@TwoSides2aCoin said:
Well the idea that sales tax collected by eBay has any change in the bottom line from PayPal is questionable. eBay doesn't take the tax from you. It might increase the fees paid but the 1099k reflects what was left for us to report.
As pointed out in the first post, this year's 1099K from paypal, gross proceeds amount includes the taxes they collected from the buyer. It helps to know how much those taxes were (not on the 1099K) and to have proof of those non-income taxes in event of an audit. The gross reported to IRS is in reality reduced by the tax amount. Paypal grouped them together as gross proceeds. IRS sees it all as income without proof otherwise.
Some here prefer to get that tax dollar amount from the available PP spreadsheet, I prefer to take it from each details transaction page that becomes part of my records and transfer the amount to my own spreadsheet.
For reasons explained earlier I prefer working with printed copies of each transaction details page and my own customized spreadsheet. It's makes for better record keeping to attach the other costs (copy of purchase receipt, shipping receipt, ebay fees, grading fees, etc.) not included on PP's spreadsheet for that item right to the details pages. This provides all the records I need grouped together for each item. It avoids going to a PP spreadsheet for the partial info it provides and then having to go to other files for the rest of the costs that affect the net gain. My spreadsheet provides me with all the info I need and the transaction page, or invoice for each line item on the spreadsheet provides me with all the hard copies of what is on the spreadsheet.
Keep in mind that a Paypal 1099K reports only the income processed through paypal and not income from other sources of sales. Since this info (1099K) is never transferred directly to the tax return as is the 1099 MISC (interest income) it is simply a tool to let the taxpayer and the IRS know that somewhere on the tax return sales income totaling at least the 1099K amount better be reported. Purpose of the original post was to point out to the unaware that the gross reported on PP's 1099K includes the amount they took from buyers in the form of a sales tax. This amount is in reality not income for the person receiving the 1099K and it is best to have records that explain the discrepancy that gets reported on the tax return.
I love being the son of a CPA and having all the work done for me without having to pay. Well, I guess I pay in hugs.
And he is likely saying the same thing on his CPA forum about being the father of a pilot.
It took me 11 years after getting my license before my mom agreed to fly with me, and believe you me, she was pretty reluctant to go. She's definitely not bragging about free aerial tours
"1099K does not have a separate block to report sales taxes collected and reported."
How would having a separate block on the 1099K to report that info help you with your spreadsheet?
In my case, it would not and I wouldn't need it. My spread sheet deals with individual sales line items that include sales taxes collected by PP and keeps a running total at the bottom. This running total for sales taxes collected is what I subtract from the 1099K to know the actual gross income.
A separate block on the 1099 for sales taxes collected (needed only if Paypal is including the sales taxes in what it reports as gross income, as is the case) would provide the 1099k recipient and the IRS with the number that actually reduces the reported gross. Otherwise the gross reported by the 1099K is assumed by both the IRS and the unaware recipient to be actual income received by the seller. Those who have read the original post are now aware of this discrepancy.
"1099K does not have a separate block to report sales taxes collected and reported."
How would having a separate block on the 1099K to report that info help you with your spreadsheet?
In my case, it would not and I wouldn't need it. My spread sheet deals with individual sales line items that include sales taxes collected by PP and keeps a running total at the bottom. This running total for sales taxes collected is what I subtract from the 1099K to know the actual gross income.
A separate block on the 1099 for sales taxes collected (needed only if Paypal is including the sales taxes in what it reports as gross income, as is the case) would provide the 1099k recipient and the IRS with the number that actually reduces the reported gross. Otherwise the gross reported by the 1099K is assumed by both the IRS and the unaware recipient to be actual income received by the seller. Those who have read the original post are now aware of this discrepancy.
The amount on the 1099K IS THE GROSS income of the seller. Everything else is deductions: shipping, taxes paid, eBay fees, etc.
