Paypal Advice and Tax Question

  • Thread starter Thread starter Anxiety Serum
  • Start date Start date
Anxiety Serum

Anxiety Serum

Well-known member
Sorry, couldn't find a quick answer on this by searching. 3 Questions

1. If I sell on Paypal and its not F&F, what's the best way to do that? Is it create an invoice or something else?

2. Will they charge me or the buyer sales tax?

3. And If I sell it for what I bought it for am I at risk of any tax? I know they might send a 1099, but I can just offset with my cost right?
 
1. Good idea, but really just print the details screen from PayPal.

2. No sales tax through PayPal. In any case it would be the buyer’s responsibility to pay a Use tax (basically a sales tax but for purchases from out of state vendors without nexus) to his state, not yours

3. You owe tax on the gain. No gain, no tax. Need to substantiate a cost basis though
 
Last edited:
mhenson42 said:
1. Good idea, but really just print the details screen from PayPal.

2. No sales tax through PayPal. In any case it would be the buyer’s responsibility to pay a Use tax (sale thing) to his state, not yours

3. You owe tax on the gain. No gain, no tax. Need to substantiate a cost basis though
Click to expand...
thanks
 
mhenson42 said:
1. Good idea, but really just print the details screen from PayPal.

2. No sales tax through PayPal. In any case it would be the buyer’s responsibility to pay a Use tax (sale thing) to his state, not yours

3. You owe tax on the gain. No gain, no tax. Need to substantiate a cost basis though
Click to expand...
So just hit request money and enter their email or will that be F&F?


1687349566531.png
 
You can request money but how they send it is up to them since the protection is provided on their behalf.

If you don’t have capital gains, there’s no federal tax. However as stated earlier you have to have proof you didn’t have capital gains called a cost basis. An original purchase receipt for proof for example. If you get audited and can’t claim you didn’t make money, it doesn’t work in your favor if you paid no taxes. Also people don’t know this but if you do make profits, you can write off all of the costs associated with selling the item. That includes packing material, shipping costs, etc. to lower your cost basis and amount owed due to capital gains. I’m not a tax pro so do your own research.

Some states have rules already in place for state level taxes on online sales reaching more than $600 for a single year. Depends on the state so be sure to do your research. In those states if you’ve sold more than $600 in one year, you owe state taxes on it period regardless of no federal capital gains taxes.
 
Everything I sell is either PP FF or in person cash.
That’s why this forum works so well for the most part; those of us that participate in the gear forum have a vested interest in honest gear exchanges….that way we have peace of mind when it comes to transactions. Other than scammers that attempt to scam I can’t remember the last time anyone got burned here.
 
Racerxrated said:
Everything I sell is either PP FF or in person cash.
That’s why this forum works so well for the most part; those of us that participate in the gear forum have a vested interest in honest gear exchanges….that way we have peace of mind when it comes to transactions. Other than scammers that attempt to scam I can’t remember the last time anyone got burned here.
Click to expand...

Even if you sell PPF&F, you should still maintain all your documentation supporting whether or not you realized a gain or not. Paypal activity and transfers to an from you bank account could be subpoenaed in an audit situation. If you have unreported gains, could get yourself into trouble. You'd have to be under audit though, I don't think F&F payments are subject to reporting. In anycase, there are plausible reasons why you had a $3k paypal F&F receipt that you could use/make up. lol
 
mhenson42 said:
Even if you sell PPF&F, you should still maintain all your documentation supporting whether or not you realized a gain or not. Paypal activity and transfers to an from you bank account could be subpoenaed in an audit situation. If you have unreported gains, could get yourself into trouble. You'd have to be under audit though, I don't think F&F payments are subject to reporting. In anycase, there are plausible reasons why you had a $3k paypal F&F receipt that you could use/make up. lol
Click to expand...

100% agree. I use PayPal FF to keep from paying Paypal 3.9%. I still document everything I sell using PayPal FF and claim gains on my taxes. I never want to piss off the IRS.
 
If you're looking for an alternative way to handle transactions without the extra tax headaches, OwnersClub FX is worth checking out. It keeps things simple and straightforward, without the type of reporting that can trigger unnecessary tax concerns.
 
Last edited:
Paying F&F leaves the buyer with zero protections and is the way most PayPal scams work. It does not even need to be malicious, if an item is damaged or lost in transit, what percentage of sellers will step up and eat the loss?
 
njshred said:
Paying F&F leaves the buyer with zero protections and is the way most PayPal scams work. It does not even need to be malicious, if an item is damaged or lost in transit, what percentage of sellers will step up and eat the loss?
Click to expand...

Lost or damaged is a shipping dispute, not a seller dispute. Reverb has everyone thinking they’re entitled and putting sellers in awful positions. Once tracking is sent and money is received it’s your product you agreed to buy damaged or not. If they damage it in process then sellers should definitely do what they can to help file a claim and show whatever’s needed because some shipping companies won’t even let the recipient begin the claim. However, if a product is lost or damaged in transit, the seller still sold a working product as described and buyer has a product that needs repair or replacement due to shipping loss or damages. As soon as you pay for it and agree to the shipping charges, the product is yours.
 
glpg80 said:
Lost or damaged is a shipping dispute, not a seller dispute. Reverb has everyone thinking they’re entitled and putting sellers in awful positions. Once tracking is sent and money is received it’s your product you agreed to buy damaged or not. If they damage it in process then sellers should definitely do what they can to help file a claim and show whatever’s needed because some shipping companies won’t even let the recipient begin the claim. However, if a product is lost or damaged in transit, the seller still sold a working product as described and buyer has a product that needs repair or replacement due to shipping loss or damages. As soon as you pay for it and agree to the shipping charges, the product is yours.
Click to expand...
Yeah, no. The buyer paid to receive a safely delivered product. If the buyer is smart, they pay with their credit card, via goods and services, which guarantee the buyer either receive the product as described or will refund them their purchase price.

