I've made a conscious effort all year to not request payments too frequently to try to keep my total payouts under 200 for the year and avoid triggering the PayPal W9.  I have to admit I wasn't tracking the number of my requests, and it appears to have burned me... I just downloaded a report of my PayPal activity for the year and I'm almost at 200 payments from the agencies already.  Even if I don't request any more payments this year, the agencies that automatically send payments will push me over 200.

Theoretically, I shouldn't worry since I'm paying taxes on all the money I make at the agencies and the PayPal tax reporting is just duplicating those records, not calling for additional tax payments.  But I worry about the flags it could set off within the IRS and maybe trigger an audit. 

Assuming you're making over $20,000 this year, what are YOU doing about this?  Requesting fewer payouts?  Do you care?

I request payments as soon as the payout hits between $200 to $500. On some of the lower tier sites I cash out at $100. By doing this I find that PayPal never takes a cut. A couple of times when customers paid through PayPal in amounts of $1500 to $3000, I noticed that PayPay charged me for the transaction. So I figured that when the payout is just a few hundred dollars, PayPay doesn't charge. It's like free banking.

Anybody else notice this?

My payouts aren't typically this large, so I never encountered fees from the ms agency payments.  (If you make more than $1,000 in a month at Shutterstock, they will send multiple payments, with none more than $999... I'm wondering if this is to protect us or them from fees?)

But my original question is a completely different matter.  Are you getting more than 200 payments in a year from the agencies?  Or are you actively trying to avoid the PayPal W9 at the end of the year?

Stockmarketer - are you able to get a Payoneer card in your country?  Can you send some of your payments to Payoneer?

One payment withdrawal a week makes 52 a year.  That's plenty enough for me.

Stockmarketer - are you able to get a Payoneer card in your country?  Can you send some of your payments to Payoneer?

Hmmm. Might be worth looking into.  Which agencies are willing to pay via Payoneer, and are there any fees?  If the agencies that don't work with Payoneer are the same agencies that automatically send me payments once a month, I'll still end up over 200 and it won't be worth pursuing.

Quote from: sjlocke on September 12, 2011, 14:51

One payment withdrawal a week makes 52 a year.  That's plenty enough for me.

Many of us also receive payments from other sources (assignments etc.).

I wish I could just live off of one agency and not having to work anything else...

Whoops.  I thought I remembered it being 200 withdrawals, not 200 deposits...  Sorry.

" Applies to sellers receiving over $20,000 in gross payment volume AND over 200 payments
  Applies only for sales on or after January 1, 2011"

Just a simple bit. You can have more than one PayPal account. If someone wanted to, they could divide the payments and avoid the automatic trigger. However agencies report to the IRS, the law is $600.01 (aka over $600) and they must send a W-2, so what's the difference?

I declare all income because I can use the business, equipment and travel deductions to offset some of it. Easier for me to pay the taxes and not try to game the system.

Quote from: RacePhoto on September 14, 2011, 20:41

Just a simple bit. You can have more than one PayPal account. If someone wanted to, they could divide the payments and avoid the automatic trigger. However agencies report to the IRS, the law is $600.01 (aka over $600) and they must send a W-2, so what's the difference?

I declare all income because I can use the business, equipment and travel deductions to offset some of it. Easier for me to pay the taxes and not try to game the system.

I report the income from all the agencies every year.  No problem there.  But I don't know how I'm going to address the PayPal W9s that report the same income as the agency W9s.  I use TurboTax each year, and I don't recall it asking about W9s that may be reporting income that is already reported on other W9s.  If I don't enter the figures from the PayPal W9, that would have to raise a flag at the IRS, right?  Do I enter it, then subtract it out somewhere on a form that allows me to explain that it is income that has been reported by two different sources?  This is just an invitation to an audit.  Just remembered that I have a friend who is a tax accountant.  I'll ask his advice and report back here.

Ah Ha now I get it. You will be showing the same income twice?

Well here's my secret. I have an accountant that I pay to do my taxes. I tried turbotax and found that I still did better paying someone $250 to figure my taxes. Much of that is me being horrible and stupid about tax things, and lazy. I give her a big box of all my papers, printouts, checkbook statements, sales receipts, inventory costs, (I have a real business outside of photography) then photo expenses and income, and she does it. Also the cost of having the taxes calculated is a deduction.

I don't have to figure this or winder if I missed something or added something I shouldn't. Did I mention lazy? 

Many people can do just fine with turbotax it's reasonable and you get good results. Because I have four sources of income, it starts to get messy.

I get W-2s, 1099s, I don't know what a W-9 is? Taxpayer Identification form? Why would PayPal send that? Also PayPal should be sending a W-2 because they aren't paying you, it's a banking kind of thing, so it's just a record of transactions, not an "income".

And now you know why I don't do my own taxes.

I think people are confused.

https://cms.paypal.com/us/cgi-bin/marketingweb?cmd=_render-content&content_ID=marketing_us/IRS6050W

Yup, I messed up by saying W9 instead of 1099.  (I deal with W9s a lot in my day job, so I made a mental slip.)

And there does seem to be an important distinction between the 1099-K and the 1099s the agencies send us (they're 1099-MISC forms, right?)

Doing more web research, it looks like the 1099-K is used to compare your income to info the IRS gathers from credit card processing companies (which includes PayPal) to make sure we're claiming the right amount.  As long as we're not expected to add this 1099-K revenue alongside the other 1099s and use the grand total to determine the amount we owe, I guess I'm fine with it.


 

Doing more web research, it looks like the 1099-K is used to compare your income to info the IRS gathers from credit card processing companies (which includes PayPal) to make sure we're claiming the right amount.  As long as we're not expected to add this 1099-K revenue alongside the other 1099s and use the grand total to determine the amount we owe, I guess I'm fine with it.

Good to know.  Thanks for explaining the distinction.  I'd still rather not deal with it if I don't have to.