The amount on the 1099K IS THE GROSS income of the seller. Everything else is deductions: shipping, taxes paid, eBay fees, etc.
The only thing the 1099K gross includes besides sales income is the taxes collected. Everything else you need for tax purposes is in your records and PARTIALLY on the PP spreadsheet. Because of the PARTIALLY, I choose to keep my own complete spreadsheet.
The amount on the 1099K IS THE GROSS income of the seller. Everything else is deductions: shipping, taxes paid, eBay fees, etc.
The only thing the 1099K gross includes besides sales income is the taxes collected. Everything else you need for tax purposes is in your records and PARTIALLY on the PP spreadsheet. Because of the PARTIALLY, I choose to keep my own complete spreadsheet.
@derryb said:
Everything else you need for tax purposes is in your records and PARTIALLY on the PP spreadsheet.
That's hardly PayPal's fault. Unless somebody else has a record of what you paid for your coins, you're the only one who has access to all costs necessary for tax purposes.
@derryb said:
Everything else you need for tax purposes is in your records and PARTIALLY on the PP spreadsheet.
That's hardly PayPal's fault. Unless somebody else has a record of what you paid for your coins, you're the only one who has access to all costs necessary for tax purposes.
I think this all comes back to everyone's obsession/frustration with the brand new sales tax.
The amount on the 1099K IS THE GROSS income of the seller. Everything else is deductions: shipping, taxes paid, eBay fees, etc.
The only thing the 1099K gross includes besides sales income is the taxes collected. Everything else you need for tax purposes is in your records and PARTIALLY on the PP spreadsheet. Because of the PARTIALLY, I choose to keep my own complete spreadsheet.
There's shipping & handling, VAT, eBay fees, etc.
and those are not included in the 1099K gross. When doing taxes you have to get that info elsewhere - why it is best to keep good records.
@derryb said:
Everything else you need for tax purposes is in your records and PARTIALLY on the PP spreadsheet.
That's hardly PayPal's fault. Unless somebody else has a record of what you paid for your coins, you're the only one who has access to all costs necessary for tax purposes.
I'm not faulting paypal for know all of my expenses, how could they? I am faulting them for incorrectly reporting gross income on their 1099K.
I'm simply pointing out why there is a need to keep detailed records on each purchase and each sale. Paypal records are only part of the equation and we now know their 1099K is not accurate in the way it is reporting gross income.
@jmlanzaf said:
I think this all comes back to everyone's obsession/frustration with the brand new sales tax.
"Brand new" as in "It's always been there but now I have to deal with it"?
Yep.
I have no problem with the sales tax. I simply pointed out in the OP that there is a problem with the BRAND NEW format of the 1099K that now is incorrect in the way in reports gross income. Learn and use this information or disregard it, I could care less. I only provided it for those that appreciate the insight. The complainers and side trackers can eat dirt.
@derryb said:
I simply pointed out in the OP that there is a problem with the brand new 1099K that now is incorrect in the way in reports gross income.
The amount on the 1099K IS THE GROSS income of the seller. Everything else is deductions: shipping, taxes paid, eBay fees, etc.
The only thing the 1099K gross includes besides sales income is the taxes collected. Everything else you need for tax purposes is in your records and PARTIALLY on the PP spreadsheet. Because of the PARTIALLY, I choose to keep my own complete spreadsheet.
There's shipping & handling, VAT, eBay fees, etc.
and those are not included in the 1099K gross. When doing taxes you have to get that info elsewhere - why it is best to keep good records.
They are in the 1099K gross because it is the gross. It simply represents the total amount of payments made to you.
You can then deduct them as expenses. The point is that sales tax is part of your gross receipts like all of those things. You're just not used to dealing with the sales tax because you didn't have to in the past. For me, it was always something I had to deal with. I don't see any difference between this year and the last 10 or 12 years since PayPal started issuing 1099s.
