Will You Receive a 1099 from eBay or Paypal this year?

by Kristine on January 13, 2011

Back in 2008, I reported that eBay and PayPal would have to start sending 1099s out to sellers who use those sites.

In the original bill, it was proposed that credit card processors would be required to file Form 1099 (there will be a new 1099-K just for credit card merchants) for each seller that has at least $10,000 in gross sales and 200 transactions.  Since then the numbers have changed to at least $20,000 in gross sales and 200 transactions, so less people will be affected by this new rule.

This rule is not limited to just eBay and PayPal.  All credit card merchants – including Amazon, eBay, PayPal, etc. – must start complying with the new rule beginning in 2011.

Given the amount of revenue and the number of transactions, this new rule won’t affect very many people.  But if you do meet the income and transaction requirements, don’t panic.  As long as you are reporting your income on your tax return, there’s no reason to worry about the new 1099 rules :)

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{ 5 comments }

Scott Burry January 20, 2011 at 4:01 am

Using TURBO TAX where do I find the place on the 1040 to key in for lines [27] (1/2 self employment tax) [29] (Self Employed SEP SIMPLE and Qualified Plans, and line [32] (IRA deductions)??

droffats May 12, 2011 at 10:04 pm

The headline says $20,000 OR 200 transactrions, the article says $20,000 AND 200 transactions. Which is it?

Kristine December 5, 2011 at 5:32 pm

Good catch droffats. Per the IRS website, it should be AND.

“Exception for de minimis payments. A third party settlement organization is required to report any information concerning third party network transactions of any participating payee only if for the calendar year:

The gross amount of total reportable payment transactions exceeds $20,000, AND

The total number of such transactions exceeds 200.”

Charles December 8, 2011 at 2:30 am

Great Article! In the article, you state that credit card processors need to report the 1099′s to users who exceed 20k/200 transactions, but eBay is not the credit card processor, it is PayPal. So it is PayPal that is issuing the 1099′s? It seems similar to why Craigslist doesn’t report 1099′s, since there is no actual proof that a transaction took place, unless there is a physical transaction of monies-such as the use PayPal, is this assumption correct?

Stephen May 9, 2012 at 8:05 pm

“Exception for de minimis payments. A third party settlement organization is required to report any information concerning third party network transactions of any participating payee only if for the calendar year:

The gross amount of total reportable payment transactions exceeds $20,000, AND

The total number of such transactions exceeds 200.”

So if I sold gross of 30,000$ with 100 transactions, then I dont need to worry about 1099 form for income tax report? Will ebay send my infomation to CRA if my sale gross more than 20,000$?

Thanks.

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