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


#1

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.


#2

The US tax laws are way too complicated. Gives me a headache and a light wallet.


#3

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


#4

Bruce, I am betting the IRS says YES. All income should be claimed, regardless of if it is reported.


#5

Reply to @lparziale: All income over $600 for the given income source. You don’t need to claim anything under $600.00. I made over that on Fiverr, so there ya go.


#6

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.


#7

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


#8

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.


#9

Finally an advantage of been British!


#10

Reply to @oranjewebdesign: Haha, and the accent that people always get worked up about in America.


#11

Reply to @nrallstars: I don’t know what you mean! Oranjegirl being an American, claims that she didn’t even like my accent to start with.



Maybe I need to make it more Jame Bond!


#12

Reply to @oranjewebdesign: Haha, totally. I don’t know I hear a lot of American females that think it’s “hot”.


#13

Reply to @tn5rr2012: Agree, you should always consult your CPA/tax attorney.


#14

Well I am not from US but my Paypal is US based (Payoneer). What will happen in such case? I don’t know anything about tax etc. :confused:


#15

I’m curious how is this applied in Romania…


#16

Finally an advantage of been British!


#17

Reply to @oranjewebdesign: Haha, and the accent that people always get worked up about in America.


#18

Reply to @nrallstars: I don’t know what you mean! Oranjegirl being an American, claims that she didn’t even like my accent to start with.



Maybe I need to make it more Jame Bond!


#19

Reply to @oranjewebdesign: Haha, totally. I don’t know I hear a lot of American females that think it’s “hot”.


#20

Reply to @tn5rr2012: Agree, you should always consult your CPA/tax attorney.