The amount on the 1099K IS THE GROSS income of the seller. Everything else is deductions: shipping, taxes paid, eBay fees, etc.
The only thing the 1099K gross includes besides sales income is the taxes collected. Everything else you need for tax purposes is in your records and PARTIALLY on the PP spreadsheet. Because of the PARTIALLY, I choose to keep my own complete spreadsheet.
There's shipping & handling, VAT, eBay fees, etc.
and those are not included in the 1099K gross. When doing taxes you have to get that info elsewhere - why it is best to keep good records.
They are in the 1099K gross because it is the gross. It simply represents the total amount of payments made to you.
You can then deduct them as expenses. The point is that sales tax is part of your gross receipts like all of those things. You're just not used to dealing with the sales tax because you didn't have to in the past. For me, it was always something I had to deal with. I don't see any difference between this year and the last 10 or 12 years since PayPal started issuing 1099s.
The 1099K gross includes your sales price and the taxes collected by ebay. It does not include your expenses. Tell me how PP knows what I just charged on my credit card at the post office when I shipped the item. Tell me how PP knows what my ebay fee for the item was. Tell me how PP knows about any related tax deductible expense that was not paid for with PP.
There is a MAJOR difference with PP's 1099K this year - the reported gross income of the account holder for the first time includes taxes collected and remitted by PP. This is not income to the account holder as reported on the 1099K.
The reason this is so hard for some here to understand is that they are focusing on the messenger and not focusing on the message. The facts have been presented in the first post for those that want them. You're welcome.
There are at least two posters here who have shown the same behavior in other threads. I'll now turn the discussion completely over to them so they can argue with each other.
@derryb said:
There is a MAJOR difference with PP's 1099K this year - the reported gross income of the account holder for the first time includes taxes collected and remitted by PP. This is not income to the account holder as reported on the 1099K.
This is not the first time. PayPal included sales taxes in 2019, too. The biggest difference I can see is that PayPal moved the sales tax total out of the Payment Type column into its own column, making it easier for sellers to calculate the total.
@derryb said:
There is a MAJOR difference with PP's 1099K this year - the reported gross income of the account holder for the first time includes taxes collected and remitted by PP. This is not income to the account holder as reported on the 1099K.
This is not the first time. PayPal included sales taxes in 2019, too. The biggest difference I can see is that PayPal moved the sales tax total out of the Payment Type column into its own column, making it easier for sellers to calculate the total.
There is no payment type column on the 1099K. My post is about the 1099K and all you can focus on is their spreadsheet. While it contains some helpful tax information to the taxpayer it is not a tax document. It does not go to the IRS. What does go to the IRS is a 1099K that provides an incorrect gross income. If you want to be a meaningful part of a discussion you need to learn to focus on what is being discussed.
The amount on the 1099K IS THE GROSS income of the seller. Everything else is deductions: shipping, taxes paid, eBay fees, etc.
The only thing the 1099K gross includes besides sales income is the taxes collected. Everything else you need for tax purposes is in your records and PARTIALLY on the PP spreadsheet. Because of the PARTIALLY, I choose to keep my own complete spreadsheet.
There's shipping & handling, VAT, eBay fees, etc.
and those are not included in the 1099K gross. When doing taxes you have to get that info elsewhere - why it is best to keep good records.
They are in the 1099K gross because it is the gross. It simply represents the total amount of payments made to you.
You can then deduct them as expenses. The point is that sales tax is part of your gross receipts like all of those things. You're just not used to dealing with the sales tax because you didn't have to in the past. For me, it was always something I had to deal with. I don't see any difference between this year and the last 10 or 12 years since PayPal started issuing 1099s.
The 1099K gross includes your sales price and the taxes collected by ebay. It does not include your expenses. Tell me how PP knows what I just charged on my credit card at the post office when I shipped the item. Tell me how PP knows what my ebay fee for the item was. Tell me how PP knows about any related tax deductible expense that was not paid for with PP.
