Taxes & Selling Digital products..

[Savingmonster]

Hey guys, I have a couple questions.. I am a dunce when it comes to Taxes I admit..

I want to start a website and sell a digital product on the Website, and Accept Payments through paypal..

Lets say, this yr, I make $100k off sales, as and Example...

Would I have to report that income? Does Paypal report what you are making to the IRS?

I am based in NYC if that matters...


Nice to be back on this forum, it helped save my financial life about 6-7 yrs ago .. I am never ashamed coming on here and ask a "Dumb" Financial Question..

[doingitallwrong]

You absolutely have to report that income. You'll most likely do it on a Schedule C and you will be able to write off business-related expenses such as your website hosting, PayPal fees, etc.

PayPal will report sales of goods and services to the IRS if in a single year you receive more than $20,000 gross *and* 200 or more payments. They will also send you a 1099-K reflecting the amount reported to the IRS.

Even if you make less than $20,000 in sales, you have to report that income. (You have to report even $1, actually.)

[disneysteve]

You absolutely have to report that income. You'll most likely do it on a Schedule C and you will be able to write off business-related expenses such as your website hosting, PayPal fees, etc.

PayPal will report sales of goods and services to the IRS if in a single year you receive more than $20,000 gross *and* 200 or more payments. They will also send you a 1099-K reflecting the amount reported to the IRS.

Even if you make less than $20,000 in sales, you have to report that income. (You have to report even $1, actually.)

I agree with all of this. All income is reportable. The benefit is you get to deduct expenses. It would also qualify you for a SEP-IRA if you are so inclined. That can be done in addition to a Roth IRA or other retirement plan.