Months Sales Limit to Avoid 1099

aking · #1 10-10-2017

So apparently to avoid the 1099 alert and having to submit docs or get shut down, you need to stay below $20k thresh hold, correct? With that being said, I am going to have to start monitoring my monthly sales b/c I think I'm selling too fast. Anyone else do this?

For example: Sales limit per month.

Month 1 $500
Month 2 $750
Month 3 $1,000
Month 4 $1,500
Month 5 $2,000
Month 6 $2,000
Month 7 $2,000
Month 8 $2,000
Month 9 $2,000
Month 10 $2,000
Month 11 $2,000
Month 12 $2,250
Total $20,000

phaz0rz · #2 10-10-2017

Quote:

So apparently to avoid the 1099 alert and having to submit docs or get shut down, you need to stay below $20k thresh hold, correct?

Correct. You would need to stay below both $20,000 and 200 sales for an entire year.

Quote:

With that being said, I am going to have to start monitoring my monthly sales b/c I think I'm selling too fast. Anyone else do this?

Correct, you'll need to limit your sales to keep an account going all year without a tax ID. However if your goal is to never get an EIN or have PP send 1099's for you, you should be filling out a 1099 for yourself at tax time reporting your income. It's not going to look good when your bank(s) report your income to the IRS when you haven't reported any income yourself.

aking · #3 10-10-2017

Quote:

Originally Posted by phaz0rz

It's not going to look good when your bank(s) report your income to the IRS when you haven't reported any income yourself.

I'm not worried about being reported to the IRS as I am employed and run a company so I file taxes every year. My income already reported yearly.

My concern or my improvement needs to be in monitoring monthly sales and profits, and moving on to next account before this limit is reached. All is for longevity and safety of the accounts.

phaz0rz · #4 10-10-2017

Quote:

Originally Posted by aking

I'm not worried about being reported to the IRS as I am employed and run a company so I file taxes every year. My income already reported yearly.

My concern or my improvement needs to be in monitoring monthly sales and profits, and moving on to next account before this limit is reached. All is for longevity and safety of the accounts.

If you're already reporting all your stealth account income then I don't understand why you're concerned about staying under $20k.

There's nothing dangerous about hitting the limit and having your account tax-limited. It doesn't do any harm. You just can't take in any more money until the next year. Personally I never divvy-up sales like you're describing in order to keep an account going all year. I just sell as normal until an account is tax-limited and then move those listings to another stealth account.

I run companies too and PP reports income for my 3 business accounts each year via 1099k's. But every year there's $70-80k of income from stealth (no tax ID) accounts which is reported to the IRS by my bank but not by Paypal. I report the stealth account income myself to avoid being audited and owing a bunch of back taxes.

**TGMT²** · #5 10-10-2017

Quote:

Originally Posted by aking

So apparently to avoid the 1099 alert and having to submit docs or get shut down, you need to stay below $20k thresh hold, correct? With that being said, I am going to have to start monitoring my monthly sales b/c I think I'm selling too fast. Anyone else do this?

For example: Sales limit per month.

Month 1 $500
Month 2 $750
Month 3 $1,000
Month 4 $1,500
Month 5 $2,000
Month 6 $2,000
Month 7 $2,000
Month 8 $2,000
Month 9 $2,000
Month 10 $2,000
Month 11 $2,000
Month 12 $2,250
Total $20,000

My Stealth accounts are all established (almost 10 years) so I don't have to really monitor monthly sales...

I just sell up to the $19.5k mark and bounce to the next account. I still pay the taxes but without the benefit of being reported with a 1099

ebaystealth1974 · #6 10-10-2017

Quote:

Originally Posted by phaz0rz

I run companies too and PP reports income for my 3 business accounts each year via 1099k's. But every year there's $70-80k of income from stealth (no tax ID) accounts which is reported to the IRS by my bank but not by Paypal. I report the stealth account income myself to avoid being audited and owing a bunch of back taxes.

Are you saying that banks report all money sent through them as income?

**SaiJin** · #7 10-10-2017

I think that your method will work for newer accounts.
For me I just stop selling when I reach 19K whether that's in 1 month or 12 months time.
But that's because of my old established accounts.

phaz0rz · #8 10-11-2017

Quote:

Originally Posted by ebaystealth1974

Are you saying that banks report all money sent through them as income?

Anything over $20k (or $5k+ in single transaction), just like PP is required to do. Part of the reason banks are required to get your SSN when you open accounts. I can go into most of my online banking accounts right now and find the 2016 tax forms they submitted on my behalf.

ebaystealth1974 · #9 10-11-2017

So, the 20k that I receive to Paypal gets reported. Then the very same 20k that I move from paypal to my bank account gets reported again? That makes no sense.

phaz0rz · #10 10-11-2017

Quote:

Originally Posted by ebaystealth1974

So, the 20k that I receive to Paypal gets reported. Then the very same 20k that I move from paypal to my bank account gets reported again? That makes no sense.

I don't see where the logic breakdown is. It's not hard to comprehend how and why this is done.

Paypal and whatever bank you're working with are two different types of companies performing two different services. Both your payment processor and your financial institution are required by law to report income over $20k to the IRS.

It's a simple process. Your income is reported to the IRS by both your bank and by Paypal on two different forms. The IRS compares the two. If it's reported that you received more money in your bank accounts than you received in your Paypal account, the IRS investigates further and you could possibly be audited.

MM78 · #11 10-11-2017

Quote:

Originally Posted by phaz0rz

I don't see where the logic breakdown is. It's not hard to comprehend how and why this is done.

Paypal and whatever bank you're working with are two different types of companies performing two different services. Both your payment processor and your financial institution are required by law to report income over $20k to the IRS.

It's a simple process. Your income is reported to the IRS by both your bank and by Paypal on two different forms. The IRS compares the two. If it's reported that you received more money in your bank accounts than you received in your Paypal account, the IRS investigates further and you could possibly be audited.

Knowledge!

ebaystealth1974 · #12 10-11-2017

Quote:

Originally Posted by phaz0rz

I don't see where the logic breakdown is. It's not hard to comprehend how and why this is done.

Paypal and whatever bank you're working with are two different types of companies performing two different services. Both your payment processor and your financial institution are required by law to report income over $20k to the IRS.

It's a simple process. Your income is reported to the IRS by both your bank and by Paypal on two different forms. The IRS compares the two. If it's reported that you received more money in your bank accounts than you received in your Paypal account, the IRS investigates further and you could possibly be audited.

Ok... just as long as you aren't saying that 1,000,000 total gets reported if I sell 500,000 and send it to my bank account, then I'll agree with you. Beacause that's how I read your original statement. Sorta like double dipping...