PayPal and taxes?
Thread poster: Jekaterina Kotelnikova

Jekaterina Kotelnikova  Identity Verified
Italy
Local time: 15:33
English to Russian
+ ...
Dec 12, 2013

Hi, everyone! Before I was working with clients who payed me via bank transfers. Now, that I have registered here at ProZ.com and started to get some projects, I started to use Paypal.

And here comes the dumb question (I know, many of you will think, how can she not know this, but I have just started with paypalicon_smile.gif :

how does it work with paypal and taxes?


 

alessandra bocco  Identity Verified
Local time: 15:33
Member (2006)
English to Italian
+ ...
It's the same Dec 12, 2013

Exactly as with bank transfers... There is no difference.

 

Valery Shapovalenko  Identity Verified
Ukraine
Local time: 16:33
English to Russian
+ ...
...and no discounts Dec 12, 2013

...whatsoevericon_wink.gif

 

Maria Popova  Identity Verified
Bulgaria
Local time: 16:33
Member (2011)
German to Bulgarian
+ ...
use it only for small amounts Dec 12, 2013

As taxes are very high I recommend using it only for small amounts. Every time I accept PayPal payment I regret it.

 

Flavio Granados  Identity Verified
Venezuela
Local time: 10:33
Member (2006)
English to Spanish
at least Dec 12, 2013

5% of your payments received in the most cases.

 

Trinh Do  Identity Verified
Australia
Member (2007)
English to Vietnamese
+ ...
Three options: PayPal, Moneybookers/Skrill, bank transfer Dec 12, 2013

1. PayPal: for non-instant or small payments, then it's great.
2. Moneybookers/Skrill: for large payments.
3. Bank transfer: for large payments.

All have a fee and this can be claimed in tax.

In Australia, the bank transfer fee is really high, but tax issues of all payment modes make me feel good.


 

EvaVer  Identity Verified
Local time: 15:33
Member (2012)
Czech to English
+ ...
More to the point... Dec 12, 2013

I book these payments in net value (actually received) as cash sales.

 

Tina Vonhof
Canada
Local time: 07:33
Member (2006)
Dutch to English
+ ...
Same as Eva Dec 13, 2013

I get an annual statement from PayPal showing the amounts I actually received after their fees are deducted. Those amounts are what I declare on my taxes (i.e., not the invoiced amounts).

 

Radian Yazynin  Identity Verified
Local time: 17:33
Member (2004)
English to Russian
+ ...
The best thing is Dec 13, 2013

to go to your local tax inspectorate and ask for instructions on how to pay taxes because tax payment schemes do differ from country to country. Any information suggested here may be misleading for you in particular. So be careful. Good luck!

 

Jekaterina Kotelnikova  Identity Verified
Italy
Local time: 15:33
English to Russian
+ ...
TOPIC STARTER
Thank you! Dec 13, 2013

icon_smile.gif

 

Robert Dunn  Identity Verified
Panama
Local time: 09:33
Member (2013)
German to English
+ ...
Tax deduction from PayPal fees Dec 13, 2013

You report PayPal income just as you would any other freelance income.

You can also claim a tax deduction from the fees that PayPal deducts from your incoming payments.


 

LegalTransform  Identity Verified
United States
Local time: 09:33
Member (2002)
Spanish to English
+ ...
And a new tax law went into effect in the US where Dec 14, 2013

if you are paid more than $20,000 per year from PayPal (and affiliate programs like Amazon) and you get more than 200 payments during the year, PayPal must notify the government and you must claim it on your taxes (if you live in the US) or risk heavy fines and jail time.

Not so bad for translators where most of this money is taxable income, but not so great for people who make a living selling products (such as on Ebay) because this $20,000 includes the cost of the item, shipping, etc. and they now have to keep detailed records in order to prove how much of that $20,000+ was not profit.

Here's an article about it: http://www.ecommercebytes.com/cab/abn/y13/m08/i20/s02

Also the IRS CODE:
"Internal Revenue Code (IRC) Section 6050W states that all US payment processors, including PayPal, are required by the Internal Revenue Service (IRS) to provide information to the IRS about certain customers who receive payments for the sale of goods or services through PayPal. PayPal is required to report gross payments received for sellers who receive over $20,000 in gross payment volume AND over 200 separate payments in a calendar year. " https://cms.paypal.com/us/cgi-bin/?cmd=_render-content&content_ID=marketing_us/IRS6050W

[Edited at 2013-12-14 01:05 GMT]


 


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