Changes to PayPal that could affect BST on Tacomaworld

Looks like starting 2022, paypal will require to report all earnings over $600 via goods and services.

https://www.doctorofcredit.com/stim...to-report-earnings-of-600-on-1099-k-tax-form/

What this means to BST:

Sellers -
If you sell over $600 of product you would have to pay taxes on it, if done via goods and services. Regardless if you are an actual business or not.

Buyers -
You will find less people accepting Paypal or Venmo goods and services or sellers pushing local cash sales only.

 

Thanks for the heads up on this. Definitely something to look out for with any larger purchases. I always liked the protection you get from goods/services purchases but would suck to have to pay tax. I suppose you could always break a larger purchase into multiple transactions. A bit inconvenient though.

 

Breaking it up into multiple transactions isnt going to work.

Its $600 cumulative of all sales within the year.

 

I've tried this in the past, but people get too sketched out about it.

 

One thing to note from the article:

Whether or not you get a tax form does not change what you actually owe, e.g. if you don’t get a tax form you still have to report income earned, and if you do get a tax form you still only pay tax on the actual profits. The primary purpose of this stricter law seems to be for gig workers like Uber/Lyft drivers and the like, but it seems like the rest of us will get snared by this as well.

While its a bit more effort for your tax preparer its a good idea to keep the receipts for the items purchased. If your selling it used for less than you paid, the money should not be in taxed as income. Consult a CPA or professional tax preparer in your area as your mileage may vary.

From what I have seen on TW, most sales are for second hand stuff that is for less than original purchase price. The folks selling custom parts at a markup will the ones most affected it would seem.

Edit: More from the article:

Important note: The 1099-K is just for total processed transactions, it’s not assumed to be your total profit; typically the profit on a sale is only a tiny percentage of the 1099-K reporting amount. Or it could be zero if you sold something for the same amount you bought it for. But it could still create a hassle with the tax reporting since you might have to report a business which earned zero, versus simply leaving it off your tax return entirely.

 

Oh shit, well that sucks!

 

But if you use friends and family it isnt affected? Most of the BST i have done have been friends and family.

 

not affected, but most of the BST I've done is goods and services

 

If it's over $600 and you get a 1099 it's additional income as an independent contractor. You can write off a plethora of expenses for taxes including the original price of the item(s).

If you buy a new bumper for $2000 and end up selling it for $1000 via Paypal, you'll get a $1000 1099. Then you can write off the original price of $2000 (expense), so it becomes a $1000 tax credit. Something to keep in mind.

 

This sucks on another level. I despise people that demand being paid for goods by F&F. I appreciate the service that paypal provides and expect them to be paid for that service. How would people like it if they came to work and the boss said, “Our business is now on the friends and family plan. We appreciate the work you do, but we’re not going to pay you”.

However, I despise paying taxes even more. People that make millions don’t pay squat and the hard working middle class gets reamed and I sure as hell don’t want to pay taxes on items I sell that I bought 5 years ago and decide I want to get rid of.

 

I think you're missing what the "goods and services" fees cover. It's not to cover the cost of transferring funds from one account to another. It's to cover the buyer's protection. If you pay through F&F, PayPal will not cover you if the seller defaults. If you pay through G&S, PayPal will make you whole and go after the seller, if the seller defaults.

I regularly pay through F&F with fellow TW members. However, as long as the buyer compensates for the added fees, I couldn't give two shits what form the buyer pays in. If a seller won't accept G&S when YOU cover the fees, that's a huge red flag... until this tax factor comes into effect.

 

FPP

 

I realize that the buyer protection is part of the user fee, but my best guess is that paypal makes enough money on the g&s fees that they can give away the perk of allowing grandma to help out her loser grandson. Obviously paypal is aware that people are using f&f for g&s purchases, but it’s probably a small amount in comparison to the legitimate transactions.

I remember when paypal was free to everyone. I knew it would be a short time till they started charging. Like a drug dealer giving away free drugs. Sure enough.

It’s going to be interesting to see how paypal deals with a huge loss of income. I’m guessing the fee for g&s will go up or f&f will no longer be free.

 

It's actually both. The fees cover the protection they provide AND the costs related to the transaction - primarily the cost of credit card processing. For example, if you use F&F but pay with a credit card they will still charge you the fees in order to cover the CC transaction costs even though you're not getting any buyer/seller protections.

I too prefer G&S transactions for the added security. The 3% bugged me originally but now I just chalk it up to being the cost of making a safe and secure transaction. I've seen more honesty trustworthiness here on TW than most other forums and places I buy/sell stuff so it's not as big of a deal here, IMO. But lots of other places I wouldn't dare use F&F with some rando that I've never met.

 

There will always be a "new" company offering the free service... Cash app, Gazelle, Venmo... PP F&F will continue to be free, or they'll get surpassed by the competition.

 

You could always send a USPS money order.

 

What happen if you do a $$ transfer in PP? That does not considered as a sale of goods and services.

 

you're fine as long as its friends and familie

 

I stopped using PayPal when they got on board with restricting firearm sales

 

Just a reminder that this is still happening