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Nov. 22nd, 2010

This isn't a beware regarding an artist or a commissioner, but rather a heads up to anyone who uses PayPal as a means of business transaction;

As of 2011, PayPal will now be reporting the total payment volume of the following to the IRS:
-Anyone who earns more than $20 000/yearly.
-Anyone who recieves more than 200 payments per year.

I don't see the former to be much of an issue for most of us here, but the latter may or may not be of some interest for those of us who like taking on tons of small commissions, i.e. the Iron Artist 100+ image challenges and anything similar.

More information can be found here:
https://www.thepaypalblog.com/2008/08/proposed-irs-reporting-requirements-become-law/

Edit: Thanks to Joecifur for pointing this out;
According to PayPal[see here: https://cms.paypal.com/us/cgi-bin/marketingweb?cmd=_render-content&content_ID=marketing_us/IRS6050W ];
"-If a merchant meets both thresholds by receiving over $20,000 in gross payment volume AND 200 or more payments in a calendar year, PayPal will send Form 1099-K electronically or by mail for the 2011 tax year. This document will be made available in January 2012.

-Will All Merchants Receive 1099s?
No. Only merchants who receive over $20,000 in gross payment volume AND receive 200 or more payments in a calendar year will receive Form 1099-K electronically or by mail."

Apologies for causing a stir over nothing; the blog entry, from PayPal staff themselves is worded as though it's one or the other, not both.

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Comments

( 133 comments — Leave a comment )
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tugrik
Nov. 22nd, 2010 11:58 pm (UTC)
Very important to fandom merchants like me, yet I had no idea this was coming through. Thank you for posting it!
hellebore
Nov. 22nd, 2010 11:59 pm (UTC)
I called this happening years ago. People need to be watching on paying taxes for their freelance work. I pay mine, and don't have a problem!

I'm switching over to moneybookers, which thankfully handles a lot of countries in Europe that don't use paypal. So far, so good, and more world-wide friendly.
ichigoneko33
Nov. 23rd, 2010 01:29 am (UTC)
Is Moneybookers something similar to paypal?

People have been switching to Alertpay and I'm not sure where I should go.
(no subject) - hellebore - Nov. 23rd, 2010 01:41 am (UTC) - Expand
(no subject) - hellebore - Nov. 23rd, 2010 01:43 am (UTC) - Expand
(no subject) - ichigoneko33 - Nov. 23rd, 2010 01:44 am (UTC) - Expand
(no subject) - hellebore - Nov. 23rd, 2010 01:50 am (UTC) - Expand
(no subject) - ichigoneko33 - Nov. 23rd, 2010 01:52 am (UTC) - Expand
(no subject) - onesteptwo - Nov. 23rd, 2010 02:13 am (UTC) - Expand
(no subject) - fenris_lorsrai - Nov. 23rd, 2010 02:51 am (UTC) - Expand
cesarin
Nov. 23rd, 2010 12:01 am (UTC)
and what of those who dont live in the US?
shukivengeance
Nov. 23rd, 2010 12:03 am (UTC)
For non US countries their own tax laws would be relevant.
(no subject) - cesarin - Nov. 23rd, 2010 12:15 am (UTC) - Expand
(no subject) - aerospiritual - Nov. 23rd, 2010 12:18 am (UTC) - Expand
(no subject) - shukivengeance - Nov. 23rd, 2010 12:21 am (UTC) - Expand
(no subject) - aerospiritual - Nov. 23rd, 2010 12:21 am (UTC) - Expand
(no subject) - shukivengeance - Nov. 23rd, 2010 12:25 am (UTC) - Expand
(no subject) - shukivengeance - Nov. 23rd, 2010 12:20 am (UTC) - Expand
(no subject) - joecifur - Nov. 23rd, 2010 12:24 am (UTC) - Expand
(no subject) - foxhack - Nov. 23rd, 2010 12:44 am (UTC) - Expand
(no subject) - cesarin - Nov. 23rd, 2010 03:13 am (UTC) - Expand
shukivengeance
Nov. 23rd, 2010 12:03 am (UTC)
Thanks for the info. I'll spread the word as many people may not know what this means.
foxhack
Nov. 23rd, 2010 12:03 am (UTC)
Time to get alternate PayPal accounts!
bladespark
Nov. 23rd, 2010 12:21 am (UTC)
Time to get arrested for tax fraud!
(no subject) - foxhack - Nov. 23rd, 2010 12:33 am (UTC) - Expand
(no subject) - foxhack - Nov. 23rd, 2010 12:36 am (UTC) - Expand
(no subject) - astralabortion - Nov. 23rd, 2010 12:33 am (UTC) - Expand
(no subject) - foxhack - Nov. 23rd, 2010 12:37 am (UTC) - Expand
(no subject) - onnaevilsmith - Nov. 23rd, 2010 12:40 am (UTC) - Expand
(no subject) - westly_roanoke - Nov. 23rd, 2010 12:46 am (UTC) - Expand
(no subject) - celestinaketzia - Nov. 23rd, 2010 12:47 am (UTC) - Expand
(no subject) - bladespark - Nov. 23rd, 2010 12:54 am (UTC) - Expand
(no subject) - bladespark - Nov. 23rd, 2010 12:40 am (UTC) - Expand
onnaevilsmith
Nov. 23rd, 2010 12:13 am (UTC)
Uhm, I just noticed it was made in 2008. Where does it say 2011?
cesarin
Nov. 23rd, 2010 12:16 am (UTC)
the law seems to be approved in 2008 and taking in effect on the 2011

