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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10432
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Tax Question for U.S State of NY Ref 1099K I just received

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Tax Question for U.S State of NY Ref 1099K

I just received a notification from Paypal indicating I could get a 1099K if
I sell over $20,000 gross AND have over 200 transactions.
I'm around the $15,000 figure so far and at this pace, I will most likely go over the $20,000 figure.
Can I continue selling via Paypal until I reach about $19,000 then use a different Merchant i.e Amazon to continue selling?
Merchants do not send 1099K if the above mentioned conditions are not met.
Theoretically then, I could have an account with two different merchants; Paypal- Amazon, and sell up to $19,000 on each.
I will be able to sell more than 20k total and avoid receiving the 1099k.
Is my assestment correct? Is it legal?

Lane :

Hi

Lane :

Ye, you have it

Lane :

The legality here is that the merchant must send out a 1099K when sales reach 20,000 ... they have know way of know, and quite honestly don't CARE if you have accounts at other places

Lane :

However, I must tell you that you need to report profits regardless

Lane :

If you're a sole proprietor and this is your only income then it MAY work out that once you look at your income statement you don't have enough income to have to file ... (and sometimes you may want to anyway, to get certainl credits or refund from withholding elsewhere)

Lane :

in that case (below the filing threshold AND no other reason to file), then what you're talking about makes some sense ... becasue there will be no 1099-K

Lane :

BUT if you're profitable enough (sales minus expenses) that need to file (or need to for some other reason) then having the 1099 will only serve to document that part of your gross sales

Lane :

make sense?

Lane :

are you still with me here?

Lane :

Ahh I see you typing... I'll wait

Customer:

I'm a full time employee and received my 1040 each year. My little sales on Paypal are just something on the side. I really wouldnt want to have to report these 1090k and it would not be a smart business decision to stop selling.

Lane :

Well again, your assessment is correct, and I't's certainly legal to start using another merchant whenever you like

Customer:

I certainly dont want to have any problems with the IRS, but if the merchants systems do not generate 1090k below 20k sales, It shoudnt be a problem

Customer:

allright, thanks. I'll probably look into doing a sole propietorship next year. Thanks for the clarification

Lane :

NOT reporting any net profit on your side business? Well, I'll leave that one up to you ... I wouldn't be doing my job if I didn't tell you that IRS wants you to report any NET income (again PROFIT) regardless of any 1099s

Lane :

You

Lane :

're welcome ... hopefully having all the facts will help you "see around some corners"

Lane :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

Customer:

Yes it helped. cheers

Lane and 3 other Tax Specialists are ready to help you


Thanks much!


If you'd like to work with ME again just say "For Lane only," at the beginning of your next question.

Thanks again,
Lane