There is a MAJOR difference with PP's 1099K this year - the reported gross income of the account holder for the first time includes taxes collected and remitted by PP. This is not income to the account holder as reported on the 1099K.
The reason this is so hard for some here to understand is that they are focusing on the messenger and not focusing on the message. The facts have been presented in the first post for those that want them. You're welcome.
There are at least two posters here who have shown the same behavior in other threads. I'll now turn the discussion completely over to them so they can argue with each other.
You're not listening. It includes everything that YOU WERE PAID via eBay regardless of whether you actually saw the money or not. Shipping and handling, PAID BY THE BUYER, for example. VAT paid by the buyer. eBay fees are in there because, as you point out, PayPal doesn't know what they are and so can't subtract it. H It is up to you to subtract the deductions from the GROSS to get the ADJUSTED GROSS and, ultimately, the NET.
How is sales tax any different than PayPal fees? They are both part of your gross income but both represent money you don't actually see because they are, simultaneously, both a credit and a debit.
PayPal/eBay was also collecting sales tax in 2019 although they were treating it differently because eBay was treating it differently. They treated it as one transaction and a payment vs. two transactions, if I recall.
The amount on the 1099K IS THE GROSS income of the seller. Everything else is deductions: shipping, taxes paid, eBay fees, etc.
The only thing the 1099K gross includes besides sales income is the taxes collected. Everything else you need for tax purposes is in your records and PARTIALLY on the PP spreadsheet. Because of the PARTIALLY, I choose to keep my own complete spreadsheet.
There's shipping & handling, VAT, eBay fees, etc.
and those are not included in the 1099K gross. When doing taxes you have to get that info elsewhere - why it is best to keep good records.
They are in the 1099K gross because it is the gross. It simply represents the total amount of payments made to you.
You can then deduct them as expenses. The point is that sales tax is part of your gross receipts like all of those things. You're just not used to dealing with the sales tax because you didn't have to in the past. For me, it was always something I had to deal with. I don't see any difference between this year and the last 10 or 12 years since PayPal started issuing 1099s.
The 1099K gross includes your sales price and the taxes collected by ebay. It does not include your expenses. Tell me how PP knows what I just charged on my credit card at the post office when I shipped the item. Tell me how PP knows what my ebay fee for the item was. Tell me how PP knows about any related tax deductible expense that was not paid for with PP.
There is a MAJOR difference with PP's 1099K this year - the reported gross income of the account holder for the first time includes taxes collected and remitted by PP. This is not income to the account holder as reported on the 1099K.
The reason this is so hard for some here to understand is that they are focusing on the messenger and not focusing on the message. The facts have been presented in the first post for those that want them. You're welcome.
There are at least two posters here who have shown the same behavior in other threads. I'll now turn the discussion completely over to them so they can argue with each other.
This is laughable. You take a shot at these messengers and accuse us of focusing on the messenger and not the message. Neither of us has said a word about you personally. We've been talking about PayPal's 1099 form which has only a minor recording difference from 2019 which is, I believe, driven by the change in the way eBay treated sales tax collection.
@derryb said:
There is a MAJOR difference with PP's 1099K this year - the reported gross income of the account holder for the first time includes taxes collected and remitted by PP. This is not income to the account holder as reported on the 1099K.
This is not the first time. PayPal included sales taxes in 2019, too. The biggest difference I can see is that PayPal moved the sales tax total out of the Payment Type column into its own column, making it easier for sellers to calculate the total.
There is no payment type column on the 1099K. My post is about the 1099K and all you can focus on is their spreadsheet. While it contains some helpful tax information to the taxpayer it is not a tax document. It does not go to the IRS. What does go to the IRS is a 1099K that provides an incorrect gross income. If you want to be a meaningful part of a discussion you need to learn to focus on what is being discussed.
