Did anybody else get the email from Paypal about a Tax ID number?

frankhardy

I just got an email from Paypal wanting a Tax ID number. Then, when I log on, there is a message at the top wanting it. Anybody else get the message? Do we have to give it if we don't meet the $20 grand in payments and 200 payments?

bobbyw8469

I did not get it...........very scary.....big brother is wanting YOU to make up for Bank of America/GE/Ford, et al's shortcomings.....

grote15

I thought paypal had your SSN or EIN on file already if you received more than $500 a month..

cpamike

Shane,

Paypal shouldn't be asking for your Tax ID via email. Call them up and make sure the request is legit.

cone10

It's legit I got one too. You must of went over the min requirements or are on your way. I believe its 20,000 in gross payments and 200 payments received. If selling cards keep good records of what you paid. The good old days of Paypal are over

jlzinck

I got the same e-mail yesterday. It probably kicks in the month after you pass one of the thresholds. I got my 200th payment received in July and am at 226 now.
I only have 9K in receipts though so there is no way I will go over 20K.

It does say if you do not provide the Tax ID number you account may be restricted from receiving payments.

So I will see what happens in the next few sales and it they stop me from accepting payments.

bobbyw8469

<< <i>The good old days of Paypal are over >>



Exactly! If you buy a card for $1,800 and sell it for $2,000, they don't care that you paid $1,800 for the card - they care about the $2,000 you recevied!! Keep records of EVERYTHING!!! EVERY STINKING LITTLE THING!! You can deduct part of your mortgage/rent, supplies, PO Box, etc.

mknez

Looks like some sellers will be going back to the good old days of checks and money orders, especially for non eBay deals.

fergie23

Here is the IRS guideline for IRS business deductions. For more information on the home office deduction. The key for deducting some portion of your mortgage/rent is that the area of the home must be used exclusively for your business. More information on the business use of home.
My accountant indicated that the home office deduction is one of the most scrutinized deductions during an audit and the expense is almost always challenged by the IRS auditor.

Cheers,

Robb

frankhardy

Does "gift" payments count toward that?

Edited to say: I looked it up and I don't think that they do. Personal payments are not counted.



How can I find out how much in payments I have received? I have looked on Paypal, and without adding up each individual payment, I don't know how to find out.

thedutymon

<< <i>Here is the IRS guideline for IRS business deductions. For more information on the home office deduction. The key for deducting some portion of your mortgage/rent is that the area of the home must be used exclusively for your business. More information on the business use of home.
My accountant indicated that the home office deduction is one of the most scrutinized deductions during an audit and the expense is almost always challenged by the IRS auditor.

Cheers,

Robb >>



Morning,

Having gone thru this years ago (And will be having to do this again starting this year because of PayPal reporting), a Word of Advice for all you: DO NOT bother taking the pittance of a deduction you would get for claiming your portion of your house as a Home Office deduction, it all seems good and fair at the time you do it but the complications if you sell your house 3, 5, 10 years down the road and then have to have an accountant do the figuring of that as it relates to your Capital Gains/Profit on the House is a Nightmare....I MEAN FRICKIN' Nightmare !! I sold a Rental that had been used as a Home Business deduction primary residence before it became a Rental and the Bottom line is I Paid the accountant more than I ever got for the deduction to sort through my taxes for that year...10 Fold !!!!

Just my 2 cents !!

Neil

frankhardy

I just answered my own question. You find it in the monthly sales report section.

Bad news for me - I just went over the $20,000 threshold. But it looks like they counted personal "gift" payments. I have been selling a ton of autographs on sportscollectors.net. I have been requiring a "Gift" payment (which, I know, could get me a slap on the wrist). Not sure why they are counting gift payments as sales when they say that personal payments will not count toward the $20,000 mark.

gemint

I started a thread a short while ago on a similar topic and includes some responses with answers you're looking for. It looks like the PP gift payments would be scrutinized. Also, I wonder if you close the business a year before you sell the house and no longer claim it as a deduction if that would clear the issues Neil highlighted. I live in CA, so that deduction could be substantial and probably wipe out any gains and then some.

Edited to add the link to the previous topic.

Tax Questions

tigerdean

I believe you can legally gift someone up to $13,000.00 a year if I am not mistaken so this should not count. Where did the number of $500 a month come from? Do I need to limit my sales to $500 a month??

storm888

"...Also, I wonder if you close the business a year before you sell the house and no longer claim it as a deduction if that would clear the issues Neil highlighted...."

////////////////////////////////////////////

Nope.


................................................

On the gift issue:

Scamming PayPal out of their fees on the "gift loophole" is a
totally dfferent thing than using the paperwork from those scams
to evade the rules of the Service.

Lying to PP is one thing; relying on the paperwork detailing those
lies to burn the Service is a serious matter that has a 50/50
chance of ending VERY badly for those who do it.

thedutymon

<< <i>I believe you can legally gift someone up to $13,000.00 a year if I am not mistaken so this should not count. Where did the number of $500 a month come from? Do I need to limit my sales to $500 a month?? >>



Big Big Question (About the $13K, as I thought this was IRS regulation as well, so how can Paypal add a Gift to your Sales numbers Legally??) !! Where did the $500 number come from?

