It depends on your unique tax situation, and PayPal will send you a 1099-K tax form if you receive more than $20,000 and 200 or more payments per year to help you with filing requirements. Please consult your tax professional for tax advice.
Here is some related information from PayPal and the IRS:
https://www.paypal.com/webapps/mpp/irs6050w
http://www.irs.gov/Businesses/Understanding-Your-1099-K
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