Paypal drastic changes
When you’re paid for goods and services, the US Internal Revenue Service (IRS) considers this reportable income.
Once you receive $600 in payments for goods and services within a calendar year, tax laws require us to withhold 24% of such payments when you have not confirmed your taxpayer status by either providing your US tax ID or completing a Certificate of Foreign Status. This 24% is sent to the IRS as backup withholding for any potential income tax due on those payments.
You can learn more about this tax law on the IRS website.
I tried to attach a link , but it wouldn't cooperate.
This started in 2024, but apparently there was a 60 day moratorium on the 24% I thought this was still on hold, but apparently not. Quick math- You sell an amp for 1000.00 You get paid with PP goods and services. PP takes 240.00 for the IRS, and they take their 3.9... you net 721.00 on a 1000 dollar sale. If this is old news I apologize....I just found this out today. |
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@carlsbad2 …thereby further complicating our tax return process. Especially for those who do several PP, Venmo or other transactions in a year. Better save lots of receipts for many many years fellas. We’re from the IRS and we’re here to help. I suspect the F&F loophole will get closed post haste. |
@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. |
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