Ask Terry Questions limits on paypal transactions

limits on paypal transactions

By Terry Savage on May 13, 2023 | Wild Card

My sons reimburse me $50 each, $100 per month for their share of our cell phone bill, $1200 per year.
Next, I have been selling Annalee dolls on line, many of which were my mother’s or maybe I purchased years ago.

Am I going to be subject to some small business tax rules? Especially regarding getting reimbursed, this is (obviously) not income.

What is the status of either changes in the law or rules on this? Can you provide any sort of update? I’m rapidly reaching $600 just by my kids reimbursement of cell phone charges!

Terry Says

Your children should state on their payments that they are paying a “friend” — so these amounts will not be considered as “earnings.”
For 2022, the limit was $20,000 in earnings before Paypal sent a 1099k.
BUT — for 2023, Paypal will send you (and the IRS) if you took in more than $600 in earnings from the sale of items or services.

Very important for your kids to make the payments as “paying to a friend”. They should know that and probably have been doing that. Ask them.

But if you are selling dolls that you inherited, you need to make a good faith estimate of the “cost basis” which would be the value on the date of her death. If she died in the past year, you could argue that you had no “taxable gain” — But when you file your taxes get some help to make sure this is treated as a sale of goods that had a cost basis, which results in little or no taxable gain.

It would help to get a professional valuation of the collection, as of the date of her death.



a personal
finance question