New eBay Managed Payments - They cut PayPal out!

[LaC | 104]

47 minutes ago, Tanooki said:

I did some poking, found this so far of those who already screw their citizens (knew of MA from a friend) Vermont, Massasschusetts, Virginia, DC, Mississippi, and Maryland.  $600 in gross payment value over a year.  Illinois is $1000 over 4 sales and New Jersey is $1000 overall.  $2500 in Arkansas.

DAMNIT...fucking democrats and their taxing.  I was going to ask where'd you find this, but I did some digging.  That asshole in chief Biden signed it into law this month.  I guess I'm done using ebay for sales 12/31 of this year.  I refuse to pay taxes on an item I already paid taxes on to buy it in the first place.  I'll just use facebook, cash only.  I wonder if I'll need to terminate my paypal account too, since they'll happily rat me out too if I have more than $600 injected into the account from 'goods and services' as well.  Seems if you go along with it, you're hit with the 15.3% self employment tax rate.

 

American Rescue Plan Act Clarifies Scope of Form 1099-K Reporting and Reduces De Minimis Threshold

Section 9674(a) of the ARPA changes the de minimis threshold for Form 1099-K reporting for TPSOs.  (No de minimis threshold applies with respect to payment card transactions.)  Currently, the de minimis rule under section 6050W(e) provides that a TPSO is required to report on Form 1099-K with respect to third party network transactions of any participating payee only if (1) the amount that would otherwise be reported exceeds $20,000, and (2) the aggregate number of transactions exceeds 200.  The new law replaces this two-step de minimis standard with a single $600 reporting threshold effective for 2022.  Accordingly, a single transaction for more than $600 settled through a TPSO will now be reportable as will multiple transactions that total more than $600.

There is no new law here stating you have to pay more taxes.  You already were supposed to be paying these taxes.

As long as you didn't buy stuff to make money then you don't have to pay taxes.  This qualifies as a garage sale fund.  But if it appears you are buying to flip stuff, that is income and you are now and were always supposed to be reporting it. 

I'm sure turbo tax will have a little button you click when you enter your 1099K that lets you specify you didn't actually sell stuff in order to make a profit. So most people will be fine.  But it is annoying because likely every one of these +$600 people will be clicking that button.  They should've made it like $6000.

However, if you do have to do the schedule C and report the extra income, remember you can write off what you paid for the item (including what you paid in tax).  You can also deduct tons of other things like your mortgage (home business), lawn care, repairs, all kinds of stuff.  

All that being said, places like Facebook marketplace and Paypal F&F payments are about to get a lot more popular in 2022.

 

[Estil | 1,264]

5 minutes ago, LaC said:

There is no new law here stating you have to pay more taxes.  You already were supposed to be paying these taxes.

So what you're trying to tell Tanooki is...

 

[cromag27 | 46]

4 hours ago, Tanooki said:

I did some poking, found this so far of those who already screw their citizens (knew of MA from a friend) Vermont, Massasschusetts, Virginia, DC, Mississippi, and Maryland.  $600 in gross payment value over a year.  Illinois is $1000 over 4 sales and New Jersey is $1000 overall.  $2500 in Arkansas.

DAMNIT...fucking democrats and their taxing.  I was going to ask where'd you find this, but I did some digging.  That asshole in chief Biden signed it into law this month.  I guess I'm done using ebay for sales 12/31 of this year.  I refuse to pay taxes on an item I already paid taxes on to buy it in the first place.  I'll just use facebook, cash only.  I wonder if I'll need to terminate my paypal account too, since they'll happily rat me out too if I have more than $600 injected into the account from 'goods and services' as well.  Seems if you go along with it, you're hit with the 15.3% self employment tax rate.

 

American Rescue Plan Act Clarifies Scope of Form 1099-K Reporting and Reduces De Minimis Threshold

Section 9674(a) of the ARPA changes the de minimis threshold for Form 1099-K reporting for TPSOs.  (No de minimis threshold applies with respect to payment card transactions.)  Currently, the de minimis rule under section 6050W(e) provides that a TPSO is required to report on Form 1099-K with respect to third party network transactions of any participating payee only if (1) the amount that would otherwise be reported exceeds $20,000, and (2) the aggregate number of transactions exceeds 200.  The new law replaces this two-step de minimis standard with a single $600 reporting threshold effective for 2022.  Accordingly, a single transaction for more than $600 settled through a TPSO will now be reportable as will multiple transactions that total more than $600.

the only ways around it would be accepting cash, paypal friends/family or using direct bank transfer services like zelle or apple pay. none of which ebay accepts. 

