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How about ebay statements, do you add all statements even if they have different names ???
and the oversea wholesaler invoices?

In Today's Wall St Journal - Online Sellers Face New IRS Rules
 

Online Sellers Face New IRS Rules

By MARTIN VAUGHAN
See Correction Below
July 30, 2008; Page D3

If you regularly sell items on online auction sites, you may find yourself on the Internal Revenue Service's radar. Recent legislation aims to help the IRS collect more taxes from online enterprises, many of which either don't know about their tax obligations or are ignoring them, according to the agency.
The provision, part of the housing rescue package that President George W. Bush is expected to sign within days, will require PayPal and other processors of online payments to report annual gross receipts to the IRS for all but the smallest online merchants.
Processors' Requirement
The new reporting requirement is similar to a proposal the Bush administration has put forward in its most recent budgets as a way to ensure that taxes owed are being collected. It also applies to intermediary banks that process card payments for restaurants and brick-and-mortar retailers. Congressional tax estimators predict the reporting change will help the IRS collect an additional $9.5 billion in taxes owed by online and traditional businesses over the next 10 years.
The payment processors will be required to file a 1099 form for each merchant to the IRS and to the merchant. They won't have to file for merchants with less than $10,000 in gross sales and less than 200 transactions in a given year.
And they won't start reporting until 2011, giving the banks and the merchants a couple years' head start to make sure everything is in order.
Business Transition
Confusion about taxes may be more prevalent among eBay sellers than brick-and-mortar firms because it is comparatively easy and cheap to set up an eBay business. The transition from casual seller to profit-seeking business can seem almost spontaneous.
Like many eBay sellers, Sarah Davis didn't set out to be a business owner. But somewhere between her first online sale and last quarter's $560,000 in sales of second-hand luxury handbags, it dawned on her that she had become one. From the time she started selling in 1999, Ms. Davis reported income from her eBay sales on a Schedule C. By 2005, her business had grown large enough that she sought tax advice. Soon after, she incorporated her business, Fashionphile, as an LLC.
"You start out selling some stuff from your closet, and then the random clearance handbag," Ms. Davis said from her Beverly Hills, Calif., office. Mix in some shoes you never wore and "It's hard to say when you are really, 'in business.' "
Here are a few suggestions to help eBay entrepreneurs protect themselves and their profits, while complying with tax laws:
Report all income from online sales, even from casual or hobby selling. If you made a profit from goods sold on eBay -- whether vintage KISS action figures or hand-knitted doggy sweaters -- you owe income or capital gains taxes, and likely self-employment taxes, too. No taxes are owed, however, on used items that you sold for less than what you paid for them, essentially using the online service as a virtual garage sale.
If you mean to deduct expenses, act like a business. One of the most common mistakes eBay sellers make on their tax returns is to claim deductions to which they aren't entitled. The tax code allows deductions for business expenses, but deductions are limited for individuals who sometimes make a little money on the side from hobbies.
One rule of thumb the IRS uses to determine whether an individual is engaged in a business is whether they made a profit in any two of the past five years. Another is if the person would still, say, frame landscape photographs, or carve garden gnomes, or buy and sell rare 45s, regardless of whether or not they made any money from the activity.
"If the answer is yes, you may be on the wrong side of an IRS argument that you are taking a hobby loss," said Tom Ochsenschlager, vice president of taxation for the American Institute of Certified Public Accountants.
Keep your personal and business accounts separate. Make sure you have a PayPal business account separate from your personal one, an eBay business account that is separate from any casual buying and selling you do, and a separate business checking account.
These steps will not only make it easier for you to determine how much you owe, but may help protect your deductions by signaling to the IRS that you are serious about running a business. "Everything you can do to treat it like a business will help," says Kristine McKinley of Beacon Financial Advisors, based in Independence, Mo. Ms. McKinley specializes in tax advice to eBay sellers.
Claim the home office deduction. While this deduction has fallen out of favor because of a popular belief that it triggers IRS audits, it is still a valuable deduction if you have a separate space in your home that you use exclusively for business purposes, according to Ms. McKinley. It's true that you will owe more taxes when you sell the home on amounts that you have depreciated. But the deduction can still be a major benefit because it will reduce your income for the purposes of self-employment tax, she said.

