Paypal, Taxes, EIN (I know, been there, done that...but need help)

suza271 · #1 10-14-2011

Hi,

First off, please don't slam me for asking this. I have done a pretty good search on here to try to find my answer. But, I need some clarification and I would be oh. so. grateful. to anyone who can help me....

OK, I'm not selling more than $20,000 in goods, so I'm assuming the tax issue won't be a big deal for me. In fact, I honestly don't mind paying on my earnings as they are pretty insignificant. But, here's my first question...

-If I don't hit $20,000 is Paypal and/or the IRS even going to do anything with me? As in, will I get something in this mail this year to give to the person who prepares my taxes?

Now...the big questions...I haven't had a chance to give Paypal the information they asked mostly because I was hoping it would just go away since I'm not going to hit the $20,000 mark. But, I read on the ebay forum that people are now getting limited bc of this.

-How long will Paypal give me to give them my EIN or whatever I need to give them?

-I did go on the site to apply for an EIN but there are alot of choices. If I'm just a tiny seller (I sell probably $300 in a month), what should I register as? I thought someone said Corporation on here, but then there are other options to pick from even if you chose Corporation. Can someone just walk me through it?

-And/Or...Paypal said you have three options: You can give your social (not an option), your EIN (but then they ask you to upgrade to a business account, which I would prefer not to do), OR your Individual Tax ID Number. What is the last one? Can I get one of those?

THANK YOU SO MUCH FOR YOUR HELP!!! I can't tell you how much I appreciate it.

suza271 · #2 10-14-2011

Sorry, answered my own question about the ITIN. Guess I can't get one of those!

One last question....

-I read on here that my (real) information will not be given to Paypal by the IRS. Is this true? I know I have to give my real name to the IRS. But, what happens when the address on my Paypal account doesn't match the address on my EIN account. Is that a problem? Should I re-open my PO Box (I had one but realized I didn't really need it since I wasn't ordering anything on ebay) and give the same info to both the IRS and Paypal?

THANKS!!

KingRay · #3 10-14-2011

I answered all your questions in a long reply but hit the wrong button and lost it. I will repost it soon. It took a long time to do that and I hosed it up. When I am done cooling off I will redo it.

sorry.

GreenBean · #4 10-14-2011

@KingRay, dont you be sorry. Topic is answerd ad nauseam by you before.

And considering the need was made known in 2009 for IRS requirements, it's a little past a joke for the worries to be voiced now.

KingRay · #5 10-14-2011

Okay lets try this again........

The 20k issue: You will need to report it yourself due to the IRS only getting the forms IF you hit the 20k. Paypal can require the info sooner if they wish but unless you hit the 20k gross and 200 transactions they do not send it in.

what most people arent aware of is that they can indeed send it in if they please but are only required to if it hits 20k. until jan 1st or they make a statement we wont know. (unless I have missed it.)

You are legally liable for the tax payments on the income you created so you do need to pay it. Not paying it is 100% tax evasion. People think its small cookies but those add up to the IRS. They require the taxes but they just dont get the forms unless you hit 20k. You have to pay tax on $300 if it were the only money you took in all year.

You give your records to your tax preparer, The records you should have kept all year. If you get the form from Paypal, you give that as well.

Ignoring paypal requests: Many people as well as myself have had limitations within 2-3 weeks of this request and other have gone on just fine ignoring it. Myself I had 3 that limited and the others have still gone on. Its decided upon some issue that we all have not figured out yet. Some think so but its still up in the air. either way if they ask you are probably going to have to give it up. If you simply ignore it and plan on going back to it next year with a fresh start, I think those will be suspended from the beginning of the year when you come back. Just my opinion though.

Paypal will reinstate the account as soon as you post the SSN/EIN to them. Even if they completely lock the account up they will release it to you when you give them what they requested and they like what they see.

Business Entity choices: There are many to choose from but each has its own good and bad issues that may affect your decision. some have better tax benefits for different types of businesses. The ONLY way to know for sure what to do is to talk to a tax pro or a business/Tax attorney. They will tailor a business plan(even very small ones) to your need and to where you get the best tax deductions,etc. a business plan is a must for anyone. I would not even start a lawnmowing business without consulting a professional 1st. Go talk to a seller that makes over 200k per month and ask them if they ever got a business plan in order. They will always tell you the same thing I am. 100% yes. 90% of the sellers I have ran into never get a plan, they just sell and make money. The wealthy ones I know and I know many ALL speak to Professionals regularly when they have a problem.

In my opinion, on only $300 per month, I would go do a sole proprietorship BUT I would for sure talk to a professional to get a small business plan and have my deductions set for me as to what I need to do for the year.

I see you answered the ITIN issue but for people that do not know, Its for people that are not US citizens and cannot get a SSN.

Your last question:: So far paypal when using the EIN and upgrading to a business account can only see the legal business name, business start date and EIN #. I can almost assure you that will change soon. People are abusing it more and more daily. It may be changed now. I dont know.

One last thing,, Finally right??

Never go into business or use any type of EIN,etc unless you talk to a professional as listed above. like I said, you can easily make money on ebay but if you want success you need to know what you can and cannot deduct and use to your advantage. You will pay for that professional help 100 fold in a short time just by knowing the rules of the game and how they can help you instead of hurt.

My eyes are crossing reading this long message. Not sure I even covered all I wanted but If so I will repost. good luck.

RedShootingStar · #6 10-14-2011

All your questions HAVE been answered every day. To make it plain and simple for you here are some quick answers...

-It is 50 Transactions / $20,000, not just $20,000 as you mentioned above. Sometimes if you only sell a few items they will still ask for this.

-It will not go away. They will continue to ask, and if you dont provide it then they will just limit you, which will create more issues.

-For amazon you have until Dec. 26th. For eBay I would assume it is around that same time, but I dont know for sure, so just call them to ask, since you have nothing to hide.

-Just register as a sole proprietor / small business. Remember you must file your taxes (wont be much for you), but it is important, and is not a joke to mess around with.

-If you provide EIN, then you must upgrade. There is nothing bad about it, and wont cause any issues. If anything it will help establish your account. The Tax ID I believe is given to you if you dont have an SSN.

Although you are a small seller, I would advise getting the EIN from irs.gov., and just file your taxes yourself, since your income is so minimal. I am sure you could pick up a tax software for cheap, or wait until black friday and pick it up cheap. But when push comes to shove, this is going to be a requirement for all online selling sites, so if you avoid giving ebay/paypal/amazon what they want you will be limited/suspended, and I would avoid this at all cost because you have a legit/establish account going for you right now. Although you dont make alot of money, dont take it fo granit, because as soon as you dont have the account you will want one, and then you have to go through all the bs to go stealth again. So in conclusion, just get the EIN, file your taxes yourself, and life will be so much easier. So many people on here try to cut corners, and try avoiding situations, and it only creates more problems and they are constantly starting over. Good luck.

GreenBean · #7 10-14-2011

I'm adding another important statement.

Above posters have given ADVICE, that is their opinion based on the time & effort they have done to even get such replies here.

For full and complete understanding of tax requirements, seek professional assistance.

forum is not responsible for taxation matters.