[jonebone | 1,307]

12 hours ago, BreaKBeatZ said:

I was just looking at eBay, and noticed that I am going to get a 1099 for having $600 or more aggregate sales in 2021 since I live in Maryland. That's a hell of a lot lower than the $20,000 limit from PayPal. Has this been discussed already somewhere else, because I'd love to hear people's opinions about it and if there's a way I can switch back to using PayPal to receive payments and avoid this.

 

Link: https://www.ebay.com/help/selling/fees-credits-invoices/ebay-form-1099k?id=4794#:~:text=eBay and Form 1099-K,-If you're&text=We'll provide you with,%2420%2C000 in gross payments%2C and 

Don't freak out about it, its pretty simple tax wise.  You should at least be running a spread sheet tracking what you sell things for that would match eBay.  

Let's say you sold $1,000 worth on eBay and are frustrated you tripped the $600 breaker.  

Then deduct cost of goods sold, lets say $500.  Then deduct eBay fees, say $100.  Then deduct shipping, say $50.  So you'd only be taxed on $350 of the $1,000 as "profit".

You can also deduct ink, paper, gas to post office, "home office" (raises red flags though), depending on how creative you want to get.  I'm not a tax professional but unless you running numbers to show a loss (more deductions than total sales) or doing extemely high numbers (6 figures plus), your audit risk is zero.  

End of day, it's an annoyance sure, but it's not tax based on your total sales which you seem to imply.  

[MrWunderful | 2,927]

Listening to people blame Biden for taxes they should have been paying makes my day

[BreaKBeatZ | 136]

3 hours ago, jonebone said:

Don't freak out about it, its pretty simple tax wise.  You should at least be running a spread sheet tracking what you sell things for that would match eBay.  

Let's say you sold $1,000 worth on eBay and are frustrated you tripped the $600 breaker.  

Then deduct cost of goods sold, lets say $500.  Then deduct eBay fees, say $100.  Then deduct shipping, say $50.  So you'd only be taxed on $350 of the $1,000 as "profit".

You can also deduct ink, paper, gas to post office, "home office" (raises red flags though), depending on how creative you want to get.  I'm not a tax professional but unless you running numbers to show a loss (more deductions than total sales) or doing extemely high numbers (6 figures plus), your audit risk is zero.  

End of day, it's an annoyance sure, but it's not tax based on your total sales which you seem to imply.  

Thanks for the info. Although I keep track of what I paid for games, actually finding proof of those expenses would be extremely time consuming. Would I only need to do that if I get audited?

[arch_8ngel | 1,597]

11 hours ago, cromag27 said:

the 1099k is only to report transactions processed via card (ebay, paypal, venmo, etc). it has nothing to do with owning a business or sales tax. it’s designed to keep business owners honest, but it now effects all of us who just want to sell personal items. yeah it sucks. 

There is definitely a difference between what the form is literally intended to represent (a strict record of gross payments) and how the form is actually used.

For a business -- it is easy to take those gross payments and with a schedule C deduct all of your costs, fees, basis, etc.

For an individual -- we are put over a barrel with "hobby income" that effectively doesn't get to deduct anything, and if you don't have the 1099-K gross value show up SOMEWHERE on your taxes, you're  probably running a risk.

[Tanooki | 4,933]

That's rich, I should be paying taxe son items I already own and paid taxes for when I bought it, because I want to get rid of it other than throwing it in the trash.  That's delusional.

 

I've been trying to crunch the numbers, and now it looks like between the ebay processing fees including fvf in that, and then the self employment tax basically the losses would be kind of bad.  On a $100 sold item you'll maybe get $70, if it's a cheap item, due to increasing scale it can get closer to 50%.  Basically selling on ebay next year on stuff under $10 would be to break even or pay them to get rid of it, that's awful.

 

@LaC I get that, and if there is a button for it, that's my plan entirely.  I'm not a business, and pulling this is just nasty.  I buy to basically enjoy things and some I do end up selling to make the end cost zero or close to as possible.  Usually when I"m done with it, I sell it, trade it at the second hand store, trade it online for other goodies, or it's trash.  I'm not dkoldies or one of those types so this was quite infuriating reading that a 1am this morning.  I've not paid anything on stuff I've sold on ebay before, I never crossed or came anywhere near the old 20K/200 threshold so I've had no reason to do accounting or the rest of it.