It is NOT an incorrect gross. If you have a store, all your transactions have the sales tax as part of the gross receipts. Because eBay remits to the States, it is a pass through payment. In this case, the buyer pays the sales tax and ebay collects the sales tax to remit to the State. It sort of passes through you even though you never collect it. It's just another expense, like shipping or PayPal fees that would be deducted from your gross receipts to get to your net income.
@derryb said:
My post is about the 1099K and all you can focus on is their spreadsheet.
You're not the only one here. Other posters have expressed interest in accessing their PayPal transaction history. The thread doesn't belong to you and if there are comments you're not interested in, you're free to skip past them.
@derryb said:
My post is about the 1099K and all you can focus on is their spreadsheet.
You're not the only one here. Other posters have expressed interest in accessing their PayPal transaction history. The thread doesn't belong to you and if there are comments you're not interested in, you're free to skip past them.
I actually use the PayPal spreadsheet to do my income taxes and, in years past, to do my NY State Sales tax. It allows me to sort the transactions into categories. I can easily determine my deduction for eBay fees, since those get charged through PayPal, as well as my deduction for PayPal fees. Since I use almost exclusively eBay labels, it also allows me to easily determine my deduction for shipping expenses.
It is NOT an incorrect gross. If you have a store, all your transactions have the sales tax as part of the gross receipts. Because eBay remits to the States, it is a pass through payment. In this case, the buyer pays the sales tax and ebay collects the sales tax to remit to the State. It sort of passes through you even though you never collect it. It's just another expense, like shipping or PayPal fees that would be deducted from your gross receipts to get to your net income.
I have verified that state sales tax paid by the buyer is the only item included with the sellers sales in the gross reported on the 1099K. Being the first year for this it is important that sellers know this is why their total sales number does not match the "gross" number on their 1099K, and is why I brought it to their attention in the OP.
If you are correct and this pass through can be treated as an expense by the seller on his 1040, then hopefully this thread will bring this matter to his attention. One thing he needs to know is that he no longer reports the sale amount as income. He should be reporting the gross amount for each sale (shown on the individual transaction details page for each transaction and as a total on the 1099K) as income and then reduce it with a state sales tax expense. Sound correct?
It is NOT an incorrect gross. If you have a store, all your transactions have the sales tax as part of the gross receipts. Because eBay remits to the States, it is a pass through payment. In this case, the buyer pays the sales tax and ebay collects the sales tax to remit to the State. It sort of passes through you even though you never collect it. It's just another expense, like shipping or PayPal fees that would be deducted from your gross receipts to get to your net income.
I have verified that state sales tax paid by the buyer is the only item included with the sellers sales in the gross reported on the 1099K. Being the first year for this it is important that sellers know this is why their total sales number does not match the "gross" number on their 1099K, and is why I brought it to their attention in the OP.
Normally a tax filer would reconcile the difference in the reported gross and what he shows as net income on his 1040 by reducing the gross with his expensese. However, this "pass through" sales tax is not a seller expense and reporting it as such would be an error.
That is incorrect. Sales tax collected is part of gross receipts and deducted on Schedule C line 23
@derryb said:
My post is about the 1099K and all you can focus on is their spreadsheet.
You're not the only one here. Other posters have expressed interest in accessing their PayPal transaction history. The thread doesn't belong to you and if there are comments you're not interested in, you're free to skip past them.
Apology, let me clarify: when addressing a concern about the 1099K do not confuse the limited information it provides with the more extensive information that the spreadsheet provides. I have no problem with any thread discussing related issues, just don't get them confused with each other.
I am clear on the claiming of expenses. My concern is claiming an expense that I did not pay. As a "pass through" in my paypal account are you telling me that the state sales tax processed by paypal becomes my expense?
I am clear on the claiming of expenses. My concern is claiming an expense that I did not pay. As a "pass through" in my paypal account are you telling me that the state sales tax processed by ebay becomes my expense?