I quote the second line:
This legislation applies to all payment providers including PayPal and takes effect in 2011, so the first reports will go to the IRS in January 2012. Our goal when the legislation takes effect is to make it easy for PayPal merchants who fall under the provision to report their taxable incomes.
(no subject) - onnaevilsmith - Nov. 23rd, 2010 12:17 am (UTC) - Expand
growly
Nov. 23rd, 2010 12:20 am (UTC)
Waughhhh this is really bad news. D: I don't think I can register myself as a business selling Pokemon toys can I?
fatkraken
Nov. 23rd, 2010 12:28 am (UTC)
why not? you sell things to customers and make money from it. If you make over $20k a year you should already be paying the appropriate taxes.
(no subject) - growly - Nov. 23rd, 2010 12:44 am (UTC) - Expand
(no subject) - bladespark - Nov. 23rd, 2010 12:29 am (UTC) - Expand
(no subject) - growly - Nov. 23rd, 2010 12:45 am (UTC) - Expand
(no subject) - bladespark - Nov. 23rd, 2010 12:46 am (UTC) - Expand
(no subject) - connorgoodwolf - Nov. 23rd, 2010 01:51 pm (UTC) - Expand
frazzled_niya
Nov. 23rd, 2010 12:21 am (UTC)
I assume that i'll be the same for anyone who sells and uses paypal frequently like on ebay and such @_@;...Well this kinda sucks.
kamakru
Nov. 23rd, 2010 08:09 am (UTC)
Psst, I'm pretty sure paypal forbids the use of their site for anything such as raffles, gambling or bidding sites. They might limit or close your account if they find out.
(no subject) - frazzled_niya - Nov. 23rd, 2010 08:12 am (UTC) - Expand
(no subject) - baronyiffington - Nov. 23rd, 2010 08:20 am (UTC) - Expand
(no subject) - kamakru - Nov. 23rd, 2010 08:21 am (UTC) - Expand
(no subject) - kamakru - Nov. 23rd, 2010 08:23 am (UTC) - Expand
bladespark
Nov. 23rd, 2010 12:23 am (UTC)
I'm eyeing the negative responses here somewhat oddly. Does that mean you folks haven't been paying taxes on your income? Because that's the only reason I can see to be upset about this. Paypal reports to the IRS that I'm making X amount. Okay fine. I'm reporting to the IRS that I make X amount already, so why is this a problem?