Good stuff, I always claim 100% of the income I make online and deduct as much as possible within the law and I'm fine.

Paypal will start asking for a SS# even sooner in a couple years.

Ssn Issue - does PayPal report income to IRS? No.
 

Hi, My sister let me use SSN and her information to create paypal account. However, she is afraid that she might have to pay taxes of amount I earn through paypal. Does government or credit company monitor paypal account if I put SSN?

I mean by borrowing her SSN , is there anything that might harm my sister?

There is 0 chance that she is going to create paypal account for her.

No Paypal doesn't report anything... Yet...

Soon they hinted they will, a couple years from now though.

Here's the link for this story if anyone is interested....

PayPal Required to Report Payments to IRS

great thanks

Thats easy to get around. LoL. All you have to do is log all your incoming payment totals and when you hit $19,999 just close it and start another paypal account, lol.

That was good info tho, didnt know this. Thanx.

I hope i have that problem to worry about!

The first reports won't go out until 2011...hopefully we all will be weaned off of paypal by then :D

Actually PayPal merely needs to tell the IRS the bank accounts you use so the IRS can check the bank accounts. Not social security number.

So does this mean eventually we will have to have a social security number in order to use Paypal, regardless of on eBay or not?

And what about accounts that take in less than $10,000?

What about accounts opened outside the US? I'm sure there are ways around this.

I think for eBay we will just have to resort to the virtual credit cards again.

This is just a US thing from what I read.

So in the event that it does go in to effect, we will either have to find a workaround or go international.

The issue isn't so much income tax. If America wants to end income tax, they'd elect Ron Paul was president and instead they chose John McCain for the Republican nomination.

The IRS only needs to monitor bank accounts that get a bunch of money coming in. They don't need paypal to get a social and if it really is an IRS issue, then someone can get a tax ID just for privacy and the IRS can know all their paypal income and paypal won't nosing around in their social security number. But funds into a paypal account aren't income, it's if you get ever the money out then it's income.

I do wonder how paypal does its taxes when it freezes $5000 of someone's money and never ever releases it. Do they declare it as income, or just funds on hold?

Jonas, you make a very good point.

In fact, Paypal could already be doing this (hence the demand for the SS# after you have a lot of income coming in).

FYI:
The Irs has very sophisticated Forensic Accountants , who can "reconstruct": ones income, believe me.. my husband was audited when we first met--He was under criminal investigation because his ex-turned him in..
2 US Treasury agents came to our house!!
--So PAY your taxes!!!! :)

This is all just yet another reason to get an anonymous offshore corporation with that includes an anonymous offshore merchant account and bank account.

This nation is sadly heading downhill towards the total elimination of the ideals America was founded on, and ultimately to a completely controlled, one-world government.

See the EXCELLENT movie, "America: Freedom to Fascism" for free on Google Video for proof.

Click on the photo banner below to see this 111 minute film.

http://img.photobucket.com/albums/v2...rty_468x60.jpg

Good to hear this is only US for now.

Oh and George Bush is sounding like he's going to invade Russia now!

I was looking for a tax posting I saw earlier, was going to post this same info in response, glad to see some related links you guys saw too. They leave out each lawmaker getting $19,999.99 deposited into their brand new paypal accounts for letting paypal do a higher minimum lol j/k. It's really too bad- this piece was buried in the Housing and Economic Recovery Act of 2008 which of course people wouldn't want to be seen as not supporting. It will become a mess for sure for the IRS to verify of everyone who received $20k over 200 or more transactions which were business which were totally personal. Also part of it is the $7500 "credit" if you buy a house during a certain timeframe. Unfortunately, the "credit" has to be paid back over the next 15 years and the IRS confirmed that if you screw up the repayment you will be hit with penalties lol

There's a lot of comments in various threads about "paypal's" onerous policies with asking for and verifying id and it all comes down to the Patriot Act not so much paypal's own decisions 100% of the time. I would just throw out that idea that is mentioned of keeping under $10k- try thinking lower amount now and doesn't matter if even much lower if suspicious. The $10k was pre 9/11. In fact, don't even have a discussion regarding dollar limits and patterns, there's such a crime in the US of being an unknowing aid in this sort of thing lol