I'm not an accountant, but if they made it part of your gross receipts (1099-K) then it also becomes part of your expense. I think this is then clearer to the IRS without needing to justify the potential mismatch in your Schedule C line 1 and the 1099-K.
I've always done it that way. It is sort of necessary because if you file your own sales tax forms, the state lets you keep a fraction of a percent of the sales tax collected.
You did "pay" it in the sense that eBay/PayPal paid it on your behalf. I really don't see it as different from the PayPal fees which is an expense that PayPal also "pays" on your behalf with money that is effectively a pass-through as you don't ever get that money handed to you.
I too, have suddenly found myself being listed as a small business with a 1099k after selling a $1400 coin. I’m getting an itemized list of the grading fees, safety deposit box rentals, gasoline, shipping costs, insurance, etc..
"I'll split the atom! I am the fifth dimension! I am the eighth wonder of the world!" -Gef the talking mongoose.
I too, have suddenly found myself being listed as a small business with a 1099k after selling a $1400 coin. I’m getting an itemized list of the grading fees, safety deposit box rentals, gasoline, shipping costs, insurance, etc..
"I'll split the atom! I am the fifth dimension! I am the eighth wonder of the world!" -Gef the talking mongoose.
Comments
As pointed out in the first post, this year's 1099K from paypal, gross proceeds amount includes the taxes they collected from the buyer. It helps to know how much those taxes were (not on the 1099K) and to have proof of those non-income taxes in event of an audit. The gross reported to IRS is in reality reduced by the tax amount. Paypal grouped them together as gross proceeds. IRS sees it all as income without proof otherwise.
Some here prefer to get that tax dollar amount from the available PP spreadsheet, I prefer to take it from each details transaction page that becomes part of my records and transfer the amount to my own spreadsheet.
And he is likely saying the same thing on his CPA forum about being the father of a pilot.
If you're audited and don't bother with printing out a report of your PayPal transactions, yeah- it's income.
For reasons explained earlier I prefer working with printed copies of each transaction details page and my own customized spreadsheet. It's makes for better record keeping to attach the other costs (copy of purchase receipt, shipping receipt, ebay fees, grading fees, etc.) not included on PP's spreadsheet for that item right to the details pages. This provides all the records I need grouped together for each item. It avoids going to a PP spreadsheet for the partial info it provides and then having to go to other files for the rest of the costs that affect the net gain. My spreadsheet provides me with all the info I need and the transaction page, or invoice for each line item on the spreadsheet provides me with all the hard copies of what is on the spreadsheet.
Keep in mind that a Paypal 1099K reports only the income processed through paypal and not income from other sources of sales. Since this info (1099K) is never transferred directly to the tax return as is the 1099 MISC (interest income) it is simply a tool to let the taxpayer and the IRS know that somewhere on the tax return sales income totaling at least the 1099K amount better be reported. Purpose of the original post was to point out to the unaware that the gross reported on PP's 1099K includes the amount they took from buyers in the form of a sales tax. This amount is in reality not income for the person receiving the 1099K and it is best to have records that explain the discrepancy that gets reported on the tax return.
Your initial concern:
"1099K does not have a separate block to report sales taxes collected and reported."
How would having a separate block on the 1099K to report that info help you with your spreadsheet?
It took me 11 years after getting my license before my mom agreed to fly with me, and believe you me, she was pretty reluctant to go. She's definitely not bragging about free aerial tours
In my case, it would not and I wouldn't need it. My spread sheet deals with individual sales line items that include sales taxes collected by PP and keeps a running total at the bottom. This running total for sales taxes collected is what I subtract from the 1099K to know the actual gross income.
A separate block on the 1099 for sales taxes collected (needed only if Paypal is including the sales taxes in what it reports as gross income, as is the case) would provide the 1099k recipient and the IRS with the number that actually reduces the reported gross. Otherwise the gross reported by the 1099K is assumed by both the IRS and the unaware recipient to be actual income received by the seller. Those who have read the original post are now aware of this discrepancy.
you have 2. I have 1.> @derryb said:
The amount on the 1099K IS THE GROSS income of the seller. Everything else is deductions: shipping, taxes paid, eBay fees, etc.
