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Go To Great Panes, Kathryn Maloney ©2012
(This post is copyrighted–you do not have permission to repost this content elsewhere but you are welcome to link to it if you’d like to share the information.)
I’ve seen lots of posts with confusion about the new 1099 Paypal is sending to some sellers. Here’s the scoop:
- The 1099 Paypal is sending out is only fulfilling their obligation under a new law, it has nothing to do with whether or not you are required to file income taxes.
- Paypal will only be sending it to people who bring in at least $20,000 AND have 200 or more transactions through PP.
- Regardless as to whether or not Paypal (or other company) sends a seller this form, the seller must report income for their business if they meet the IRS’s requirements for filing a return.
Do you meet the requirements? Generally speaking, if you have to file income tax for any reason (day job, filing jointly w/ spouse, etc) you must report all your income on your taxes. If you have at lest $400 profit from your small business, you will most likely need to file. Your best bet is to get info about whether or not you need to file directly from the IRS–this post should help:
And if you do need to file, this post will help with getting & adding up your income/expense info from Paypal:
This one will help when you are filling out the schedule C to report your small business income:
Turbo Tax: Many folks ask about whether or not they need to get the Home & Business version of TurboTax. I haven’t tried that version myself, but I do know that with Turbo Tax Deluxe, you can use the ‘add a form’ feature and add the schedule C to your taxes.
The interview process in the TurboTax Deluxe does cover the schedule C once you add it, but their website implies that the home & business version has more help for filling the schedule C out.
Income tax is totally separate from sales tax requirements for your business. See here for help with sales tax & business registration:
(links to official state websites)
Go To Great Panes, Kathryn Maloney ©2012
(This post is copyrighted–you do not have permission to repost this content elsewhere but you are welcome to link to it if you’d like to share the information.)










