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  3. 163567-94588

1099-K from PayPal (tax form)

It looks like I am getting a 1099-k form from PayPal for the first time. I sold a lot of audio items last year, used, while upgrading my system and swapping things around. Obviously I am not a business, not in this for profit, and did not make money, lost money. It’s just a hobby, a costly one.

I am guessing I have to report this with my taxes. However, the form only has the gross proceeds from PayPal, not my original purchase price. How do I deal with this? Any particular section on Turbo Tax to enter these?
128x128thyname
thyname's avatar
thyname OP
3,107 posts
 
Ah!! I figured out why I received this tax form although I was far from meeting IRS threshold in transaction numbers:

https://www.paypal.com/us/smarthelp/article/i-live-in-vermont-or-massachusetts,-what-are-the-form-10...

I live in one of these states.

————

Why did I receive a 1099-K if I didn’t meet the IRS reporting threshold?

Some states (VT, MA, VA, IL, MD) have reporting obligations at a threshold lower than the federal reporting thresholds:

  • Vermont, Massachusetts, Virginia, and Maryland: $600 USD in gross payment volume from sales of goods or services in a single calendar year regardless of the number of transactions.

  • Illinois: $1,000 USD in gross payment volume from sales of goods or services in a single calendar year with at least 3 payment processed.


brunomarcs's avatar
brunomarcs
240 posts
 
I dumped PayPal 10 years ago and glad I did. 
arizonabob's avatar
arizonabob
86 posts
 
Great answers here and I have nothing to add but KEEP ALL RECEIPTS! eBay became a contracted tax collector last year. Not by their choice but the states that want that extra tax money in their coffers. What I still fail to grasp is that tax has already been paid on any used item you sell. Unless you make a profit, only the profit amount should be taxed. This amounts to tax on tax in my mind. Can anyone explain it better to me?  AB
dougthebiker
191 posts
 
The simple solution is to move out of the "there's no such thing as too much tax" socialist state you're in and move to one of the no income tax states where the inmates aren't in charge of the asylum.
That's my political opinion as an audiophile.
Seriously, if you can't neutralize the 1099 in Turbo Tax Deluxe, a competent tax preparer (local CPA firm that prepares taxes, not the the H&R Block types) can solve your problem in about 15 minutes.
rushfan71
291 posts
 
I'm glad someone brought this up.
PayPal did this to me this and last year.

Can someone explain to me how it is legal to tax me for selling a product that I previously purchased new, and paid sales tax on, with money I was already taxed on when I earned it?

Last year they added what I sold off to my income which put me in the next tax bracket and I got hardly any tax return.

Better yet, can someone tell me an alternative for payment that we can trust and that won't rob us like this?
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