The only thing the 1099K gross includes besides sales income is the taxes collected. Everything else you need for tax purposes is in your records and PARTIALLY on the PP spreadsheet. Because of the PARTIALLY, I choose to keep my own complete spreadsheet.
Standard protocol. Everyone should pay taxes. If you are attempting to cheat the system you deserve to be in prison. SMPR!
There's shipping & handling, VAT, eBay fees, etc.
That's hardly PayPal's fault. Unless somebody else has a record of what you paid for your coins, you're the only one who has access to all costs necessary for tax purposes.
I think this all comes back to everyone's obsession/frustration with the brand new sales tax.
"Brand new" as in "It's always been there but now I have to deal with it"?
Yep.
and those are not included in the 1099K gross. When doing taxes you have to get that info elsewhere - why it is best to keep good records.
I'm not faulting paypal for know all of my expenses, how could they? I am faulting them for incorrectly reporting gross income on their 1099K.
I'm simply pointing out why there is a need to keep detailed records on each purchase and each sale. Paypal records are only part of the equation and we now know their 1099K is not accurate in the way it is reporting gross income.
I have no problem with the sales tax. I simply pointed out in the OP that there is a problem with the BRAND NEW format of the 1099K that now is incorrect in the way in reports gross income. Learn and use this information or disregard it, I could care less. I only provided it for those that appreciate the insight. The complainers and side trackers can eat dirt.
derryb is.
They are in the 1099K gross because it is the gross. It simply represents the total amount of payments made to you.
You can then deduct them as expenses. The point is that sales tax is part of your gross receipts like all of those things. You're just not used to dealing with the sales tax because you didn't have to in the past. For me, it was always something I had to deal with. I don't see any difference between this year and the last 10 or 12 years since PayPal started issuing 1099s.
The 1099K gross includes your sales price and the taxes collected by ebay. It does not include your expenses. Tell me how PP knows what I just charged on my credit card at the post office when I shipped the item. Tell me how PP knows what my ebay fee for the item was. Tell me how PP knows about any related tax deductible expense that was not paid for with PP.
There is a MAJOR difference with PP's 1099K this year - the reported gross income of the account holder for the first time includes taxes collected and remitted by PP. This is not income to the account holder as reported on the 1099K.
The reason this is so hard for some here to understand is that they are focusing on the messenger and not focusing on the message. The facts have been presented in the first post for those that want them. You're welcome.
There are at least two posters here who have shown the same behavior in other threads. I'll now turn the discussion completely over to them so they can argue with each other.
@derryb thank you for the info! It is a helpful observation.
This is not the first time. PayPal included sales taxes in 2019, too. The biggest difference I can see is that PayPal moved the sales tax total out of the Payment Type column into its own column, making it easier for sellers to calculate the total.
There is no payment type column on the 1099K. My post is about the 1099K and all you can focus on is their spreadsheet. While it contains some helpful tax information to the taxpayer it is not a tax document. It does not go to the IRS. What does go to the IRS is a 1099K that provides an incorrect gross income. If you want to be a meaningful part of a discussion you need to learn to focus on what is being discussed.
To those just visiting the thread, everything you need to know is in the first post.
You're not listening. It includes everything that YOU WERE PAID via eBay regardless of whether you actually saw the money or not. Shipping and handling, PAID BY THE BUYER, for example. VAT paid by the buyer. eBay fees are in there because, as you point out, PayPal doesn't know what they are and so can't subtract it. H It is up to you to subtract the deductions from the GROSS to get the ADJUSTED GROSS and, ultimately, the NET.
How is sales tax any different than PayPal fees? They are both part of your gross income but both represent money you don't actually see because they are, simultaneously, both a credit and a debit.
