PayPal clarification (1 Viewer)

[chipinla]

I know this has been discussed and I’ve googled it etc etc but just want to make sure I’m reading everything right. Asking because I saw someone make a classified the other day asking for their PayPal payment for $1400 or so to be made in multiple payments under $600.

PayPal payments under $600 to FRIENDS AND FAMILY, this whole tax thing doesn’t affect us correct? It’ll be annoying if classifieds start asking for multiple payments under $600.

 

[LotsOfChips]

My understanding is that it apples to the total transactions for the year, not for individual transactions. Therefore splitting transactions to keep them under $600 is pointless. Not sure if F&F is affected, or just G&S.

But I may be wrong, better to contact PayPal for clarification.

 

[nitzilla]

My understanding is that it apples to the total transactions for the year, not for individual transactions. Therefore splitting transactions to keep them under $600 is pointless. Not sure if F&F is affected, or just G&S.

But I may be wrong, better to contact PayPal for clarification.

Was going to say the same thing, it's not per transaction, but the whole year........

 

[chipinla]

Right, I think the issue that really needs clarification is friends/family VS goods/services.

 

[LotsOfChips]

From Paypal:

https://newsroom.paypal-corp.com/20...eporting-Requirements-Your-Questions-Answered

https://www.paypal.com/us/webapps/mpp/irs6050w


Old Policy: PayPal is required to report gross payments received for sellers who receive over $20,000 in gross payment volume AND over 200 separate payments in a calendar year. (note: this may have been changed recently)

New Policy: This change was introduced in the American Rescue Plan Act of 2021, which amended some sections of the Internal Revenue Code to require Third-Party Settlement Organizations (TPSOs), like PayPal and Venmo, to report goods and services transactions made by customers with $600 or more in annual gross sales on 1099-K forms


This new Threshold Change is currently only for payments received for goods and services transactions, so this doesn’t include things like paying your family or friends back using PayPal or Venmo for dinner, gifts, shared trips, etc.

Are personal payments that I receive counted in the total that will be reported to the IRS?

No. Personal payments that are not payments for the sale of goods or services will not be counted when determining if the IRS thresholds have been reached and will not be included on your Form 1099-K if you exceed the thresholds. However, all payments received for the sale of goods or services will be used to calculate the gross payment volume to be reported. PayPal monitors accounts to ensure that personal payments are not being used for sales of goods and services.