With the tax changes starting next year, will this impact your price cap for buying single items?

[Tanooki | 4,929]

"Do you have a price scale or price cap for single items in your game collecting?"

That topic started last Tuesday got me thinking since other posts online here, elsewhere are catching on to the tax changes in the US.  It will make a VERY large impact on how people will in the future be able to collect games unless they're already comfortably wealthy with good added monthly income.  If you try and sell second hand, once you hit $600 in a YEAR you'll owe self employment tax on it and face no refund and probably a tax bill to the IRS in 2023 because of it.

Many people here (me too) tend to sell their old goods off, some find old goods in lots keep a little sell the rest, or they really just can't pay to play anymore or very little.

 

This will definitely impact what people will pay for stuff I would imagine, especially those not as affluent or better off where price isn't so much a concern.

So I'm curious we have that scale in the other thread, let's apply it here with the future in mind.  What is going price cap now on games, what will your future scale be in 2022 and beyond?

 

[goldenpp72 | 1,229]

So I'm not particularly versed here, what specifically is the major deal with this?

[Tanooki | 4,929]

1 minute ago, goldenpp72 said:

So I'm not particularly versed here, what specifically is the major deal with this?

The original thread is in the present, asking what people feel comfortable with on a scale, paying for video game related stuff, and where they cap it at upwards to a max on a scale you can see in colors.  That's on the NOW where anyone can sell anything second hand without paying tax to the IRS on it yearly.  In 2022 the stimulus bill from last month had a lot of sneaky pork and taxes slipped in, one makes anyone in the US selling used goods, if they add up in total over $600 within a year will have to pay self employment tax on it.

So knowing that I was curious if that would impact how peoples comfort scale is on buying game stuff, and if their new max would be perhaps a lot lower if you don't have that source of secondary income to feed the hobby.

[goldenpp72 | 1,229]

1 minute ago, Tanooki said:

The original thread is in the present, asking what people feel comfortable with on a scale, paying for video game related stuff, and where they cap it at upwards to a max on a scale you can see in colors.  That's on the NOW where anyone can sell anything second hand without paying tax to the IRS on it yearly.  In 2022 the stimulus bill from last month had a lot of sneaky pork and taxes slipped in, one makes anyone in the US selling used goods, if they add up in total over $600 within a year will have to pay self employment tax on it.

So knowing that I was curious if that would impact how peoples comfort scale is on buying game stuff, and if their new max would be perhaps a lot lower if you don't have that source of secondary income to feed the hobby.

So next year if I go to sell 600 dollars worth of games I'll have to pay on that? That's kind of screwed up since most of us don't exactly keep records of everything we ever bought. Definitely will impact things if so.

[Tanooki | 4,929]

42 minutes ago, goldenpp72 said:

So next year if I go to sell 600 dollars worth of games I'll have to pay on that? That's kind of screwed up since most of us don't exactly keep records of everything we ever bought. Definitely will impact things if so.

Correct.  Any payment processor online (paypal, ebay, facebook pay, google pay, amazon marketplace, mercari, etc) will send you a 1099K after sending your total sales/winnings to them first.  And supposedly they're not accounting deductions for their fees, processing stuff, any of it.  So you'll get hit for everything, even shipping charges that get rolled in.

[goldenpp72 | 1,229]

7 minutes ago, Tanooki said:

Correct.  Any payment processor online (paypal, ebay, facebook pay, google pay, amazon marketplace, mercari, etc) will send you a 1099K after sending your total sales/winnings to them first.  And supposedly they're not accounting deductions for their fees, processing stuff, any of it.  So you'll get hit for everything, even shipping charges that get rolled in.

The stuff I read about this seems less.. Concise than that, they seem to imply it's required to report but not exactly that you'd pay on it, but also don't really define it very well. It's pretty garbage for people like me who don't keep records of the thousands of things I bought though, as there is no way to even prove you paid an original cost. Still I'm trying to read more about it.

[Jfreakofkorn | 282]

That was slipped in late in bill with stimulus by the current administration 

Edited April 10, 2021 by Jfreakofkorn

[Gulag Joe | 582]

Anybody have a link they could share about this tax change? I've tried to Google it but just get a thousand ads on doing my taxes and the other stuff is vague.

[85Collector | 8]

Lots of *states* have begun tracking e-commerce sales. It hasn't been the case that you could safely leave this stuff off your taxes for at least a year. I've always declared this income myself, but many people never did. However, that changed with the Supreme Court's Wayfair decision awhile back.

[Link | 2,707]

Yes! Tax hobbyists starting at $600! People need to start paying their fair share. 

 

Do not tax Nike, FedEx, Salesforce, Amazon, Dish, Archer Daniels Midland, Penske, or Akamai. They paid $0 and  they deserve to keep all of their money. They create jobs. They give that money to their employees. That fixes the economy.

[GPX | 1,369]

So overall if you spend $1000, and you sell $600, then you still have to pay tax? I would have thought it’s the overall profit you make?

I’m not from the US, but I find it baffling how they picked $600 as the threshold for tax entry. 

[Startyde | 175]

This succinctly explains it.

Also worth noting there was no debate here, it was just snuck in like the assholes our reps are.

