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paypal asking for tax id #? HELP!

I have been notified by paypal recently, asking for my tax ID#, or my SS#.

It also mentioned this:
We'll use your tax ID number to send tax Form 1099-K to you and the IRS
when the payments you receive exceed both of these milestones in a calendar
year:
- $20,000 in gross payment volume for goods and services
- 200 payments

It says that you have to reach BOTH "mlestones" and I have not reached any yet. I do have another shop that has reached over 200 sales but not $20,000.

I am just really confused, and need help! Do I have to provide my SS# NOW since I haven't reached any of those goals yet? Or, am I able to wait, or can I just not do it at all?

What happens when you do provide your tax ID #? Do you have to pay taxes? I have never paid taxes before so I have no idea what it is, or what to do.

Please explain, thank you!!!

37 Responses

you are required to claim your sales as income whether or not paypal issues a 1099, unless you dont meet the IRS requirements for filing a 1040 in general.
www.etsy.com/teams/7722/business-topics/discuss/8972291/page/2/
you need to file your Federal income tax, as you always should. This is just for the new reporting laws -- Paypal has to submit 1099's for people/ businesses who meet the numbers you mentioned above. This is mainly designed to help curb the tax evasion problem that seems to be pervasive in internet businesses.
www.etsy.com/teams/7744/etsy-us-tax-bookkeeping-and-business/discus...

www.etsy.com/teams/7744/etsy-us-tax-bookkeeping-and-business/discuss/
"What happens when you do provide your tax ID #? Do you have to pay taxes?"

You have to pay taxes regardless.
How much, and how often do you pay taxes?
If you bring in so much as a dollar in revenue you need to file a Schedule C with your income tax. Schedule SE (for Social Security) kicks in after, I think, $400 in PROFIT (not revenue). State income tax, local income tax, state business tax, etc, varies by state.

How often you pay (quarterly or annually), depends on your profit and other withholding.
Here is a good place for you to start.

www.irs.gov/businesses/small/article/0,,id=99336,00.html
Income taxes are filed in the US every year on April 15. Your effective tax rate depends on your total income. You will need Schedule SE (self-employed) to go along with your 1040 (standard income tax form) and also Schedule C.


I usually figure about 25% of my paycheque turns into taxes, but this number changes based on your tax bracket. When I was a teenager earning like $4K/yr, I got all my tax payments refunded because they don't tax income on such a small number. If you make $200K, you'll pay a higher effective tax rate (unless it's mostly stock since capital gains taxes are way way low).
Do I have to provide my social security # to paypal? Or is there a different way I can do my taxes without affecting my paypal account. In the notification, it mentions that I can use my "Individual Tax Identification Number" or my "Employer Identification Number". What are these, and how can I get one?

Thanks for all your help!

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