Neil

thedutymon

<< <i>"...Also, I wonder if you close the business a year before you sell the house and no longer claim it as a deduction if that would clear the issues Neil highlighted...."

////////////////////////////////////////////

Nope.


................................................

>>



Storm is correct, and I speak from experience, I had stopped claiming my House for My Comic Book business several years before I sold the house....It still was a Accounting mess and not worth it, cost me more to pay the accountant to Figure it all out "averaging over the prevoius years" and how it pertained to my Capitol Gains, and other CPA talk, I don't remember it all but cost me way more than I ever saved.

Neil

cpamike

<< <i>

<< <i>Here is the IRS guideline for IRS business deductions. For more information on the home office deduction. The key for deducting some portion of your mortgage/rent is that the area of the home must be used exclusively for your business. More information on the business use of home.
My accountant indicated that the home office deduction is one of the most scrutinized deductions during an audit and the expense is almost always challenged by the IRS auditor.

Cheers,

Robb >>



Morning,

Having gone thru this years ago (And will be having to do this again starting this year because of PayPal reporting), a Word of Advice for all you: DO NOT bother taking the pittance of a deduction you would get for claiming your portion of your house as a Home Office deduction, it all seems good and fair at the time you do it but the complications if you sell your house 3, 5, 10 years down the road and then have to have an accountant do the figuring of that as it relates to your Capital Gains/Profit on the House is a Nightmare....I MEAN FRICKIN' Nightmare !! I sold a Rental that had been used as a Home Business deduction primary residence before it became a Rental and the Bottom line is I Paid the accountant more than I ever got for the deduction to sort through my taxes for that year...10 Fold !!!!

Just my 2 cents !!

Neil >>



Neil, I hope you don't mind me quoting you, but you said it all. Taking the home office deduction is a pain when you turn around to sell your house and is not worth the trouble for most. If you own a separate rental building or home, then it would be worth the trouble and easier to prove under audit. As Robb correctly indicated, the IRS instructs their auditors to take a look at these types of home office expenses very closely.

Sorry about the accountant fees Neil. I used to bill out at $450 per hour when I worked in public although it never made it to the check that way.

Edits in bold.

gemint

Thanks for confirming. I guess the end result is it isn't worth starting a small side business. They should just go to a consumption tax and get rid of all the deductions. Make it simple. Though I doubt accountants would be supportive of this.

cpamike

<< <i>Thanks for confirming. I guess the end result is it isn't worth starting a small side business. They should just go to a consumption tax and get rid of all the deductions. Make it simple. Though I doubt accountants would be supportive of this. >>



I'm a corporate tax accountant so I say go for it. All kidding aside, a consumption tax similar to the VAT (value added tax) they have in Europe would be more equitable, but you would probably get even more resistance from businesses as they would have to collect and remit not only to the federal government, but to all the states as well. It is true that states have a sales tax, but they only require the seller to remit for in state purchases. It is on the buyer to report their purchases from out of state sellers that did not charge sales tax and remit that tax to their home state under current law. But if the state were to go to a comsumption tax as well, the states will look to replace the lost income tax revenue by going after the sellers to register and remit the consumption tax to them. Then you get into the states fighting each other over who should get the tax. Food for thought.

grote15

According to this page which was taken directly from the paypal site, paypal will deduct personal and gift payments from your total payments received when establishing the threshold for generating a 1099K form: The account history, however, provides a gross total which does include gift and personal payments, but my understanding is that paypal will subtract those payments from the 1099k formula because gift or personal payments are not the same as payments for goods and/or services.

Paypal gift payments

dontippet

While Paypal's reporting system is new, claiming your profits from sales on ebay is not new. It has been around longer than ebay has. All profits from sales are taxed as income. I see no problem with Paypal's system. In fact, it may help me around tax time.

grote15

I don't think it's so much about claiming profits. Of course, that is something you should be paying taxes on. But for many collectors (not dealers), there is, in many cases, no profits to speak of or even a loss, as many cards are sold for little or no profit when you factor in ebay fees, paypal fees, shipping and packaging fees, etc. What the new law does is requite collectors to keep records of everything they buy and sell and to make sure all deductions are claimed as well. After all, someone has to pay the tax bill that the Bank of Americas and other corporations the government is bailing out aren't paying...as Leona Helmsley once said, "Taxes are for the little people." LOL..

ga5150

Just so I understand-

I should keep receipts of all purchases (boxes/singles/raw etc); that I purchase throughout the year, and then also have record (Paypal) of all the income I receive from selling. Does this only apply if I go over the 20K/200 threshold? If I don't make any profit (or lose money) then I have nothing to worry about, but if I do make profit, then I need to remit taxes to Uncle Sam?

Thanks for any clarification!

