Paypal drastic changes

Reporting Threshold $5,000 in tax year 2024

"In a key revision to the law, the IRS said that starting in tax year 2024 it will transition toward the new rule by increasing the reporting threshold from $600 to $5,000. That means people who receive more than $5,000 in payments via PayPal and other apps in 2024 would receive the 1099-K tax form in early 2025 to complete their 2024 tax returns.

For the 2025 tax year, the threshold would step down to $600, unless the IRS makes additional changes."

@bubinga 

I have no idea what Audiogon does these days.​

Invalid,

Thanks for the clarification. If you sell on AG but receive cashiers check and avoid PP,  does AG report the transaction to the IRS?  

The "new" tax laws should reign in the tax cheaters, not the folks trying to sell used equipment.

Just another example of the Government trying to squelch the little guy...because they are easier targets...

ozzy

@bubinga 

It's the government, not the IRS, PayPal or audiogon they are just following the new tax laws. The tax payment was always due, if you made a profit, now there is just a paper trail for them to trace

All the above reinforces why I try to avoid PayPal at all costs. That and their biased policy towards the buyer in a transaction using PP. So if I purchase equipment from a dealer or e company equivalent, I pay taxes at that time. And if I use PP to sell that equipment, I may, without proper documentation, pay taxes again. The idiocy of it all is beyond astounding.

The world is upside down in so many critical ways. My big question is why the IRS, PP and AG are doing this.

Sorry but freedom and paying taxes are two entirely different things.

Unreal. A country that taxes a person’s home to the tune of thousands of dollars a quarter even when retired is not a free country.

This stuff was always taxable if you made a profit, even a garage sale is taxable if you sell something for more than what you paid for it. It used to be the honer system, now there is evidence that's the only difference.

I think 'Zelle' is the only one that doesn't have to follow this rule. 

Canada would never seize your bank account.

Another reason why I love being a Canadian.

This entire thing annoys me to no end. I researched it pretty thoroughly, and it looks like I'll never pay tax unless I profit on the sale, which I never ever do. So there's that.

My return is already complicated. But this won't complicate it further because at most, I take the form from Paypal, attach it to my documentation of what I purchased the item for, then give them to my tax prep guy who files it as a check-off (ie, he checked it off, no need to make part of actual IRS return).

On the other hand, the changes this IRS kerfluffle have wrought were/are entirely predictable: many many sellers demand payment only via PP's "Friends & Family" feature, which offers no transaction protection to the buyer. I've tried to purchase things from sellers like this and end up walking away. Doubtless some are regular audio citizens who simply don't understand that they have little if any risk. But also doubtless, some are scammers who would take my unprotected money and run. How can I tell them apart? It's impossible, so I walk.

Not true invalid. The IRS targets the poor 5 times more than the rich.

So they never had the resources to go after the rich, is that a joke. Rich people are far more likely to get audited than the average person. They always say they are only going after the rich,  then it trickles down to the average earner.

@invalid That is categorically false, they weren't going after the rich because they didn't have the resources to do so. And no they don't make more going after average taxpayers which is why the IRS was in such a crisis until now.

@84xfirez-51  Do you really believe that they are just going after the fat cats? They always say that, then they start going after the average taxpayers because it's easier and they actually collect more money in the long run.

Hey Audioman58,

Too bad that unripe Cheeto is also a corrupt, insurrectionist, incompetent, incoherent, imbecile!

I'll take anything the IRS throws my way as long as I can still live in a democracy.

Jimbo

It doesnt take much to make it a business if you do enough volume.

The biggest issue will be trying to find a 10 year old receipt for an amp or pair of speakers to show the purchase price. What happens then? Vinyl record sale profits are taxed as Capital Gains and taxed at 28% and there are a lot of sellers out there that have no idea what's coming. The fact they won't let you deduct losses is criminal.

The whole idea that the government taxes used goods (sales tax and income tax) every time they are sold is total BS. Yeah lets make the little guy who is just trying to sell an audio device (or anything else) that he already paid taxes on, go through all this hassle and potential costs involved. Tax everything to death.

Woe, that is crazy. There is never a gain in selling used stuff.... especially hi-fi. So if I wanted to sell my luxman for thousands of dollars I would have to deal with this horribleness. This means also my accountant bill will be higher with extra forms like this. This is all because of the democrats.

@moonwatcher 

Behold your pritcher!

@czarivey 

The only issue with that selling goods are sometimes not for income, Sometimes you lose money if selling it cheaper. 

Problem solved then, no tax will be due.

