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Post by JesusNinja on Mar 14, 2021 13:17:12 GMT
Included in the new Democrat Stimulus Package was a new tax law. In the past if you got paid by PayPal you could make up to $20,000 in 200 payments before they would report your earnings to the IRS. This has now been changed. Starting in 2022 any earnings over $600 will be reported. The new Gig Worker tax law was included in the new package just passed in the Senate. Just a heads up to anyone using PayPal.
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Post by Retread-Retired-Cameron on Mar 14, 2021 13:34:30 GMT
As a general rule people in the US earning over $400 from an activity should be reported it to the IRS, though typically there isn't a tax liability on amounts under $10,000.
If PayPal wasn't reporting amounts people earned under $20,000 to the IRS, it would lead to problems.
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Post by JesusNinja on Mar 14, 2021 19:36:31 GMT
Actually PayPal has it on their site and I've spoken to them on the phone. $20,000 and 200 transactions is the threshold. Even if you made $20,000 but didn't reach the 200 transaction threshold they do not send out a 1099. I've used PayPal as payment from Lulu for years and never get one although yes it is required I still report it. I also contacted EBay when I was selling some old stuff out of the garage. They told me the same as most people use PayPal for payment options on EBay. Here is directly from PayPal's website:
"Under the IRC Section 6050W, PayPal is required to report to the IRS the total payment volume received by US account holders whose payments exceed both of these levels in a calendar year: US$20,000 in gross payment volume from sales of goods or services in a single year. And 200 transactions."
Under the new stimulus package they inserted a new law which at first was struck down and later reinserted. It changes the threshold used by third party payment services such as PayPal.The new law specifies the limit is dropped from $20,000 to only $600. It does specify that the law takes effect Jan 2022. I'm not sure yet if that means this year counts or if the returns in 2023 will be when it takes affect.
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Post by Retread-Retired-Cameron on Mar 14, 2021 20:24:21 GMT
The new law essentially lays out which entity is required to issue a form 1099. It's been the responsibility of individuals to report $400 or more of income on tax returns for many years, with the proviso that if an individual didn't make enough money to owe federal taxes they don't have to file a federal tax return. States with income tax tend to require individuals to file a federal return even if the person doesn't owe federal taxes because their systems use the same information. If Lulu Press doesn't issue a 1099 for payments from PayPal it's about getting unreported income clarified. When in doubt check with a tax professional.
Audits tend to happen when the IRS notices people have more money to spend than their reported income.
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Post by JesusNinja on Mar 14, 2021 23:46:04 GMT
Lulu only sends you one from their company. They are not responsible for sending anything about PayPal. PayPal is basically an online bank. You are receiving payments from Lulu but PayPal isn't paying you. That's why the threshold at PayPal was so high. The new law changed that threshold. You will be getting two 1099s if you make over the new $600 limit on PayPal. One from Lulu and one from PayPal.The new law was supposed to tax Uber drivers and any private contractors using third party payment services. But it will affect anyone using PayPal. So far I've found no change on the PayPal website. So it's possible the changes won't be in affect until next year and 2030 tax returns. I just thought I'd let people know as many here do use PayPal and the new stimulus bill doesn't mention anything about it. So no one will be caught off guard thinking the old limit was still in place. And yes everyone is responsible for their own taxes and should contact H&R Block or PayPal to see about the changes.Here is a link to read if anyone is interested. runningwithmiles.boardingarea.com/paypal-payment-network-reporting-stimulus-bill/ |
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Post by JesusNinja on Mar 17, 2021 0:02:48 GMT
I just checked. This affects next years returns. So if you are getting paid by PayPal and make over $600, you will receive a 1099k from them to file next year.
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