If you are doing your bookkeeping right then this isn’t going to be an issue for you anyway but for those who were treating their online side business as a tax exempt cash cow the party is over.
The payment gateways, mainly PayPal, but it applies to any company offering the service, is now required to file notice with the IRS of how much cash they’ve sent to your account if you have more than 200 transactions or over $20,000 in deposits.
Again, if you are really tiny then this won’t matter or if you were running your business correctly the whole time then you are fine but if you have been playing it loose the good times are at an end. The government is sure it needs your money more than you do and now it has a new way to keep you honest!
Have you had a nice side income selling stuff on eBay or through PayPal? Sales you maybe conveniently forgot to declare at tax time?
Well, that party is officially over.
Thanks to our revenue-hungry, debt-strapped government, the IRS is now keeping tabs on what you’ve been selling on eBay, Amazon or your own company’s website. If you’ve used PayPal or other popular payment-collection tools to sell products or services, you may see a crisp new 1099-K form from your payment provider. This change is a biggie.
Over the years, an industry sprang up around small, online sellers and resellers who neglected to include their Etsy or eBay income at tax time. It was like running a lemonade stand, or the equivalent of a cash business.
That’s no longer the case. If you conducted 200 transactions totaling $20,000 or more, you’ll be getting a tax form from your payment provider declaring the amount of that income. If you’re thinking about losing that form, don’t — the IRS gets a copy, too.
If you have questions about your obligations with the new 1099-K form, the IRS’s website is a treasure trove of information, so start there. If you have more questions, ask a tax pro.