PayPal/eBay was also collecting sales tax in 2019 although they were treating it differently because eBay was treating it differently. They treated it as one transaction and a payment vs. two transactions, if I recall.
This is laughable. You take a shot at these messengers and accuse us of focusing on the messenger and not the message. Neither of us has said a word about you personally. We've been talking about PayPal's 1099 form which has only a minor recording difference from 2019 which is, I believe, driven by the change in the way eBay treated sales tax collection.
It is NOT an incorrect gross. If you have a store, all your transactions have the sales tax as part of the gross receipts. Because eBay remits to the States, it is a pass through payment. In this case, the buyer pays the sales tax and ebay collects the sales tax to remit to the State. It sort of passes through you even though you never collect it. It's just another expense, like shipping or PayPal fees that would be deducted from your gross receipts to get to your net income.
You're not the only one here. Other posters have expressed interest in accessing their PayPal transaction history. The thread doesn't belong to you and if there are comments you're not interested in, you're free to skip past them.
I actually use the PayPal spreadsheet to do my income taxes and, in years past, to do my NY State Sales tax. It allows me to sort the transactions into categories. I can easily determine my deduction for eBay fees, since those get charged through PayPal, as well as my deduction for PayPal fees. Since I use almost exclusively eBay labels, it also allows me to easily determine my deduction for shipping expenses.
I have verified that state sales tax paid by the buyer is the only item included with the sellers sales in the gross reported on the 1099K. Being the first year for this it is important that sellers know this is why their total sales number does not match the "gross" number on their 1099K, and is why I brought it to their attention in the OP.
If you are correct and this pass through can be treated as an expense by the seller on his 1040, then hopefully this thread will bring this matter to his attention. One thing he needs to know is that he no longer reports the sale amount as income. He should be reporting the gross amount for each sale (shown on the individual transaction details page for each transaction and as a total on the 1099K) as income and then reduce it with a state sales tax expense. Sound correct?
That is incorrect. Sales tax collected is part of gross receipts and deducted on Schedule C line 23
https://smallbusiness.chron.com/report-commercial-sales-tax-collected-form-1040-65992.html
https://www.irs.gov/pub/irs-pdf/f1040sc.pdf
https://ttlc.intuit.com/community/taxes/discussion/where-do-i-deduct-business-sales-tax-collected-and-subsequently-paid-to-our-state-gov-that-was/00/453743
Apology, let me clarify: when addressing a concern about the 1099K do not confuse the limited information it provides with the more extensive information that the spreadsheet provides. I have no problem with any thread discussing related issues, just don't get them confused with each other.
I am clear on the claiming of expenses. My concern is claiming an expense that I did not pay. As a "pass through" in my paypal account are you telling me that the state sales tax processed by paypal becomes my expense?
I'm not an accountant, but if they made it part of your gross receipts (1099-K) then it also becomes part of your expense. I think this is then clearer to the IRS without needing to justify the potential mismatch in your Schedule C line 1 and the 1099-K.
I've always done it that way. It is sort of necessary because if you file your own sales tax forms, the state lets you keep a fraction of a percent of the sales tax collected.
You did "pay" it in the sense that eBay/PayPal paid it on your behalf. I really don't see it as different from the PayPal fees which is an expense that PayPal also "pays" on your behalf with money that is effectively a pass-through as you don't ever get that money handed to you.
Took a while but now I'm clear. thanks for your patience.
OP updated with what I have learned.
I too, have suddenly found myself being listed as a small business with a 1099k after selling a $1400 coin. I’m getting an itemized list of the grading fees, safety deposit box rentals, gasoline, shipping costs, insurance, etc..
I too, have suddenly found myself being listed as a small business with a 1099k after selling a $1400 coin. I’m getting an itemized list of the grading fees, safety deposit box rentals, gasoline, shipping costs, insurance, etc..
In the end , more reporting means less fun.