posted on October 8, 2000 01:26:13 AM new
To outoftheblue:
No, seriously, that amt. you see as "available funds". I called & they said to get it lower than $500 I'd have to withdraw my acct. & start another.
posted on October 8, 2000 06:01:52 AM new
A couple of things about the new PayPal "$500 in 6 months" rule.
When PayPal first started, I called them and specifically asked them how they could make money offering this for free, and if it was only an introductory offer.
Their response was that they made money on the "float." And that free wasn't introductory. Now they whine that processing costs them money. Can you spell Bait & Switch?
Another note is that a friend told me that for tax purposes, a person can make up to $12k/yr on a hobby before it's taxed federally. (Don't holler if the $12k has been changed recently.) But apparently PayPal is a greater authority than the feds since their limit on hobby income is only $1000/yr.
I'll continue to offer this convenience to my buyers. And will offer other cc services the day I pay my first charge to PayPal.
When will businesses learn that lying gets you only grief? (I would have signed up even if they'd been honest and said it was only introductory!) Put these guys in the same league as the ones who testified to congress that tobacco wasn't addictive. Lying and cheating in a white shirt and tie only makes you a well-dressed thug!
posted on October 8, 2000 03:16:16 PM new
stantman
From what I have seen the PayPal cheerleading squad is getting smaller. Until the verification thing, I was one of them.
[ edited by outoftheblue on Oct 8, 2000 03:17 PM ]
posted on October 8, 2000 03:38:27 PM new
You can make 12k per year before being taxed by the fed's? I would love to see the tax code that says this. That's a lot of money to make on a hobby, and have Uncle Sam keep his mitt's off of it. I dare say this advice didn't come from a tax professional.
This is copied from the IRS web site:
"You must include on your return income from an activity not for profit (a hobby). Deductions for expenses related to the activity are limited to the amount of hobby income you report, and can be taken only if you itemize deductions on Schedule A, Form 1040.
If you collect stamps, coins, or other items as a hobby for recreation and pleasure, and you sell any of the items, your gain is taxable as a capital gain. However, if you sell items from your collection at a loss, you cannot deduct a net loss."
In other words, you claim the income, deduct the expenses up to an amount equal with the income, which "washes" out any profit. You can't deduct more expenses than you have profit, which would give you a loss. In order to show a loss, you would have to use the Profit and Loss paperwork as well, which would take you out of the Hobby area.
[ edited by Meya on Oct 8, 2000 03:43 PM ]
[ edited by Meya on Oct 8, 2000 03:46 PM ]
posted on October 8, 2000 04:31:43 PM new
My understanding of what I have read is this; when your "hobby" begins to actually make you a profit, it ceases being a hobby. I have sold a good deal of my own belongings on eBay over the past two years. Keeping track of what those items cost when they were new, the cost of listing and selling them, milage deductions, and my costs for shipping materials, taken away from the money I received for the items left me with a loss. I had no profit over all, even on garage sale items I picked up and sold. Probably 85% of the items I sold were mine to begin with, and I sold them at a loss.
This keeps my selling in the "hobby" catagory. Actually, this calendar year I have sold very little.
posted on October 8, 2000 04:54:09 PM new
MEYA, if you actually can substantiate that loss, you ought to file a Schedule C and declare it on your return. You can offset other income and produce a tax savings. Just one nice thing about being in business, as opposed to having fun with a hobby.
BTW, as somebody else correctly stated upstream, there is no such thing as a limitation of $12,000 or any other amount before you have to declare that a hobby is a business. There are a number of qualifications that determine whether you are operating a business or a hobby, but gross income isn't one of them (at least, not in the way the original thought was stated).
What many people don't realize is that there are so many advantages to filing a Schedule C (being in business) that they should do this if their situation permits. There's a whole range of deductions awaiting you, and any losses may be declared against your other earnings, thus lowering your overall taxes. Bear in mind, of course, that only LEGITIMATE deductions should be taken.
posted on October 8, 2000 05:14:31 PM new
OK, I thought the point was it was better to not claim it as a hobby, that it's only not a hobby if you can show a profit in so many years. If it's a hobby you aren't allowed to deduct for expenses, but you are still required to pay taxes on all money that is paid to you - even if it's something like finding a 10 dollar bill on the ground.
posted on October 8, 2000 05:32:50 PM new
Kate, the info I copied from the IRS site seems to say you can deduct the expenses if you itemize, but only up to the amount of hobby income you report. So yes, if you are making more than you are spending, filing the Schedule C profit and loss papers is the way to go. It only makes sense to reduce the amount of taxable income by each and every legitimate deduction.
Since selling such as mine has been on a very very part time basis, and as a hobby with no profit, I don't bother with Schedule C etc. If I seriously got involved with buying to resell etc, then I would keep the proper records and file the appropriate forms. Selling old tupperware for 40% of what I paid for it is much different. I may recoup some of my outlay, but I certainly don't make a profit on it.
posted on October 9, 2000 11:31:58 AM new
Hi rigdon625aolcom,
The limit applies to credit-card funded transactions only. If someone paid via ACH or money in their PayPal balance the payment would not apply to that limit.
The limit is 500.00 over six-months off of a credit card.
