There’s a New Tax Form in Town:The PayPal 1099
This guest post is brought to you by Outright.com, the easiest way to mange your business finances online.
You may have heard the rumor around the virtual water cooler that there’s a new tax form in town for 2012 – the 1099K. As always, the Internet is filled with half-truths, so it’s tough for you to figure out exactly what’s going on. Outright wants to help you with all your financial woes, so we thought we’d set the record straight.
In fact, there is a new 1099 for online sellers coming straight to your mailbox in 2012. It’s colloquially called the PayPal 1099, and it’s something anyone selling on eBay, Amazon, Etsy, and other online markets must worry about. That is, if PayPal is one of their preferred method of payment.
The Basics of the PayPal 1099
It’s no secret that ecommerce is blowing up. Customers love the ease and speed of buying online, and are constantly proving it through increased sales on Black Friday and Cyber Monday. Online entrepreneurs are making money hand over fist while working from the comfort of home.
However, this increased recognition comes with a price. One of these consequences is increased notice by the IRS. To ensure that online sellers are paying taxes on all the money they collect, they have to keep a closer watch than they have in the past. A lot of money is moved through PayPal, so the 1099 for online sellers is a way for the IRS to ensure that online sellers are actually reporting all of their ecommerce income.
For now, the 1099 doesn’t include everyone who uses PayPal. In fact, it’s only certain online sellers who will receive the new tax form. There are two pre-requisites you must meet to qualify:
- You made $20,000 or more in 2011 through PayPal transactions
- The $20,000 was made through 200 or more transactions on PayPal
If you meet both of these requirements, then you will receive the new PayPal 1099 tax form in January. If you don’t, it’s business as usual for you!
What To Do
What are your usual routines for handling taxes? Depending on how organized you are, you may not have to alter them that much.
When you boil it down, getting your taxes together is all about calculating how much you made versus how much you spent. When you factor in the new 2012 1099 filing requirements, you’re still left with the same tax time responsibility – keeping track of all of your expenses so you can write them off on your taxes. The tax form calculates how much you made based off your PayPal history.
So despite this coming off as a hassle, it could potentially make your life much easier. Now you have a way to verify how much you need to report to the IRS. Of course you should also keep up with your own records, because there may be an error or two on the form. No big company is infallible!
If you have any questions or concerns, Outright is here to help with all your financial and 1099 tax form needs! Head over to Outright’s 1099K Tax Center for more!
Professional writer, blogger, and social media consultant. www.jennescalona.com What do you want to say?