PayPal and IRS

[bbckfh]

Got this message from PayPal after I sold something to a member here:


I had heard that this had been proposed, but not that it was passed. Must have been in the 2022 IRS funding bill? (I am NOT saying this to spur political discussion).

They sent the money G&S to get the protection (no fault on his part, nor animosity on mine). I’m not selling professionally, this is not a business.

Apparently the IRS is now mandating withholding. While technically I suppose one can tell them on your 1040 that this wasn’t a business sale, I think there’s about zero chance that that deduction will be allowed and one is opening oneself to an audit (disclaimer: I’m not a CPA, clearly).

I also know that there’s about zero chance I’m giving PayPal my SSN, which is my Tax ID. Again, I’m not a business.

I think that this will be the straw that makes me close my PayPal account.

This will spur change in how I trade goods online. Will it for you?


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[bbckfh]

I apologize. Should’ve searched first. I see the other, better posts now.

 

[roadrunner]

PayPal will go the wayside. Cashiers checks will go back in style.

 

[hunterjmj]

Craigslist may make a comeback.

 

[Bluefish]

I expect most people won’t realize the final impact until this time next year, then PayPal will be used a lot less.

 

[voltage]

CPA here. This can seem scary, but it’s not a big deal. Generally speaking, your cost in the item will exceed what you sold it for. Assuming cost > selling price, you have no tax to pay (you still need to report it on your 1040, though).

Just so everyone is aware, this was already a risk. You technically owe tax if you sell an item for more than you paid for it. Let me assure you, if audited, the IRS will want to know why you have so many deposits into your account from PayPal (even if F&F).

Cashiers checks can seem like a better option, but there is still a paper trail and you have no protection as a buyer.

 

[Rich M]

CPA here. This can seem scary, but it’s not a big deal. Generally speaking, your cost in the item will exceed what you sold it for. Assuming cost > selling price, you have no tax to pay (you still need to report it on your 1040, though).

Just so everyone is aware, this was already a risk. You technically owe tax if you sell an item for more than you paid for it. Let me assure you, if audited, the IRS will want to know why you have so many deposits into your account from PayPal (even if F&F).

Cashiers checks can seem like a better option, but there is still a paper trail and you have no protection as a buyer.

You still have to keep the receipt, etc. the receipt paper often fades w time if you save it.

I plan on selling a few things this year to fund orher stuff but large ticket items will be local, cash only. Someone doesnt want to buy is fine, someone else will.

Not playing this game w govt/IRS.

 

[voltage]

You still have to keep the receipt, etc. the receipt paper often fades w time if you save it.

I plan on selling a few things this year to fund orher stuff but large ticket items will be local, cash only. Someone doesnt want to buy is fine, someone else will.

Not playing this game w govt/IRS.

Yes, having a receipt is preferred, but it is NOT required to deduct something on schedule C. There are other options like bank/credit card statements which can also help if audited. The IRS isn’t too worried about someone selling $810 worth of Sitka. However, if you want to sell a $10k custom gun that you paid for in a combination of cash and precious metals, it may be best to sell that locally for cash.

 

[NDGuy]

Let me assure you, if audited, the IRS will want to know why you have so many deposits into your account from PayPal (even if F&F

That’s all just beer and gas money

 

[Rich M]

Yes, having a receipt is preferred, but it is NOT required to deduct something on schedule C. There are other options like bank/credit card statements which can also help if audited. The IRS isn’t too worried about someone selling $810 worth of Sitka. However, if you want to sell a $10k custom gun that you paid for in a combination of cash and precious metals, it may be best to sell that locally for cash.

10-4 - definitely

 

[voltage]

That’s all just beer and gas money

I am a bit of a sand volleyball addict and play on 4ish teams every summer. I always front the league fees for the each team so I might end up with a 1099-k for sand volleyball refunds… I might need my friends to start picking up my bar tabs

 

[roadrunner]

CPA here. This can seem scary, but it’s not a big deal. Generally speaking, your cost in the item will exceed what you sold it for. Assuming cost > selling price, you have no tax to pay (you still need to report it on your 1040, though).

Just so everyone is aware, this was already a risk. You technically owe tax if you sell an item for more than you paid for it. Let me assure you, if audited, the IRS will want to know why you have so many deposits into your account from PayPal (even if F&F).

Cashiers checks can seem like a better option, but there is still a paper trail and you have no protection as a buyer.

Make cash out of the cashier's check upon receipt, don't deposit it. "I have no recollection of why I requested that cashier's check..."

 

[eddielasvegas]

Well, this is good news on this topic. I'm actually shocked the IRS made the changes.

Article HERE.


Eddie

 

[Theringworm]

Yea, $5,000 is now the new threshold limit for reporting, not $600.

 

[tony]

So 5 K is the limit

I am for one pretty damn honest, have never screwed anyone when selling. Obviously as a seller I/we can't control delivery.
I'm open to paying with money order or cashiers check, and taking the same. Risk obviously, but there's a risk in any online deal.

I'll tell you what's irritating, is these "businesses" adding this bullshit "insurance" on sales now and saying your shit out of luck if you don't buy it.

 

[MSElkHunter]

Make cash out of the cashier's check upon receipt, don't deposit it. "I have no recollection of why I requested that cashier's check..."

There are limits that apply for this. If you cash a cashiers check over a certain amount there is a record of it. The bank is required to do this.


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[roadrunner]

There are limits that apply for this. If you cash a cashiers check over a certain amount there is a record of it. The bank is required to do this.


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"I have no recollection of why I requested that cashier's check..."

 

[Duh]

Well, this is good news on this topic. I'm actually shocked the IRS made the changes.

Article HERE.


Eddie

I wonder if the delay is because they have a bunch of agents going through training right now? I’d imagine they want to hold off until they get said agents certified through the academy.

 

[Unckebob]

CPA here. This can seem scary, but it’s not a big deal. Generally speaking, your cost in the item will exceed what you sold it for. Assuming cost > selling price, you have no tax to pay (you still need to report it on your 1040, though).

Just so everyone is aware, this was already a risk. You technically owe tax if you sell an item for more than you paid for it. Let me assure you, if audited, the IRS will want to know why you have so many deposits into your account from PayPal (even if F&F).

Cashiers checks can seem like a better option, but there is still a paper trail and you have no protection as a buyer.

I agree it is not a big deal.

Just for clarity's sake, it was my understanding that it was net profit vs a profit on an individual item.

Hypothetical: I sold a rifle this month at a loss of $150. I sell some primers next month for a $150 profit. I have zero income and don't owe tax.

A I understand it, this will impact people like the guy who sold me a 3D printed part to change how my reloading press gets rid of primers. Although he isn't getting rich, he would make a net profit at the end of the year.

 

[Swamp Fox]

So let's say you inherit/get tired of an unknown/untraceable/not-easily-valued pile of stuff ...

You manage to get $5001 out of it through one or multiple third parties ...

I'm getting smoke signals that reporting is involved ....

I'm not even going to spin the scenario further, because this is complete BS even at this early point ...

No wonder that the tax system needs to be re-imagined.



Here's my report right here ... [grabbing motion]