So what, am I supposed to now run a spreadsheet with every cost of packing supplies, gas, etc down to the penny again so defray this if they don't agree with me checking that theoretical box this is like 'garage sale funds' or some sort?

[GPX | 1,369]

I haven’t done any new listing on eBay for over a month, although still buying in bits here and there. 

Today I received this message from eBay:

”Your ability to create new listings on eBay has been suspended as you have not yet registered for managed payments. If you do not complete registration for managed payments by 15 April 2021, you will no longer be able to revise your existing eBay listings.”

Thanks for the enforcement eBay, you’re really looking after me..

[Tanooki | 4,933]

I just had a big pile of stuff up there that ended on Sunday night and I never had so much stuff at one time get picked off percentage wise (and total.)  Now I'm getting more concerned they'll get on my case.

I really don't want to give them access to my checking account, but now with this possible tax issue (we really need this researched) I'm not sure I even want to open a temporary shadow account to deal with keeping their fingers out.

Not really sure where to go with this one now.  Let them have access, temporarily, clear the closet out and just call it a day for ebay sales and switch to facebook for local sales only in cash or friends/family.  I imagine I'd be less aggravated if there was some system put into place for taxes if ebay (or others) extracts them automatically so I don't have to be sending bank wires of funds every quarter to the IRS so my refund isn't fried to death as we count on that heavily.

[yZoneFox | 18]

19 hours ago, GPX said:

I haven’t done any new listing on eBay for over a month, although still buying in bits here and there. 

Today I received this message from eBay:

”Your ability to create new listings on eBay has been suspended as you have not yet registered for managed payments. If you do not complete registration for managed payments by 15 April 2021, you will no longer be able to revise your existing eBay listings.”

Thanks for the enforcement eBay, you’re really looking after me..

You could probably ignore it until it actually stops you from hitting list item. I got the same warning and ignored it. Only months later did the activate button on their side screw me. Nonetheless, you should probably setup the relevant accounts and transfers since it's inevitable the hammer will fall.

 

Wow, this topic went somewhere. If you guys didn't know, there's also a collectible tax which is a tax on items that appreciate in value. I wonder how many people actually fill that out properly. I'm not sure on the specifics such as what items are considered collectibles (like is it items over $200? $10K? or does value matter at all?), but considering how some people view these game items investments like stocks, it does make me wonder / worry, especially given the staggering appreciation over the last year.

[Tanooki | 4,933]

17 hours ago, yZoneFox said:

You could probably ignore it until it actually stops you from hitting list item. I got the same warning and ignored it. Only months later did the activate button on their side screw me. Nonetheless, you should probably setup the relevant accounts and transfers since it's inevitable the hammer will fall.

 

Wow, this topic went somewhere. If you guys didn't know, there's also a collectible tax which is a tax on items that appreciate in value. I wonder how many people actually fill that out properly. I'm not sure on the specifics such as what items are considered collectibles (like is it items over $200? $10K? or does value matter at all?), but considering how some people view these game items investments like stocks, it does make me wonder / worry, especially given the staggering appreciation over the last year.

I brought it up, got mocked by one troll because I supposedly got away without paying tax for years like I'm a business with a tax ID or something.  It was 200 item + $20K.  2022 rolls out, the current slime in power dropped it to $600 total a year, items count doesn't matter.

What I guess may not be clear, if there will be a way to dodge it or not if you're just a private person not buying implicitly to sell for a profit, from those just getting rid of their old stuff like an online version of a garage sale.  I'm hoping sometime sooner than later as more learn of this junk digging is done, maybe a tax lawyer gets involved and dumbs it down for everyone, so we know what the deal is.  From there, then it's up to quitting selling online unless friends and family, hoping ebay and others setup some instant tax draw from your profits so your refund isn't ruined, or people are coached how to setup some IRS deposit plan so keep that impact off that vital refund people tend to really need and use.

[yZoneFox | 18]

4 hours ago, Tanooki said:

I brought it up, got mocked by one troll because I supposedly got away without paying tax for years like I'm a business with a tax ID or something.  It was 200 item + $20K.  2022 rolls out, the current slime in power dropped it to $600 total a year, items count doesn't matter.