It’s very easy to call your credit card company and file a chargeback, then it is completely on the seller to resolve, as the buyer has their money at back instantly.

This is not FOB shipping, it is FCA, which is why market facilitators side with the buyer 99% of the time.
 
njshred said:
Yeah, no. The buyer paid to receive a safely delivered product. If the buyer is smart, they pay with their credit card, via goods and services, which guarantee the buyer either receive the product as described or will refund them their purchase price.

It’s very easy to call your credit card company and file a chargeback, then it is completely on the seller to resolve, as the buyer has their money at back instantly.

This is not FOB shipping, it is FCA, which is why market facilitators side with the buyer 99% of the time.
Click to expand...

Shipping controls that. Not the seller.

FF or zelle guarantees all sales are final. Every person selling a product is not a business unless advertised as one and that’s when return policies exist since they can offer repair or replacement. The fact you expect some seller who’s not a business to eat their broken product that cannot be replaced due to shipping a product you already paid for is unreal. That’s why no one is using reverb anymore - sellers are tired of the buyer first mentality and that’s exactly why I only accept Zelle or FF. All sales are final means all sales are final.
 
glpg80 said:
Shipping controls that. Not the seller.

FF or zelle guarantees all sales are final. Every person selling a product is not a business unless advertised as one and that’s when return policies exist since they can offer repair or replacement. The fact you expect some seller who’s not a business to eat their broken product that cannot be replaced due to shipping a product you already paid for is unreal. That’s why no one is using reverb anymore - sellers are tired of the buyer first mentality and that’s exactly why I only accept Zelle or FF. All sales are final means all sales are final.
Click to expand...
So you have chosen to limit your potential buyer pool by about 90%, which is fine if you have something extremely desirable. If not, I’d expect you receiving approximately 25% less than market pricing. It’s a trade off, one each of us has to consider as both buyers and sellers.

Oh, and shipping insurance purchased through shippers is a joke, they deny every claim the first pass. To collect is a long fought battle, assuming the item was packaged with guidelines to begin with.
 
njshred said:
So you have chosen to limit your potential buyer pool by about 90%, which is fine if you have something extremely desirable. If not, I’d expect you receiving approximately 25% less than market pricing. It’s a trade off, one each of us has to consider as both buyers and sellers.

Oh, and shipping insurance purchased through shippers is a joke, they deny every claim the first pass. To collect is a long fought battle, assuming the item was packaged with guidelines to begin with.
Click to expand...

You’ve never shipped anything in perfect order, marked received, and had a buyer completely rob you of tubes or purposefully damage anything to want a refund and it shows.

I’ve never had an issue selling on here and people know I pack my stuff to survive a bomb. I however have been subject to ripoffs in the past and that’s why all sales are final. If something is claimed to be a shipping problem, then that’s what claims are for.

My policy protects from buyers remorse. Yours does not, and is the reason people hate selling on buyer first platforms. Dishonest sellers deserve to be outed and normally are banned here no questions asked.
 
glpg80 said:
You’ve never shipped anything in perfect order, marked received, and had a buyer completely rob you of tubes or purposefully damage anything to want a refund and it shows.

I’ve never had an issue selling on here and people know I pack my stuff to survive a bomb. I however have been subject to ripoffs in the past and that’s why all sales are final. If something is claimed to be a shipping problem, then that’s what claims are for.

My policy protects from buyers remorse. Yours does not, and is the reason people hate selling on buyer first platforms. Dishonest sellers deserve to be outed and normally are banned here no questions asked.
Click to expand...
I grew up in a retail business, we lost $25,000 a year minimum to customer issues. And nothing you said changes the fact, you have a smaller buyer audience than you would otherwise. There are costs to bring in business, and these are business transactions, whether you wish to acknowledge it or not.

I had an opportunity to buy a one-off guitar, from a dealer in Germany. They would only accept wire transfer payment. I ultimately passed, too much risk for my appetite.
 
glpg80 said:
You can request money but how they send it is up to them since the protection is provided on their behalf.

If you don’t have capital gains, there’s no federal tax. However as stated earlier you have to have proof you didn’t have capital gains called a cost basis. An original purchase receipt for proof for example. If you get audited and can’t claim you didn’t make money, it doesn’t work in your favor if you paid no taxes. Also people don’t know this but if you do make profits, you can write off all of the costs associated with selling the item. That includes packing material, shipping costs, etc. to lower your cost basis and amount owed due to capital gains. I’m not a tax pro so do your own research.

Some states have rules already in place for state level taxes on online sales reaching more than $600 for a single year. Depends on the state so be sure to do your research. In those states if you’ve sold more than $600 in one year, you owe state taxes on it period regardless of no federal capital gains taxes.
Click to expand...
For 2025, the threshold for a 1099k is $2500. You'd get a 1099k in 2026, and if you sold at a loss, you owe nothing.
 
glpg80 said:
That’s federal. State laws like MD still have a $600 cap. Everyone should definitely look into their own state laws in addition to federal.
Click to expand...
Additionally, if sales tax is not collected at the time of sale, the buyer owes it to their home state as “use tax” on their state return.
 
You must log in or register to reply here.
Back
Top