"My pet fish is named Eric! He is an halibut! I searched through thousands of them to find him. They were all too flat!"
I know one thing though...yup just one thing...if I had a million dollar collection, this is the last place I would be yakking about it. You guys would never hear from me again.
Depends on your perspective... you are assuming my motive was in line with the poster. And note, I rejected the idea of accepting any compensation. He's genuine, then he'll set up a store, and I'm happy to help. If he's not, we all know where he can go.
What is a million dollar stamp collection? Is it a million stamps worth $1 each? One stamp worth $1,000,000? Something in between? If I had a million dollars, I'd buy "a nice reliant automobile." If I had a million dollar stamp collection, I'd loan it to a "meauseam."
As to the 10-99s, just keep a record of your expenses. Many of you will have more expenses than sales. Those are usually tax deductions that will eliminate most or all of the income stated in the 10-99.
Expenses in the process of doing business (as applied to stamps:)
1) First and foremost: Cost to acquire collections (including travel and shipping costs, so if you drive to shows, record your mileage, if you fly to shows, don't forget the cost of flights and hotel stays, as well as meals while traveling, all deductions) 2) Shipping - all postal charges, envelopes, packing material (dealer cards), glassines, tape, glue... all those "Office supplies" that are used in the fulfillment of your business. 3) Storage - Safes, albums, cash boxes (if you sell at shows) 4) Fees - Show fees, table fees, PayPal and HipStamp fees, Customs (inbound) fees 5) Giveaways - If you do any giveaway either here or elsewhere 6) Donations - Member of APS? Or other Philatelic Society? Those are deductible as well. 7) Lost/stolen/damaged in shipping items (these items are a loss, and can be deducted)
Add all that up (some large items like a safe, or values over $1000 may be depreciable, meaning you get part of their value each year instead of the full value, which helps in having some "expense" to offset your sales year over year. Your accountant can set that up for you). Keep EVERY receipt. If you didn't get one (like in a taxi from the airport to your hotel), then make a journal of it and the amount. I'm not sure what the amount is in the US these days, but "petty cash" expenses don't require receipts, but they are helpful in justification if there is an audit. One or two lost ones here or there will not be cause for any action. I may have missed something as well, but if it's an expense related to this, then you can use it to counter tax. Even your office furniture may be a reasonable expense if it is used as majority for your stamp business, especially if you have a declared business and you're not just selling as "Bob Smith", but even then, still lots of expansible items.
As others suggested, get a good accounting. But you also have an accountability. They will only "know" what you give them proof of. Important to keep track of all of this, year over year. Not to mention you get to find out at the end of that if you are even making any money from it at the end of the day.
One problem is that if you have expenses that are more than your sales you are allowed to use those but only for a few number of years and then you have to show a profit. Just as Scott and others have said you must have a good accountant that understands this and makes sure you are compliant.
You know, mighty bold of the government to assume everyone uses PayPal for "business transactions". I use it to transfer money to the daughter for birthday and Christmas gifts for the grandkids. If I send over $600 in a year, she now has to pay taxes on it?
Thats the government problem if they can tax it they will, now didn't we separate from the British because of the taxation without representation? Let's separate from the government because no taxation with representation here because they tax you without any representation just makes me think what a corruption this way or that way you look at it!
I think it would depend on how you are sending that gift. And I believe the answer you're looking for is here.
What's the difference between friends and family or goods and services payments? You can send money to friends and family or pay for goods and services in the Send & Request tab at the top of the PayPal page.
If you’re sending a payment, payment types include: Sending to a friend and family - used when sending money or a gift card to a friend or family member. Before you complete a payment, you can opt to pay the fee, or pass it onto the recipient by changing it to a Goods or Services payment, to be covered by PayPal Purchase Protection. Paying for goods or service - used when buying an item or service from someone. When you make a purchase, the seller pays a small fee to receive your money. Your payment is covered by our protection policy automatically. You can make a personal payment to anyone in the U.S. for free. Just make sure that you pay the entire amount using your bank account or your balance if you have a PayPal Balance account. There is a small charge for payments made with a debit or credit card.
It looks like if you send it via friends and family and you pay the fees when sending it, it would be classified as a gift and not for goods and services. They may not be required to send a 1099 in that case as it is a gift. (Gifts are not taxed as long as the total for the year is less than about $15,000.) However if you change it to goods and services then they will get a 1099 as it will come up as a sale if the total amounts go over $600.
I have loaned one of my sons money and do it as family and have never paid a fee nor has he paid a fee when he pays it back. Friends and Family has never had a fee but it has to be as a gift or a loan. A number of people have been dropped by PayPal because they were selling items on Facebook and having the buyer pay with friends and family.
