Paying taxes is an annual occurrence every year, and in order to pay your taxes, the IRS keeps track of your information.
If you have recently received an email or message from PayPal asking you to confirm your taxpayer status, you are probably wondering what that means and how to do it. I researched PayPal and why it needs your taxpayer information, and here is what I found out!
Why Does PayPal Ask to Confirm My Taxpayer Status In [currentyear]?
PayPal asks you to confirm your taxpayer status because the IRS requires PayPal, and all other payment processors, to report amounts of $600 or more received for commercial transactions. Moreover, if you receive $600 or over for commercial transactions, you will have to provide PayPal with your Taxpayer Identification Number, TIN, and any other information that is asked for.
If you want to learn more about how to confirm your taxpayer status, what your TIN is, and much more, then read on!
What Does Confirming your Taxpayer Status Mean?
Confirming your taxpayer status means providing PayPal with your personal information that it needs to be able to provide the U.S. Government with the necessary information.
PayPal, is required by the U.S. IRS “to provide information to the IRS about customers who receive payments for the sale of goods or services through PayPal.”
Moreover, PayPal has to report if you receive payment for goods or services more than “certain transaction and payment volume thresholds.”
Furthermore, starting January 1st, [currentyear], the reporting threshold for commercial transactions, or the sale of goods and services, is $600 or more.
Therefore, anyone who comes close to receiving $600 for selling goods or services in [currentyear] will be asked by PayPal to “confirm their taxpayer status.”
How Do I Confirm My Taxpayer Status on PayPal?
As stated previously, PayPal will ask you to “confirm your taxpayer status” when you are close to, or reach, $600 for selling goods or services in 2022.
When you come close to or reach this limit, PayPal will send you notifications on your PayPal account and emails stating that you need to confirm your taxpayer status with a link attached.
Furthermore, you will need to click the link either in the email or in the notification on your account, and enter the information that is asked for.
Moreover, PayPal will ask you for your TIN, Taxpayer Identification Number, which is the most important piece of information for your taxpayer status.
Additionally, the information you give PayPal will be compared to the IRS’s files, the same information you provide on the IRS Form W-9.
Fortunately, if it does not match, you will have three (3) chances to review and edit the information.
Furthermore, if the information continues to not match, and cannot be verified, PayPal will also ask you for your address and to “certify your information.”
Another piece of information that is important, is if you have multiple PayPal accounts, you will have to confirm your taxpayer status on all of them.
Beyond that, if the IRS notified you that you currently are subject to “backup withholdings,” PayPal asks that you call Customer Service at 1 (888) 221-1161
You can also call 1-402-935-2052 if calling from outside of the U.S., instead of submitting your information online.
What Is My Taxpayer Identification Number?
Several different identification numbers can be used for your Taxpayer Identification Number. You can use the following:
- SSN, Social Security Number
- EIN, Employer Identification Number
- ITIN, Individual Taxpayer Identification Number
- ATIN, Taxpayer Identification Number for Pending U.S. Adoptions
- PTIN, Preparer Taxpayer Identification Number
Furthermore, when providing your TIN for PayPal, the company will accept you’re EIN, SSN, or ITIN.
What Happens If I Don’t Give PayPal My Taxpayer Identification Number?
Unfortunately, if you don’t provide PayPal with the needed information, such as your TIN, the company may place limits on your PayPal account until you provide it.
PayPal may place limits on your account, such as:
- Stopping you from sending money
- Stopping you from receiving money
- Stopping you from closing your account, or
- Stopping you from removing or changing your information
Therefore, to lift these limits, you will need to provide PayPal with the requested information, including your TIN.
To learn more, you can also read our posts on PayPal charged me twice, PayPal collections, PayPal statistics, and what is the age requirement for PayPal.
Conclusion
Confirming your taxpayer status is providing PayPal with your TIN and any other requested information. Furthermore, PayPal asks for this information so it can verify it with the IRS, who can track your income for tax season.
Moreover, you can confirm your taxpayer status on PayPal by clicking the link sent to you in the email or in the notification in your PayPal account, and giving the information requested. Additionally, PayPal will accept your SSN, EIN, or ITIN for your TIN.
