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IRS: Internal Revenue Code (IRC) Section 6050W (Tax Year 2012)

Guest tn5rr2012

By Guest tn5rr2012
in Tips from Sellers

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Guest tn5rr2012

Guest tn5rr2012

Posted
Posted

These rules are for United States citizen so check paypal site for any other countries policies



Under the rule, IRC 6050w, PayPal is required to report gross payment volume from sales of goods or services received by PayPal users in the U.S. that:



Receive more than $20,000 in gross payment volume from sales of goods or services in a single year



AND



Receive more than 200 payments for goods or services in the same year.

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hotwebideas Enthusiast

hotwebideas

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Hey Ashley, this is great information, but I have been claiming my Paypal income for about 5 years now and I also write off my business expenses on Paypal.



One question: You mentioned $20,000 in gross payment or 200 payments per year, so if the seller does not reach either of those, do they still have to claim their Paypal income?



Bruce

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lparziale Enthusiast

lparziale

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You DO need to report income under $600, the person who paid you does not have to issue a 1099.



Here is the scenario - you do work for 1000 people in a year but they each only pay you $100. What you are saying is that the IRS will not expect you to pay tax on your $100,000 income. Um, think they want a piece of that action. Now, if you choose not to report it and no one else does, perhaps you get away with it. However, you are still expected to report and pay tax on ALL income. That is my understanding.

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Guest tn5rr2012

Guest tn5rr2012

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This was a basic fact if people were concerned about being issued a 1099 for 2012. Tax laws are complex and only your accountant or financial manager can answer your tax questions. Do not go by what anyone says on any forum about your taxes and what you should or should not do

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voiceoverwork Rookie

voiceoverwork

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Posted

I am not an accountant or a tax attorney, but have owned and run small businesses and paid state and federal taxes for over 45 years and employ the services of an accountant and two attorneys. As the owner of a small business, the CFO of another business, business consultant and instructor at a local college, and fiverr seller, I’m stupefied at people I meet running businesses with no knowledge of basic business laws and best practices. When selling something (service/product/advice/anything) on the open market, it is prudent to set up a DBA, an LLC or Incorporate. Generally speaking in most jurisdictions an oral, verbal or written sale agreement is legally enforceable by either party. Running a business and selling things is not an endeavor to be entered into halfheartedly or ill-prepared. Track all income/expenses whether 5 dollars or 5 million dollars. Use an order tracking system, an AR/AP system and retain all records. Wise business owners also carry liability insurance. When certain products/services are sold out of state, there may be a liability to collect & report sales tax for the state in which the product is delivered and a license to do business in the state may be required. ALWAYS consult a qualified accountant and attorney.

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