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Taxes - PayPal, other credit card processors reporting income (gross receipts) to IRS

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  • Modee
    replied
    This is all well in place now, but as long as you stay under the reporting requirements - under $20,000. transacted and under 200 transactions (you must process $20K or more AND 200 or more transactions to be reported), your account will stay under the radar.

    If you pass these requirements and do not provide a SS # or EIN, you will be subject to back up withholding, and, especially in the case of a processor like PayPal, likely be shut down.

    Leave a comment:


  • John14789
    replied
    Be creative as there is much you can write off as expenses. Since your entire business is internet based then you can write off the following: paying for the electricity, internet, and if you incorporate you could pay your self a monthly salary since you'll be working for the corporation.

    Leave a comment:


  • cat28dog
    replied
    I do computer programming work.

    I use my spare time to write programs, so I have very little expense
    to write off the income.

    Leave a comment:


  • Modee
    replied
    You are asking if PayPal and Google Checkout will report 2009 gross receipts to the IRS. No, they will not.

    You are also asking whether or not you should pay income tax on money earned. The answer is yes, of course. But I doubt that if you received $25K all of it is income. I do a lot of accounting, including for business, so if you want to get into this in detail, please consider hiring me.

    Leave a comment:


  • cat28dog
    replied
    so paypal and google checkout will report 2011 gross receipt
    to IRS,

    if I have received $25000 thru paypal and google checkout this year,
    do i still need to report it as income ?

    Leave a comment:


  • Modee
    replied
    Read above. The nature of services has nothing to do with it, just the gross amount of receipts.

    Leave a comment:


  • cat28dog
    replied
    I provide computer programming service to some customers.

    I use Paypal and Google checkout to receive payment for my service.
    and I have provided Paypal and Google my SSN number.

    Will Paypal and Google pass my income info to IRS ?

    Leave a comment:


  • Taxes - PayPal, other credit card processors reporting income (gross receipts) to IRS

    Beginning on January 1, 2012, all U.S. merchant processors including PayPal will report your gross receipts for the prior year if:

    -that total is $20,000. or more, AND
    -this represents 200 or more unique transactions

    The reporting requirement begins for all transactions after January 1, 2011. So if in 2011 you process more than $20K and 200 transactions with ONE merchant, that merchant will report your gross receipts to the IRS at the end of 2011.

    Reporting Credit Card and Merchant Payments to the IRS

    Credit Cards, The IRS, Form 1099-K And The $19,399 Reporting Hole

    Even worse, under the new law if you do not provide a valid SS # or EIN, the merchant processor is required to withhold 28% of gross receipts. This is a sort of "withholding" requirement. The withholding requirement applies only after January 1, 2012 - so it will apply to all receipts to you in the year 2012.

    What is unknown, is how strictly they are going to enforce the rule after 2011, and what the penalties will be for non-compliance. My assumption is that the penalty will be back up withholding - whereby the processor withholds a percentage of your gross receipts until you provide a valid SS # or EIN.
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