Yep, if you make over $20K and sell more than 200 items, ebay reports that. There's a specific tax on collectibles sold and the amount they appreciated since you acquired them (I believe that's the time frame).

If anyone interested wants to dig into it, you can google collectible tax irs and you'll turn up pages on collectible gains tax / long term capital gains. I believe It's basically like the sale of a stock. This is in addition to the sales tax collected by states, which by the way, is why sellers get taxed even if the item they sell is bought by and sent to someone living outside the US.

 

[Tanooki | 4,933]

12 hours ago, yZoneFox said:

Yep, if you make over $20K and sell more than 200 items, ebay reports that. There's a specific tax on collectibles sold and the amount they appreciated since you acquired them (I believe that's the time frame).

If anyone interested wants to dig into it, you can google collectible tax irs and you'll turn up pages on collectible gains tax / long term capital gains. I believe It's basically like the sale of a stock. This is in addition to the sales tax collected by states, which by the way, is why sellers get taxed even if the item they sell is bought by and sent to someone living outside the US.

 

Right right, that's how it is, soon to be WAS.

Next year it's just $600 flat.  Has anyone dissected the new sleazy change to the law though to see if it is on anyone and everyone, registered businesses, the self employed with a tax id, or anyone and everyone?  And if it's 100% to anyone over that value, does it happen if you're buying the item to flip for profit, or if it's personal goods you're choosing to sell instead of trade or trash?

That'll be the important thing to figure out, is there a line in the sand and if so, what?  I've yet to have ebay heckle me with their scummy takeover still, and hope to find these answers before hand as I'd rather not make another bank account to keep them off my personal budget bills come out of.  If it goes bad and it is $600 total, I may just quit selling where it is tracked and stick to local and cash.

[arch_8ngel | 1,597]

1 minute ago, Tanooki said:

Right right, that's how it is, soon to be WAS.

Next year it's just $600 flat.  Has anyone dissected the new sleazy change to the law though to see if it is on anyone and everyone, registered businesses, the self employed with a tax id, or anyone and everyone?  And if it's 100% to anyone over that value, does it happen if you're buying the item to flip for profit, or if it's personal goods you're choosing to sell instead of trade or trash?

That'll be the important thing to figure out, is there a line in the sand and if so, what?  I've yet to have ebay heckle me with their scummy takeover still, and hope to find these answers before hand as I'd rather not make another bank account to keep them off my personal budget bills come out of.  If it goes bad and it is $600 total, I may just quit selling where it is tracked and stick to local and cash.

For state of VA, this already happened with year-2020 taxes, and applied across the board.

That is, if you, as an individual, crossed the $600 threshold, the payment servicers were required to generate a 1099-K.

 

Strictly speaking, that doesn't automatically force you to report it on your own taxes, since 1099-K's are "informational".

But realistically, if you don't report the number somewhere, the tax system will potentially spot it as a discrepancy.

When the threshold was $20k and 200 transactions, there was a pretty strong case that anyone hitting that level could justify accounting for it as a business with associated deductions (postage, fees, mileage, etc).

But at the $600 level, it is MUCH more likely that you're technically selling as a "hobby" and can't legally make those same deductions.

[Tanooki | 4,933]

Hmm so odds are it's just trouble.

 

Then I have to wonder, how will it be handled exactly if say you keep using ebay?  Will they take the taxes and just deal with it like the state level stuff, or will they just report your ass and you end up having to pay a lump sum once a year or lose your refund?  It would be far more helpful and handy if they just took it immediately, or did a once a month pull and extracted it then.  We survive in part off that refund each year, I can not afford to lose it.

[SilverspoonGaming | 332]

Nebraska (NE):

We collect sales tax in accordance with applicable state law. You no longer need to collect and pay it to the state. Learn more

[SilverspoonGaming | 332]

So does this mean Nebraska is exempt from this ebay sales tax deal?^^^

[yZoneFox | 18]

3 hours ago, SilverspoonGaming said:

So does this mean Nebraska is exempt from this ebay sales tax deal?^^^

 

3 hours ago, SilverspoonGaming said:

Nebraska (NE):

We collect sales tax in accordance with applicable state law. You no longer need to collect and pay it to the state. Learn more

As stated prior, ebay collects sales tax on your behalf. Your gross is still reported (sold price + shipping + tax), so you will need to deduct the tax ebay collected; otherwise, you are reporting that you made more money than you actually did. You also should deduct the shipping cost and fees paid to ebay / paypal / bank / etc. for doing business with their services.

