Paypal sending 1099-Ks to USA sellers who received over $600

You should be right. The rules kick in for 2022 and beyond so unless you’re in one of the unlucky states that had this rule before then you won’t see anything until 2023 unless your sales were over 20k.

In terms of when to expect a form in 2023, probably by mid February going off when I get 1099s from other places.

 

@vermaxen and @abs2891 - Oh, okay! That makes sense. I'll look up my state to see if it was counted for 2021.

 

I got mine this year as received email from PayPal that it was ready to download. I also downloaded my monthly statements so I could double check my math. Another year of losses, but don't want to mess up household taxes so going to make it so I broke even. I really wish they'd go after the rich and leave us all alone.

 

this will be for when you file in 2023 for 2022, afaik.

 

@Epona - Thank you! I'll remember this for next year then!

 

Yes be sure to keep receipts of everything you buy in case down the road you sell. Also keep a spreadsheet on when payments are made and what you paid in fees and shipping costs. Also I have learned double check each month your PayPal account to be sure you don't miss one. I got my PayPal k-1099 and saw they said Ivar received $250 more then my records showed. Saw I missed a couple, but what burned my biscuits was they also had the $75 payment I received but ended up refunding as I had size of doll wrong so I ended up paying tax on sale that didn't happen.

 

So this can get really complicated really quickly.

First: if you receive any form like a 1099-K or a 1099MISC, the IRS also received it. The IRS created the forms, and they require the forms be sent to you by a certain date. For 2022, you should receive your 1099-K by January 31, 2023 (scroll to the bottom).

How you report the amount on the 1099-K depends upon whether you are in the business of buying and selling dolls, or if this is just a hobby to you.

If you are in the business of buying and selling dolls - talk to your tax preparer. I'm not going to get into whether you are selling business assets or inventory, or depreciation, COGS, and all that.

If you are a hobbyist like me, here's what I suggest: Selling a doll is just like selling a piece of art. It's a collectible/capital asset, and that's how you report it. I recommend purchasing tax prep software from a company like Intuit, which offers free tax preparation advice from tax professionals as a service included with their software.

If you sold dolls or doll-related items, and you made a profit (you received more than what the item cost, aka basis), you report the sale on Schedule D, which is a summary schedule. You will need to fill out a Form 8949 listing each doll or doll item you sold. If you live in a state that requires income tax returns, you will have a state income tax return requirement. Same goes if you live in a town that imposes municipal taxes (yay, Ohio ). There's a lot more to it (28% collectibles tax for people who make over $164K individually or $325K married filing jointly) - this is just a general summary. You may also owe sales tax (because you were supposed to charge the buyer sales tax) - so that's fun.

If you sold dolls or doll-related items, and you did not make a profit (you received less than what the item cost you), you will still need to fill out Schedule D and Form 8949 listing each doll or doll item you sold. HOWEVER, because this is a hobby, there's a rule called the hobby loss rule, and you CANNOT claim a loss on your return. So you cannot claim a capital loss, and there should be no negative numbers on your 1040 from losses from doll sales. You also cannot claim a loss on your state or local return.

Note: Schedule D and Form 8949 do NOT take into account the costs of shipping or customs/sales taxes you paid: only what you paid and what you received for the item you sold. That has to be reported somewhere else (taxes), or not at all (shipping).

Source: am IRS-certified tax preparer.

Small request: please, for the love of dog, do not use Jackson Hewitt or H&R Block. Those people generally get paid slightly more than minimum wage, and they've had maybe two weeks of training.

 

One additional note: switching to Friends and Family via PayPal (or using a peer-to-peer service) to get paid is not only a bad business practice (and a violation of PayPal terms of service), it's tax evasion. And tax evasion is a crime.
Just throwing that out there.

 

If you do less that 600 in sales do you still get a form, or does no form get issued by Paypal?

 

no form

 

You do not get a form and PayPal won't issue one. But they expect you to check your account for any forms they will have sent.

 

I am still going to have to deal with it as Illinois made it a rule/law.

 

Huzzah!!!

 

Oh, this is FANTASTIC news! Thank you!

 

I would check your state's law first. If your state started in 2021 you might be getting this break, but if your state implemented this before 2021 then most likely not getting break. We'll know come January if PayPal sends you an email to get your form.

 

Latest information on irs threshold. I know some states have different requirements but I’m happy that I can sell a little more this year without reporting to the irs.

IRS announces another delay of the $600 reporting threshold for Form 1099-K

 

Ah ha ha ha ha ha ha. I'm sorry. The IRS has no idea what it's in for. PayPal and eBay keep trying to explain, but they're just not listening...

 

I still think if you have a business account on PayPal or you sell on Ebay you should then get the forms. But if you are not a business or the old rule do over $10,000 in a year then yes you get the form. I have lost selling a doll quite a few times because I won't take a regular payment. Thank God for friends.