Paypal taxes

[scully]

Income is income. It doesn't matter if it is a business or not. For a sole proprietor, aka anybody that has a social security number, if you earn money that isn't reported on a standard W2 (or other reported statement) you are expected to report that income via other means. You can claim expenses, for example shipping or internet service if used for the sales, they are claimable expenses. That expense goes against your income, effectively negating that amount of money. This gets filled out in schedule C. If the IRS comes knocking, they will want you to prove your expenses though, so just making things up to negate income is not a good idea. I keep my receipts for five years in case of an audit. The hard part for me is tracking R&D time and expense, which is a big part of my business. A lot of companies throw gobs of money at R&D as a write off.

If you charge $20 but only get $17 from PayPal after fees, then you only earned $17. It doesn't matter what you charge, it matters what you receive.

If say you bought an item and used it for 3 years after paying taxes on it as well....Then you sell it lol how is that making a profit/income if you already paid $$ for it and your just getting some back :) I don't see it as profit more of recovery of funds spent already.  Unless they can prove I sold it for more than I bought it, that could be income !

[1976RD400C]

I noticed that if you transfer money from your bank account to your Paypal account it immediately is gone from your bank account but doesn't show up in the Paypal account for 4 business days. Add in a weekend and that's 6 days.   

[sav0r]

Income is income. It doesn't matter if it is a business or not. For a sole proprietor, aka anybody that has a social security number, if you earn money that isn't reported on a standard W2 (or other reported statement) you are expected to report that income via other means. You can claim expenses, for example shipping or internet service if used for the sales, they are claimable expenses. That expense goes against your income, effectively negating that amount of money. This gets filled out in schedule C. If the IRS comes knocking, they will want you to prove your expenses though, so just making things up to negate income is not a good idea. I keep my receipts for five years in case of an audit. The hard part for me is tracking R&D time and expense, which is a big part of my business. A lot of companies throw gobs of money at R&D as a write off.

If you charge $20 but only get $17 from PayPal after fees, then you only earned $17. It doesn't matter what you charge, it matters what you receive.

If say you bought an item and used it for 3 years after paying taxes on it as well....Then you sell it lol how is that making a profit/income if you already paid $$ for it and your just getting some back :) I don't see it as profit more of recovery of funds spent already.  Unless they can prove I sold it for more than I bought it, that could be income !

Most purchases are for depreciating assets, so it's not likely to gain value, but for that to be a profit you'd have to sell that item for more than you paid for it. Then the margin would be taxable. If you buy a junky RD350 for $500, put $1k into it, and sell it for $2500, you would owe the IRS on that $1000 in profit.

[soonerbillz]

Don't get me going on taxes...
At some point in the history of this country we lost sight of why we fought for our independence.
I'll say no more because I'll just piss people off.

[m in sc]

I'll say no more because I'll just piss people off.

Probably a good idea here. 

[RDryan]

Most purchases are for depreciating assets, so it's not likely to gain value, but for that to be a profit you'd have to sell that item for more than you paid for it. Then the margin would be taxable. If you buy a junky RD350 for $500, put $1k into it, and sell it for $2500, you would owe the IRS on that $1000 in profit.

OK I see the logic in this totally but I am just not sure how this works exactly. So if you sell the bike to a buddy and he pays you cash then the same reasoning applies only it's on the honor system for you to report this profit. Now on the other hand if you sell the bike thru an auction site and use paypal for payment then they will issue you some kinda 1099 with a record of the sale which assuming said record is also shared with IRS? Even though the sale was under the usual 10k threshold that is suppose to trigger a 1099 submission? I dunno, not wanting to justify tax evasion LOL but kinda curious at what point one should be looking over their shoulder more seriously.

I must contend though that this all seems like too many gov't resources to be chasing after some dude just looking to fix and flip a bike...and such a quagmire where maybe he's supporting a hobby that he's more in the hole. You know buy a bike lose money selling it then get a good deal and actually break even with it factoring in a previous bike lost money on.

