Workshop - 2011 tax laws and your PayPal account

[Amanda411]

Starting in 2011, all U.S. payment providers, including PayPal will be required by the IRS to report sales information about merchants who exceed $20,000 and 200 transactions to the IRS.

Have a question about how the new tax law will affect your PayPal account and online business?  Please visit www.paypal.com/irs for more information.

Still have questions?   Join the PayPal team here on February 2^nd at 2pm EST,  11am PST for a 1 hour Q&A session.

 Please note, while PayPal is committed to helping our customers understand the 2011 tax changes, we are not qualified to give you specific tax guidance.

[Amanda411]

Hi,

Welcome to the Community Workshop on the 2011 tax law and your PayPal account! We'll get started in just a few minutes.

Please post any related questions for the next hour and we’ll do our best to respond.

At the end of the hour I will lock the thread but we will follow up on any lingering questions in the next few days.

Thanks!

Amanda

[Reaster]

Hello, I am not able to stay and view all this information that will be talked about, so I am wondering I see that you will be locking this section after an hour, but will it be available to read later on today?

[Amanda411]

Hi!

Welcome! This thread will still be available to view after the workshop today Please feel free to ask any questions you have.

Amanda

[Amanda411]

I am going to be posting a few of the common questions we've been getting and their responses in the next few posts.

Will the Form 1099-K list fees that were paid to PayPal?  For 2011, will I need to report on my tax return the full amount shown on Form 1099-K BEFORE fees?

• PayPal fees will not be shown separately on your Form 1099-K and will not be netted out from your gross payments.  If you made $40,000 in sales and paid $1,600 in PayPal fees, your Form 1099-K will list $40,000 in gross payments.  It’ll be your responsibility to determine the deductibility of your PayPal fees when you file your tax return.

[Amanda411]

I share my account with several people. None of us has grossed more than $5000. Will this be reported? Do we need separate accounts?

• Form 1099-K reporting will be based on the Tax Identification Number (TIN) listed on each account.  Only one TIN can be listed for reporting purposes per account at any given time.   In your example, all payments received into your shared account will be aggregated to calculate whether the gross payment thresholds have been exceeded and if so, will be reported on one Form 1099-K.

[genteelfrog]

Hello - Some sellers who have already had $20K in sales for 2011 have had some problems with having to "reverify" their tax information. My social security # is already on record with PayPal, I'm verified through my bank account, etc - later in the year when I hit $20K, am I going to have to reverify? Can I do that now to avoid any delays in processing?

[PayPal_Meg]

Hello genteelfrog,

PayPal experienced a technical glitch with collecting and re-verifying TINs earlier this week.  We apologize for any inconvenience that users experienced and we moved to correct the problem as soon as it was detected.

Moving forward, as you noted, PayPal will have to verify any TIN on record.  Please note that this is a separate process from verifying a bank account.  If you have a TIN on record (for example, you have a debit card, money market fund or Pro/VT), your account will not need  to be re-verified.   In the future, we will give you an opportunity to confirm that this is the TIN you want PayPal to use for tax reporting.

PayPal encourages all users that do not have a TIN currently on file to verify their information in advance.  Coming soon, there will be a link on your Account Overview page.  Once there, you will be able to click View Limits and then click the Lift Limits link to provide and confirm your TIN.

[mgray]

What tax form(s) will be sent out at the end of the year? 

[PayPal_William]

Thanks for your question.  Assuming your PayPal activity exceeds the IRS thresholds you will receive a Form 1099-K from PayPal on or before January 31, 2012.