1099k, under 200 but over 20k?

[MagicHat]

Hi everyone I have a question about the 1099k and paypal asking for ssn/ein... if I will only do ~60 items in a year but over $20,000, will they limit the account/ask for ssn?

I know it can happen when sales are as low as $5000, but it seems that is when people are selling over 200 items a year (or are going to).
The items I'm selling range $400-$800 sometimes over 1000.
It just seems like a waste to make that many eb/pp and bank accounts to sell only 1-4 items on each a month to stay under $1600/m total sales.

I have a personal account that has my ssn attached (has been for years) but I've never had a 1099k, but I've also never sold over 200 items. Did 70 and ~ $30k this past year so it seems like they wouldn't... just wondering from others with more experience.

[plumsake2]

Yes, if you go over, or are on pace to go over either 200 or $20,000 then you'll get the tax ID request.

As for your second question, I believe you will only get the 1099 if you surpass both 200 and $20k.

[jeffweico]

PayPal will ask for your tax-id when their algorithm shows that you MAY exceed the threshold. My guess is that due to the price of your items, you WILL be asked for this information BEFORE you get to $20,000 - but that is just a guess.

PayPal will only issue a 1099k if you meet BOTH 200 items and $20,000 in sales, per IRS rules.

I would recommend attaching an EIN to those accounts. The same reporting rules still apply, 200/$20,000.

Keep in mind that you are obligated to report your income and profits to the IRS REGARDLESS of whether or not PayPal reports it.

[CustomerServiceProTip]

yes if you pass either 200 or $20,000 you'll get the request. it only has to be one of the 2 to get the request.

[nickh04]

Well then... I only make about $17 profit on most of my items, and I can only sell 200 of that. So I can only make $3400 a year with 1 stealth account. Ughhhhhh, I guess I'm off to make more stealth accounts

[GreenBean]

Spread sales over many accounts.

Add EIN to the good ones

[jeffweico]

By adding an EIN on an account that is solid, you won't have to worry about the 200/$20,000 threshold.

PayPal will only issue a 1099k and report to the IRS if you meet BOTH 200 items AND $20,000+ in sales.

Keep in mind also - a lot of people get this wrong - you are only obligated to pay taxes on YOUR PROFITS, not on your GROSS SALES! If you sold $100,000 worth of merchandise and your profit is 10% or $10,000 - then you only owe taxes on $10,000 - NOT on $100,000!

To figure your profit, you can deduct EVERYTHING, not just the cost of the merchandise. You can deduct postage, office supplies, etc. Anything that you need to MAKE that profit can be deducted. And a tax professional can find even more deductions for you. A lot of people think of them as being too expensive. But if you spend $300 or $400, they might be able to save you THOUSANDS OF DOLLARS in taxes, and it is perfectly legal and above board. Tax AVIODANCE is smart. Tax EVASION is not.