[irk_miller]

Income is income. It doesn't matter if it is a business or not. For a sole proprietor, aka anybody that has a social security number, if you earn money that isn't reported on a standard W2 (or other reported statement) you are expected to report that income via other means. You can claim expenses, for example shipping or internet service if used for the sales, they are claimable expenses. That expense goes against your income, effectively negating that amount of money. This gets filled out in schedule C. If the IRS comes knocking, they will want you to prove your expenses though, so just making things up to negate income is not a good idea. I keep my receipts for five years in case of an audit. The hard part for me is tracking R&D time and expense, which is a big part of my business. A lot of companies throw gobs of money at R&D as a write off.

If you charge $20 but only get $17 from PayPal after fees, then you only earned $17. It doesn't matter what you charge, it matters what you receive.

If say you bought an item and used it for 3 years after paying taxes on it as well....Then you sell it lol how is that making a profit/income if you already paid $$ for it and your just getting some back :) I don't see it as profit more of recovery of funds spent already.  Unless they can prove I sold it for more than I bought it, that could be income !

Most purchases are for depreciating assets, so it's not likely to gain value, but for that to be a profit you'd have to sell that item for more than you paid for it. Then the margin would be taxable. If you buy a junky RD350 for $500, put $1k into it, and sell it for $2500, you would owe the IRS on that $1000 in profit.

You pay taxes on money over value, so if that RD has a NADA value in GOOD condition for $1200, then the tax is based on that value.  Since you paid $500 and invested $1000, that's a loss over value.  Your taxes are technically for the difference.  There's a lot of debate over whether classic cars and motorcycles are considered collectible, which would put them into Capital Gains territory.  So far, the Fed excludes them from being a collectible.  At $1000 profit, you barely have to report the income. 

[rodneya]

Seems to me most dont really understand the topic. It has nothing to do with how much you bought stuff for or how much more you sold it for, or business expenses or deductions.
Basically the threshold for paypal, venmo or cash app to report your earnings to the IRS has been lowered. Previously it was above 200 transactions or 20K in a year.
Now it is only $600 per year. This is part of the American Rescue Plan Act in response to Covid 19 costs.
Taxman will add total value of money received by individuals to your yearly earnings at tax time.

If you receive payment as friends and family, then it is not earnings, but the buyer has to protection from scammers.

[sav0r]

It is about that stuff though. Otherwise the IRS wouldn't be interested in the information.

[1976RD400C]

All is not lost. Here's how to handle Ebay and Paypal reporting your sales if you are not a business. Watch the first video. If you are a business, you are out of luck and the sales all have to be reported on your Schedule C (profit from a business) but you certainly can claim as deductions all the expenses to run your business and subtract that from your gross sales (income) and pay tax on just your profit. But being a business or self employed you must also pay a social security tax at 15% of the business profit along with the income tax due.

https://www.lawofficesofjasonknott.com/where-to-report-form-1099-k-on-your-tax-return/

[irk_miller]

Seems to me most dont really understand the topic. It has nothing to do with how much you bought stuff for or how much more you sold it for, or business expenses or deductions.
Basically the threshold for paypal, venmo or cash app to report your earnings to the IRS has been lowered. Previously it was above 200 transactions or 20K in a year.
Now it is only $600 per year. This is part of the American Rescue Plan Act in response to Covid 19 costs.
Taxman will add total value of money received by individuals to your yearly earnings at tax time.

If you receive payment as friends and family, then it is not earnings, but the buyer has to protection from scammers.

I think we understand the topic.  People have been utilizing friends and family since the beginning of Paypal.  It was always the way you avoided fees.  Now it's a way to avoid fees and taxes.  If I don't know, or have some connection, with a seller then I refuse to send it friends or family.  No one can require it.

[m in sc]

^ agreed. (but they sure try sometimes)