It's only a problem if you're evading your taxes by not reporting your income.
shukivengeance
Nov. 23rd, 2010 12:26 am (UTC)
That's exactly it, the complainers have probably been using PP for tax-free income.
(no subject) - aerospiritual - Nov. 23rd, 2010 12:26 am (UTC) - Expand
(no subject) - fatkraken - Nov. 23rd, 2010 12:29 am (UTC) - Expand
(no subject) - aerospiritual - Nov. 23rd, 2010 12:31 am (UTC) - Expand
(no subject) - sigilgoat - Nov. 23rd, 2010 12:33 am (UTC) - Expand
(no subject) - aerospiritual - Nov. 23rd, 2010 12:39 am (UTC) - Expand
(no subject) - sigilgoat - Nov. 23rd, 2010 12:40 am (UTC) - Expand
(no subject) - hellebore - Nov. 23rd, 2010 12:43 am (UTC) - Expand
(no subject) - jurann - Nov. 23rd, 2010 12:50 am (UTC) - Expand
(no subject) - hellebore - Nov. 23rd, 2010 12:38 am (UTC) - Expand
(no subject) - westly_roanoke - Nov. 23rd, 2010 12:43 am (UTC) - Expand
(no subject) - glacidea - Nov. 23rd, 2010 12:42 am (UTC) - Expand
(no subject) - bladespark - Nov. 23rd, 2010 12:45 am (UTC) - Expand
(no subject) - bladespark - Nov. 23rd, 2010 12:51 am (UTC) - Expand
(no subject) - astraldescent - Nov. 23rd, 2010 04:26 am (UTC) - Expand
(no subject) - astraldescent - Nov. 23rd, 2010 04:28 am (UTC) - Expand
(no subject) - bladespark - Nov. 23rd, 2010 04:44 am (UTC) - Expand
(no subject) - teahound - Nov. 23rd, 2010 06:58 am (UTC) - Expand
(no subject) - kriscynical - Nov. 23rd, 2010 09:34 am (UTC) - Expand
joecifur
Nov. 23rd, 2010 12:31 am (UTC)
This shouldn't affect that many people. If you're making $20,000 a year in paypal transactions alone you should already be reporting this as your raw income, then deducting your expenses, paypal fees, license fees, etc from that to get your total taxable income. Same as ever only now it's actually a little easier since boom you will get a 1099.

$20,000 and 200 payments is really reasonable. That is a lot of money to be coming solely through paypal payments. It shouldn't affect the way anyone does business.

The only thing I'd say people should be aware of is that in coming years I'd stake my life on the fact that that $20,000 is slowly going to drop down until the taxable threshold is low enough that even hobby vendors may need to be concerned about it.

But for now unless art is your business and you're a US resident this shouldn't bother you too much.
aerospiritual
Nov. 23rd, 2010 12:38 am (UTC)
Thing is, is that art is a business for a lot of people, both on this comm and other online communities.

Just coming from personal experience, I both know and have seen artists take on an insane amount of commission work[I'm envious of these drawing machines], one of whom is well over the 200/year mark,

Not to mention that some people prefer to be paid in parts, half up front and half when its finished; this makes it two transactions per image, sometimes it can be even more. 200 transactions seems like a lot, but in the long run, it's really not. Especially if it's something like an Iron Artist sketch challenge; I've seen people fill those lists entirely, selling them for $3-$5 a piece. That's 100 transactions used already.
(no subject) - hellebore - Nov. 23rd, 2010 12:39 am (UTC) - Expand
(no subject) - aerospiritual - Nov. 23rd, 2010 12:40 am (UTC) - Expand
(no subject) - foxhack - Nov. 23rd, 2010 12:42 am (UTC) - Expand
(no subject) - hellebore - Nov. 23rd, 2010 12:47 am (UTC) - Expand
(no subject) - ashleyvsdestiny - Nov. 23rd, 2010 03:00 am (UTC) - Expand
(no subject) - sigilgoat - Nov. 23rd, 2010 12:41 am (UTC) - Expand
(no subject) - joecifur - Nov. 23rd, 2010 12:45 am (UTC) - Expand
(no subject) - bladespark - Nov. 23rd, 2010 12:47 am (UTC) - Expand
(no subject) - sigilgoat - Nov. 23rd, 2010 12:48 am (UTC) - Expand
(no subject) - mandyseley - Nov. 23rd, 2010 12:53 am (UTC) - Expand
(no subject) - joecifur - Nov. 23rd, 2010 12:44 am (UTC) - Expand
(no subject) - glacidea - Nov. 23rd, 2010 12:45 am (UTC) - Expand
(no subject) - joecifur - Nov. 23rd, 2010 12:48 am (UTC) - Expand
(no subject) - frazzled_niya - Nov. 23rd, 2010 08:15 am (UTC) - Expand
ryunwoofie
Nov. 23rd, 2010 12:33 am (UTC)
My art is the only thing keepin me afloat, n live in the US, this bothers me. :C

sigilgoat
Nov. 23rd, 2010 12:39 am (UTC)
Anyone have that site or whatever that gives you the good general percentage you should be saving for the IRS if you're self employed?