From that paragraph posted on Paypal it tells you you this
You can make a personal payment to anyone in the U.S. for free. Just make sure that you pay the entire amount using your bank account or your balance if you have a PayPal Balance account. There is a small charge for payments made with a debit or credit card.
Under current rules, individuals who sell goods or services via platforms like Uber, Ebay, Etsy and others that use third-party transaction networks (i.e., PayPal) generally only receive a tax form if they engage in at least 200 transactions worth an aggregate $20,000 or more. That form, called a 1099-K, also goes to the IRS.
Starting next year (2022), the federal threshold for issuing the 1099-K will drop to $600 with no minimum transaction level, due to a provision in the recently enacted American Rescue Plan Act. (Some states already have lower minimums.)
Comments
I know one thing though...yup just one thing...if I had a million dollar collection, this is the last place I would be yakking about it. You guys would never hear from me again.
Is it a million stamps worth $1 each?
One stamp worth $1,000,000?
Something in between?
If I had a million dollars, I'd buy "a nice reliant automobile."
If I had a million dollar stamp collection, I'd loan it to a "meauseam."
1) First and foremost: Cost to acquire collections (including travel and shipping costs, so if you drive to shows, record your mileage, if you fly to shows, don't forget the cost of flights and hotel stays, as well as meals while traveling, all deductions)
2) Shipping - all postal charges, envelopes, packing material (dealer cards), glassines, tape, glue... all those "Office supplies" that are used in the fulfillment of your business.
3) Storage - Safes, albums, cash boxes (if you sell at shows)
4) Fees - Show fees, table fees, PayPal and HipStamp fees, Customs (inbound) fees
5) Giveaways - If you do any giveaway either here or elsewhere
6) Donations - Member of APS? Or other Philatelic Society? Those are deductible as well.
7) Lost/stolen/damaged in shipping items (these items are a loss, and can be deducted)
Add all that up (some large items like a safe, or values over $1000 may be depreciable, meaning you get part of their value each year instead of the full value, which helps in having some "expense" to offset your sales year over year. Your accountant can set that up for you). Keep EVERY receipt. If you didn't get one (like in a taxi from the airport to your hotel), then make a journal of it and the amount. I'm not sure what the amount is in the US these days, but "petty cash" expenses don't require receipts, but they are helpful in justification if there is an audit. One or two lost ones here or there will not be cause for any action.
I may have missed something as well, but if it's an expense related to this, then you can use it to counter tax. Even your office furniture may be a reasonable expense if it is used as majority for your stamp business, especially if you have a declared business and you're not just selling as "Bob Smith", but even then, still lots of expansible items.
As others suggested, get a good accounting. But you also have an accountability. They will only "know" what you give them proof of. Important to keep track of all of this, year over year. Not to mention you get to find out at the end of that if you are even making any money from it at the end of the day.
I think it would depend on how you are sending that gift. And I believe the answer you're looking for is here.
What's the difference between friends and family or goods and services payments?
You can send money to friends and family or pay for goods and services in the Send & Request tab at the top of the PayPal page.
If you’re sending a payment, payment types include:
Sending to a friend and family - used when sending money or a gift card to a friend or family member. Before you complete a payment, you can opt to pay the fee, or pass it onto the recipient by changing it to a Goods or Services payment, to be covered by PayPal Purchase Protection.
Paying for goods or service - used when buying an item or service from someone. When you make a purchase, the seller pays a small fee to receive your money. Your payment is covered by our protection policy automatically.
You can make a personal payment to anyone in the U.S. for free. Just make sure that you pay the entire amount using your bank account or your balance if you have a PayPal Balance account. There is a small charge for payments made with a debit or credit card.
https://www.paypal.com/us/smarthelp/article/what's-the-difference-between-friends-and-family-or-goods-and-services-payments-faq638
It looks like if you send it via friends and family and you pay the fees when sending it, it would be classified as a gift and not for goods and services. They may not be required to send a 1099 in that case as it is a gift. (Gifts are not taxed as long as the total for the year is less than about $15,000.) However if you change it to goods and services then they will get a 1099 as it will come up as a sale if the total amounts go over $600.
A number of people have been dropped by PayPal because they were selling items on Facebook and having the buyer pay with friends and family.
From that paragraph posted on Paypal it tells you you this
You can make a personal payment to anyone in the U.S. for free. Just make sure that you pay the entire amount using your bank account or your balance if you have a PayPal Balance account. There is a small charge for payments made with a debit or credit card.
There are fees for sending money outside the US.
Starting next year (2022), the federal threshold for issuing the 1099-K will drop to $600 with no minimum transaction level, due to a provision in the recently enacted American Rescue Plan Act. (Some states already have lower minimums.)