Taxes are due on income so if you’ve had a profitable side hustle and havent been paying taxes….well….so be it.

The only issue with that selling goods are sometimes not for income, Sometimes you lose money if selling it cheaper. 

The facts are that the new IRS agents are tasked w collecting from the fat cats that have been paying <6% for years(looking at u Elon and Jeff) while the burden if supporting government programs fall further and further onto the shoulders of the middle class. Thank u Ronald Rayguns.

The only thing new about this is the paper trail, these types of taxes have been around for quite a while. The only good thing about this is now you are all starting to see how much the government has been overstepping their boundaries.

@grh1958 we may frequent different neighborhoods.

@carlsbad2 I was wondering what the girls on the corner were selling

This is such BS.  My guess is that sellers will instead try to make a local sale, in cash only, so there is no record of the transaction.  It happens all the time.  

@evanpress The IRS decides where to enforce.  they can chase people working full time paying no taxes, drug dealers, mobsters, girls sellling lemonade on street corners, or paypal. 

Jerry

A clarification.  The IRS collects taxes in accordance with the laws passed by Congress. When you have a problem with a tax, talk to your Congressperson.

This is not about politics so why don't we stop talking about them? And audioman58 your post has been debunked so many times there are not 85K new agents give it up.

This is what happens when Big Governments start to run out of money.  The result is usually a thriving black market where the government gets a big fat goose egg.  Ask anyone in Russia, Greece, or many other places.  The next step is a cashless economy.  Strap yourself in, it's gonna be a bumpy ride.

You can thank Biden fr that with the 85k new agents to audit anything they please 

not good Big brother is watching ,and his digital dollar will give them 100% access to your funds and track everything.

Trump like him or not willnot allow this Digital $$ BS .

Well, someones got to fund the payroll of the Ukrainian goverment and their retirement fund.
 

Not to mention “the big guy”……

Well, someones got to fund the payroll of the Ukrainian goverment and their retirement fund.

you can only use if you are incorporated. this way it's not going to be auto-deducted. 

I hate PP.

I guess I am going to rethink the usage of PayPal. We shouldn't have to prove we did not profit on selling a used item.

ozzy

Issued: January 16, 2024

Amendments to the PayPal User Agreement
Effective January 16, 2024:

• We are clarifying our user agreement to include a wireless carrier authorization related to user identification and fraud prevention in alignment with our Privacy Statement.

Review the updated PayPal User Agreement

Taxes and information reporting Our fees do not include any taxes, levies, duties or similar governmental assessments of any nature, including, for example, value-added, sales, use or withholding taxes, assessable by any jurisdiction (collectively, “taxes”). It is your responsibility to determine what, if any, taxes apply to the payments you make or receive, and it is solely your responsibility to assess, collect, report and remit the correct taxes to the appropriate authority. PayPal is not responsible for determining whether any taxes apply to your transaction, or for calculating, collecting, reporting or remitting taxes arising from any transaction. You acknowledge that we may make certain reports to tax authorities regarding transactions that we process. For example, PayPal is required to report to the Internal Revenue Service the total amount of payments for goods and services you receive each calendar year into all of your PayPal accounts associated with the same tax identification number once you receive more than (i) $20,000 in payments for good and services and (ii) process more than 200 transactions involving goods or services through those PayPal accounts in the same calendar year (the “Reporting Threshold”). After December 31, 2021, the Reporting Threshold will be reduced to $600 in aggregate payments for goods or services, with no minimum transaction requirement. PayPal is also required to report payments for goods and services to applicable state and local governments. PayPal’s IRS, state, and local reporting obligations are not limited to payments you receive for goods and services transactions. If you receive other types of income (for example, proceeds from the sale of cryptocurrency), these are reportable payments by the aforementioned tax authorities, and PayPal will send you any necessary forms 1099s or 1042-s. These forms will also be transmitted to the relevant tax authority. Taxpayer Identification Number and Withholding Tax PayPal may request that you provide your tax identification number and/or a U.S. tax form such as W-9 or W-8. If you do not provide PayPal the requested information and documentation, you understand and agree that you may be subject to account limitations and federal and state withholding tax at the applicable rates on all US source income payments received. PayPal will send all withholding taxes to the appropriate taxing authorities and cannot refund those amounts.

@krelldog Backup withholding applies only if you fail to provide  "your US tax ID or completing a Certificate of Foreign Status".  For most of us that is our SSN, for a business it is the EIN.

As @carlsbad2 mentions, that would be reportable on the Schedule D, however you can't take a loss on the sale personal property.