LateApex
12-27-2022, 04:09 PM
Just a heads up to sellers (and buyers) using Third-Party Settlement Organizations (TPSO's), such as Paypal, Venmo, and perhaps eBay and other "brokers". This one caught me by surprise yesterday when Paypal demanded my SSN so that they could properly report the "Goods and Services" I had received in 2022. You may not already know, but there were changes to the tax law effective January '22 that require TPSOs to report this data to the IRS. The threshold for that reporting was $20,000 previously: It is $600 now.
This is triggered if a buyer chooses to pay (for example using Paypal), as a "Goods and Services" payment, as opposed to (in Paypal) a "Friends and Family" payment. There are good reasons for using a Goods and Services type of payment, as it offers Purchase Protection, and most businesses that support Paypal on their on-line stores auto-magically conduct their transactions in this way. Note that I am not a business entity (nor a tax advisor ...)
There is a 3% fee charged to the Seller to cover Purchase Protection. Yeah ...
A bit more concerning is that a buyer choosing that option for a payment essentially tags the seller as a business, and the proceeds may be considered taxable income. Aside from adding some complexity to one's tax return related to potentially taxable income, there may be other foot-traps and pitfalls your accountant is more qualified to advise you on than I.
That is about as much heads-up I will offer to prospective sellers on this forum who might opt for payment through a TPSO. My point is that any seller needs to be clear about the type of payment for any listing. I will also suggest that sellers review the tax law changes of 2022.
There is a side-thread here related to how buyers might be better protected by any scams or seller performance issues on this forum. This is after all motivation for "Purchase Protection". I now understand that there is some history of buyers being taken for a ride when purchasing items on this forum. That kinda sucks (in the technical jargon).
FWIW ...
This is triggered if a buyer chooses to pay (for example using Paypal), as a "Goods and Services" payment, as opposed to (in Paypal) a "Friends and Family" payment. There are good reasons for using a Goods and Services type of payment, as it offers Purchase Protection, and most businesses that support Paypal on their on-line stores auto-magically conduct their transactions in this way. Note that I am not a business entity (nor a tax advisor ...)
There is a 3% fee charged to the Seller to cover Purchase Protection. Yeah ...
A bit more concerning is that a buyer choosing that option for a payment essentially tags the seller as a business, and the proceeds may be considered taxable income. Aside from adding some complexity to one's tax return related to potentially taxable income, there may be other foot-traps and pitfalls your accountant is more qualified to advise you on than I.
That is about as much heads-up I will offer to prospective sellers on this forum who might opt for payment through a TPSO. My point is that any seller needs to be clear about the type of payment for any listing. I will also suggest that sellers review the tax law changes of 2022.
There is a side-thread here related to how buyers might be better protected by any scams or seller performance issues on this forum. This is after all motivation for "Purchase Protection". I now understand that there is some history of buyers being taken for a ride when purchasing items on this forum. That kinda sucks (in the technical jargon).
FWIW ...