Do You Report Your Online Earnings to the IRS? Paypal Does!

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If you are a United States citizen, you are required to report ALL income to the IRS.

Does that mean you have to report and pay tax for the money you make selling short reports? What if you only make $500 through a certain affiliate program and do receive a 1099? Do you have to pay taxes on that money? Are you required to report your profits from eBay and other auction sites?

According to the Internal Revenue Service, the answer to all of the above questions is yes. You need to report any and all income you receive, whether it is offline or online.

Until this year, it was up to internet marketers to honestly report their online earnings. There were really no measures set into place to make sure this was happening. While many people probably did keep good records and report every dollar, there were probably others who were not as forthcoming with information about the money they made online.

This year, the IRS put some changes in place that will begin to make internet marketers more accountable for reporting their online income.

For the first time, payment providers like Paypal is now required to report sales information about some of its members to the IRS. This requirement will affect anyone who has received over 200 payments totaling $20,000 or more through Paypal over the course of the year. This applies to payments made for both goods and services.

If you fit those two criteria, you will be receiving a copy of the 1099-K form that Paypal will send to the IRS this coming January.

Even if you have not received that amount of money through Paypal this year, it is always a good idea to accurately report all of your earnings to the IRS. This is a good time to set up a system to keep a record of all the money you make through your internet marketing blog.

It is likely that the government will continue to find ways to track online income. If the IRS finds out that you owe them money, they will make sure that you pay it, along with fees and late penalties if applicable. It is much better to just keep track of your earnings and report them accurately.

Paypal New Tax Law for Online Sellers FAQ:

I am not a tax professional. Please consult a financial professional before making any tax decisions.

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