And do I have to do quarterly taxes now? ;__;
hellebore
Nov. 23rd, 2010 12:40 am (UTC)
Yes bb you do. In Ohio it's bout 16%. IDK about your place, but you need to look this up. They really like to watch 'self employed' people because we tend to fly under the radar.
(no subject) - sigilgoat - Nov. 23rd, 2010 12:42 am (UTC) - Expand
(no subject) - hellebore - Nov. 23rd, 2010 12:45 am (UTC) - Expand
(no subject) - hellebore - Nov. 23rd, 2010 12:45 am (UTC) - Expand
(no subject) - sigilgoat - Nov. 23rd, 2010 12:47 am (UTC) - Expand
(no subject) - bladespark - Nov. 23rd, 2010 12:42 am (UTC) - Expand
(no subject) - sigilgoat - Nov. 23rd, 2010 12:47 am (UTC) - Expand
(no subject) - leahtaur - Nov. 23rd, 2010 04:48 am (UTC) - Expand
(no subject) - bladespark - Nov. 23rd, 2010 05:29 am (UTC) - Expand
(no subject) - leahtaur - Nov. 23rd, 2010 05:33 am (UTC) - Expand
(no subject) - jurann - Nov. 23rd, 2010 12:52 am (UTC) - Expand
joecifur
Nov. 23rd, 2010 12:47 am (UTC)
Just wanted to clarify in addition to the post above a few more points paypal has on their actual site:

-If a merchant meets both thresholds by receiving over $20,000 in gross payment volume AND 200 or more payments in a calendar year, PayPal will send Form 1099-K electronically or by mail for the 2011 tax year. This document will be made available in January 2012.

-Will All Merchants Receive 1099s?
No. Only merchants who receive over $20,000 in gross payment volume AND receive 200 or more payments in a calendar year will receive Form 1099-K electronically or by mail.


So again if you guys are just taking like 200 small commissions this will not affect you. Only if you are also making 20k. Hope that clears up for some people who are worried. D:
onnaevilsmith
Nov. 23rd, 2010 12:49 am (UTC)
So its both? Or just someone who makes 20k OR someone who has over 200 payments?

Cause what if someone makes 200 payments, but its only like, 5-10 bucks per transaction. XD that leaves around 1k-2k a year, and depends on how much money you put into that, if you spend more than you make.. how does that work? Cause 2k is clearly not enough to live on.

(no subject) - joecifur - Nov. 23rd, 2010 12:52 am (UTC) - Expand
(no subject) - onnaevilsmith - Nov. 23rd, 2010 12:54 am (UTC) - Expand
(no subject) - grandioze - Nov. 23rd, 2010 01:18 am (UTC) - Expand
(no subject) - onnaevilsmith - Nov. 23rd, 2010 01:43 am (UTC) - Expand
(no subject) - foxhack - Nov. 23rd, 2010 12:50 am (UTC) - Expand
(no subject) - joecifur - Nov. 23rd, 2010 12:53 am (UTC) - Expand
(no subject) - aerospiritual - Nov. 23rd, 2010 12:51 am (UTC) - Expand
(no subject) - joecifur - Nov. 23rd, 2010 12:53 am (UTC) - Expand
(no subject) - aerospiritual - Nov. 23rd, 2010 01:00 am (UTC) - Expand
_patches
Nov. 23rd, 2010 12:49 am (UTC)
Been watching this chug along for a while. It's mainly because of Ebay sellers who have been raking in more money than most of us could ever dream of, and not paying one penny in taxes on it because there's no reporting mechanism in place to report the money they've taken in.

Want to avoid the hassle if you make that much? Just use checks; they're so retro anyway. XD
onnaevilsmith
Nov. 23rd, 2010 12:49 am (UTC)
Ahhhh Checks, those old fashioned things of paper and pen! LOL
jurann
Nov. 23rd, 2010 12:53 am (UTC)
This is good to know, thanks for the heads-up. =)
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