it reaches $20k?  If a $20 item sells and shipping is $5, total payment of $25, does my total yearly sales volume increase by $25?  That's bull**bleep** if it does.  About 20% to eBay/PP fees plus that shipping cost, but I just 'sold' $25 worth???

When is the class action lawsuit?