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Paypal yearly limit almost reached help!!

Discussion in 'Ebay' started by kahdijahlozada, Mar 30, 2016.

  1. kahdijahlozada

    kahdijahlozada Registered Member

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    Hey everyone, I have a quick question

    I have been selling some sneakers for a little bit but things have been taking off and I have been making some good money. Anyways why i a, posting here is because I need some help..

    I know when you reach 19k PayPal has to report your account to the IRS. I am not trying to skip out on paying taxes but does anybody know how it actually works? Do they charge me per item I sell after that or do they take a huge cut per month? and about how much would I get back? Sorry for the various questions but I am starting to slowly expand with hiring a couple of freelancers and want to run my business legitimately but want to know what I am in for and how much they are going to rear end me here (excuse my mouth) any response would help. Thank you.
     
  2. toml3030

    toml3030 Elite Member

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    You can be hit with tax id request at any time if you're unlucky. In one of my accounts I got hit with one with less than $2K in sales because I was mixing in some $5 items that sold well to build up feedback.

    IIRC you are outside US. There are basically three type of taxes you will have to pay as a business. US Federal Government tax, local tax, and sales tax. Sales tax I'm sure you know about so I won't go over it.

    1. Federal income tax: What happens in US is that every April 15 you have to file taxes, as either an individual or as a business entity and you are taxed on your profits. (your revenue - your costs). Rates can vary from 0 (if you file as a individual and make less than about $30K a year) to 35% if you're a corporation making over $18 mil a year or individual making more than $350K a year. No one really pays those rates because you can write off a lot as expenses legally.

    2. Local tax. There are two types of local taxes. Taxes on income and taxes on business license taxes. The rates vary depending on where you are registered as doing business. For example, where I operate the tax on corporate profits is 8.84% + $850 yearly fee for operating as a corporation.

    In my experience, it takes about 3-5 years for the IRS and local tax people to find you and ask to pay your taxes on a eBay business.