[SilverspoonGaming | 332]

11 hours ago, yZoneFox said:

 

As stated prior, ebay collects sales tax on your behalf. Your gross is still reported (sold price + shipping + tax), so you will need to deduct the tax ebay collected; otherwise, you are reporting that you made more money than you actually did. You also should deduct the shipping cost and fees paid to ebay / paypal / bank / etc. for doing business with their services.

Im totally confused...

[yZoneFox | 18]

1 hour ago, SilverspoonGaming said:

Im totally confused...

Ebay charges sales tax to the buyer. They collect the tax and submit it to your state.

Example: Your imaginary state charges 1% sales tax. You sell an item for $100 with free shipping. The buyer pays $101. Ebay takes the $1 and sends it to your state government. Ebay reports to the government that you made $101 from the sale. You have to deduct the $1 tax collected or the government thinks you made $101, when actually you made $100.

[GPX | 1,369]

On 3/23/2021 at 3:58 PM, yZoneFox said:

Wow, this topic went somewhere. If you guys didn't know, there's also a collectible tax which is a tax on items that appreciate in value. I wonder how many people actually fill that out properly. I'm not sure on the specifics such as what items are considered collectibles (like is it items over $200? $10K? or does value matter at all?), but considering how some people view these game items investments like stocks, it does make me wonder / worry, especially given the staggering appreciation over the last year.

I think the current retro games value appreciation is bringing a lot of attention to the tax auditors. We’re likely to be more scrutinized now than ever before. Just another added factor to the list of factors of growing headaches as a collector!

[SilverspoonGaming | 332]

2 hours ago, yZoneFox said:

Ebay charges sales tax to the buyer. They collect the tax and submit it to your state.

Example: Your imaginary state charges 1% sales tax. You sell an item for $100 with free shipping. The buyer pays $101. Ebay takes the $1 and sends it to your state government. Ebay reports to the government that you made $101 from the sale. You have to deduct the $1 tax collected or the government thinks you made $101, when actually you made $100.

How do I go about deducting the tax?

Will I be getting a tax form from ebay?

[Tanooki | 4,933]

Yeah you'll get a 1099K early in 2023 because they'll snitch you out on your 2022 sales to the government.

I'm kind of curious how anyone is really expected to properly track this who isn't running some well ledgered business form for taxation.  I don't see most people even being aware of this or thinking about it either.  I think 2023 is going to be a LOT of people getting a nasty tax bill, and a further unfair one, if they have no idea how to go back and figure out to the penny how much ebay over reported for taxation on state tax, their shitty FVF, and the cost of shipping they roll into their one report.

Sell something for $100 shipped, costs $10 to ship, ebay takes along with say paypal 15% to keep it easy.  That'll require some math, and that's far more easy than some not so easily rounded number.  This isn't even figuring state taxes, but if tax free that $100 at 15% off would be $85 and then you lose $10 on shipping dropping that to $75.  So you'd end up reporting $25 as a deduction (on top of the tax I left out too.)

I really hope something gets figured out or it will be an unmanageable nightmare.

[yZoneFox | 18]

1 hour ago, Tanooki said:

I'm kind of curious how anyone is really expected to properly track this who isn't running some well ledgered business form for taxation.  I don't see most people even being aware of this or thinking about it either.  I think 2023 is going to be a LOT of people getting a nasty tax bill, and a further unfair one, if they have no idea how to go back and figure out to the penny how much ebay over reported for taxation on state tax, their shitty FVF, and the cost of shipping they roll into their one report.

 

It's been like this all along; however, it was really the end of 2019 when most states had instated their online tax laws. Because these are online transactions fed through several companies that report money-in and money out, it's made it easier to track money.

Income is income. Think about people who sell at flea markets as a business or like a garage sale. That's a cash business. It's up to people selling there to report income. Banks track accounts too. Even if you deposit the cash from flea market sales, those numbers are seen by the government.

Tracking money is doable. People do it. Will you get audited if you don't? I dunno. My guess is there is a machine that runs the numbers you are reporting and if the discrepancy is above a certain threshold, it put's you into a category for closer inspection, possibly by human eyes.