Rodney





<< <i>I don't think it's so much about claiming profits. Of course, that is something you should be paying taxes on. But for many collectors (not dealers), there is, in many cases, no profits to speak of or even a loss, as many cards are sold for little or no profit when you factor in ebay fees, paypal fees, shipping and packaging fees, etc. What the new law does is requite collectors to keep records of everything they buy and sell and to make sure all deductions are claimed as well. After all, someone has to pay the tax bill that the Bank of Americas and other corporations the government is bailing out aren't paying...as Leona Helmsley once said, "Taxes are for the little people." LOL.. >>

cards651

gemint - you hit the nail on the head. - Kevin



<< <i>Thanks for confirming. I guess the end result is it isn't worth starting a small side business. They should just go to a consumption tax and get rid of all the deductions. Make it simple. Though I doubt accountants would be supportive of this. >>

JMDVM

I've been getting the Paypal request by phone and email for my social security number for months now and since I will not hit both thresholds, I continue to ignore them. A friend of
mine called and told them he would not be hitting the thresholds and he was told he would no longer get the requests. However they have not stopped, they keep coming. We have both decided to ignore them. Frankly I have strong reservations about turning my SS ID to these pinheads.

grote15

My understanding though is that if you refuse to comply and provide a SSN upon their request, your account will be suspended until you do.

Griffins

<< <i>Morning,
Having gone thru this years ago (And will be having to do this again starting this year because of PayPal reporting), a Word of Advice for all you: DO NOT bother taking the pittance of a deduction you would get for claiming your portion of your house as a Home Office deduction, it all seems good and fair at the time you do it but the complications if you sell your house 3, 5, 10 years down the road and then have to have an accountant do the figuring of that as it relates to your Capital Gains/Profit on the House is a Nightmare....I MEAN FRICKIN' Nightmare !! I sold a Rental that had been used as a Home Business deduction primary residence before it became a Rental and the Bottom line is I Paid the accountant more than I ever got for the deduction to sort through my taxes for that year...10 Fold !!!!
Just my 2 cents !!
Neil >>



This needs repeating, in case anyone missed it.

grote15

< My understanding though is that if you refuse to comply and provide a SSN upon their request, your account will be suspended until you do. >>



They cannot suspend your account if you do not pass the 200/$20K threshold. This isn't the Soviet Union (yet), they can't punish you for a tax rule you "may" break. It is a scare tactic.

Remember Ebay, Paypal, and even Amazon are not against internet sales tax. They just don't want to collect it for the states.

Maybe someone here with more experience about tax reporting can chime in here, but paypal can most certainly suspend your account if you do not comply with their request as they are now required by law to keep track of your income and money received through your account. To this point, you were supposed to already be reporting profit as income on your taxes (that is already the law), but the only difference now is that paypal is required by law to file a 1099K form to the IRS if you exceed certain thresholds. This year (for 2011) it is 20K/200 transactions but you better believe that before long it will be for even very modest amounts and if your SSN or EIN is not on file with them, your account will be suspended. Paypal has already stated as much on their web site.

MBMiller25

I got this email overnight. Is there an easy way to determine how many payments/amount of money taken in via paypal YTD, without having to manually calculate it? I can't imagine I have taken in $20K or anywhere near 200 payments recieved.

Littletweed

I recently got this email from Paypal. While I'm close to the $20k to get a 1099, I haven't hit it yet. I'm curious to know if others have ignored the request for their SS#, and how Paypal has responded.

-Matt

ShootyBabitt

I received a phone call (voicemail) from eBay last week stating that I needed to provide Paypal with my Tax ID # or my seller's account would be suspended. When I logged onto eBay, there was a message stating the same thing. I provided it, and now my taxes are going to take much longer to complete. Ah, well.

MBMiller25

<< <i>I recently got this email from Paypal. While I'm close to the $20k to get a 1099, I haven't hit it yet. I'm curious to know if others have ignored the request for their SS#, and how Paypal has responded. -Matt >>



I've ignored it and they keep sending me the emails. I will provide when I cross $20K in sales which I have not. I spoke with my accountant and he gave me what he will need for tax purposes and it's just a spreadsheet of cost basis. You can write off up to $3K in losses annually as well.

70ToppsFanatic

<< <i>

<< <i>Here is the IRS guideline for IRS business deductions. For more information on the home office deduction. The key for deducting some portion of your mortgage/rent is that the area of the home must be used exclusively for your business. More information on the business use of home.
My accountant indicated that the home office deduction is one of the most scrutinized deductions during an audit and the expense is almost always challenged by the IRS auditor.

Cheers,

Robb >>



Morning,

Having gone thru this years ago (And will be having to do this again starting this year because of PayPal reporting), a Word of Advice for all you: DO NOT bother taking the pittance of a deduction you would get for claiming your portion of your house as a Home Office deduction, it all seems good and fair at the time you do it but the complications if you sell your house 3, 5, 10 years down the road and then have to have an accountant do the figuring of that as it relates to your Capital Gains/Profit on the House is a Nightmare....I MEAN FRICKIN' Nightmare !! I sold a Rental that had been used as a Home Business deduction primary residence before it became a Rental and the Bottom line is I Paid the accountant more than I ever got for the deduction to sort through my taxes for that year...10 Fold !!!!

Just my 2 cents !!

Neil >>



THIS IS GOOD ADVICE