I am Canadian living in Canada. I have an online business and all of my customers pay through my PayPal account, in USD. These customers are mostly in the US. but also worldwide. My address as registered with PayPal is in Canada.
My sales are transferred from PayPal to a USD account I hold with a US Bank in the U.S.From there these funds are transferred into a USD account I hold with a Canadian bank in Canada. I write a cheque payable to my business to do this. (PayPal will not deposit USD funds into a Canadian USD account.) My questions are:
1. Given that PayPal is a based in the U.S. , must I pay U.S. tax on my sales even though I live in Canada and am Canadian?
2. Are there IRS implications of having my sales deposited into a USD account in the U.S?
PayPal & IRS Tax Rules re: USD Bank Account held by Cana
Moderator: Mark T Serbinski CA CPA
You need to be aware of and comply with 1099-K reporting, exemptions and issues. PayPal can abruptly warn you to obtain an ITIN and provide that TIN to it within 10 days or they will shut you down. ITIN takes 4-6 weeks to obtain so you're essentially screwed. Do yourself a favor and get yourself an ITIN ASAP so you have it handy as soon as asked for it and read up on 1099-K, IRC § 6050W and “payment settlement entity†.