For their part, eBay is trying to fight this. They don't want to be in the game of suddenly being responsible for sending millions of 1099s a year.

https://youtu.be/weYWF_eIiaM

 

[O.G. CIB | 415]

2 hours ago, Gulag Joe said:

Anybody have a link they could share about this tax change? I've tried to Google it but just get a thousand ads on doing my taxes and the other stuff is vague.

https://www.ecommercebytes.com/C/abblog/blog.pl?/comments/2021/3/1615153514.html

https://www.cnbc.com/2021/03/26/its-going-to-get-harder-to-avoid-telling-the-irs-about-income-from-online-sales.html

Edited April 10, 2021 by Mr. CIB

[Californication | 1,477]

I'm running out of games to buy. I would be very surprised if my purchase and sales don't slow to a crawl by next year.

Edited April 10, 2021 by Californication

[LutherDestroysTheGond | 690]

What a shitload of fuck.  Hello, local cash sales!

[DK | 258]

4 hours ago, Tanooki said:

anyone in the US selling used goods, if they add up in total over $600 within a year will have to pay self employment tax on it.

 

According to what I read in Mr. CIB's links, the tax law itself hasn't changed at all, just that they are now requiring platforms (Ebay) to send a 1099-K when you hit $600 in sales.

So...if you've been following the rules already, then there isn't going to be any new tax hit. 

If you haven't been reporting Ebay sales, then yes, you'll have a slightly larger tax bill. Luckily you can deduct the heck out of it with expenses (cost of the item, envelopes, Paypal fees, shipping) and it isn't that bad. Certainly not bad enough to avoid Ebay as a sales platform.

The biggest annoyance for me out of all of this is that Ebay is going to need my SS#. The less places that is floating around, the better.

 

[phart010 | 1,705]

Just trade games for games

[LaC | 104]

Tanooki, if the IRS ever needs evidence you've been not reporting income for years then they just need to come look at the 3 threads you've posted in about this.

 

 

 

[spacepup | 2,404]

There is a lot of misinformation / misunderstanding in this thread.  Before everyone panics, I encourage you to read up on what the rules are or talk to a professional about it. 

First, nothing at all changed with your tax responsibility.  If you sell $10,000 of stuff currently and don't receive a form because it is under the 20K threshold, you still have a reporting responsibility.  People just ignore the rules and evade a lot of tax.

Second, just because you sell something for $600 and receive the new form, that doesn't mean it is self-employment income and you won't necessarily have to pay self-employment tax on it.  That is only if the activity is considered a business or for-profit activity that expands beyond standard hobby income or occasional sales.  And if it is a business, you can also potentially deduct related business expenses, to help offset the income.

Third, if you buy something for $400 and sell it for $600 and receive this form, you typically won't have to pay tax on the full $600 - just the difference between what you bought it for and what you sold it for.

There are various different situations, and different ways these types of income should be reported and are taxed.

I do think the threshold is a bit low - especially for people just casually selling a few things here and there who will now have to deal with reporting things even if they are offset by cost and no actual tax is generated from it.  So I would have personally been behind a larger threshold for this particular type of reporting.  

I generally see lots of confusion about ebay sales and when you are supposed to report them and pay tax - and all the answers aren't addressed in this one post, by any means, but this particular issue is not quite as bad as what was introduced here in this thread.

[LeatherRebel5150 | 1,055]

it just means alot more stuff is about to be sold local for cash. Also I have to imagine there is an epic F-ton of people unaware of this and there will be a shitstorm when people start to get hit with it. It might be mitigated a little bit if ebay and other commerce sites do a mass email campaign to inform people 

[MrMark0673 | 197]

I feel like I missed something.  Are they just generating a 1099 at $600 instead of $20k in sales?  If you report your income already (including ecommerce sales), does anything change?  If that's the case, I don't see the big deal personally. 

I itemize my deductions and my taxes are complicated, so I don't fuck around with anything.  If I ever get audited, all my income has always been reported.

[Tanooki | 4,929]

39 minutes ago, MrMark0673 said:

I feel like I missed something.  Are they just generating a 1099 at $600 instead of $20k in sales?  If you report your income already (including ecommerce sales), does anything change?  If that's the case, I don't see the big deal personally. 

I itemize my deductions and my taxes are complicated, so I don't fuck around with anything.  If I ever get audited, all my income has always been reported.

Yes.  Formerly 200+ sales and 20K in profits earned per year on items.

2022 it takes just 1 item at $600 or higher to pay tax.  I could be 600 dollar candy bars, or a $600 NES cart.


@spacepup still confusing. And with the old levels as they were, why would anyone on that site really be responsible if they're not an actual business to report second hand sales?  If that were required all along then it should have been reported from the get go.  I see a bunch of shoulda but didn't comments, but it doesn't change the fact there is going to be a huge shift next year and it's going to hurt a LOT of people.

I am not a business, sure I buy lots, keep some, sell the rest to offset, and I do have a decently larger sized collection of games/toys still and I do sell them off as I can so that's where my concern is from.  If I were a real LLC, sole proprietor, or whatever with a business license and tax ID then sure this wouldn't bother me in the least.  I haven't had one of those in over 15 years now so I don't keep track of every toy, game, electronic whatever Ive bought since then, before then, hell even last week.

So that's the concern, will they report it and I have to pay?  Do I have to start keeping every receipt for new items so I can prove a break even or loss?  What if it's a 20 year old that I feel unlike before, it's crap now and I don't want it?  It's just garage sale goods basically, but online.  There are just so many questions and the answers aren't great as of yet.

[Californication | 1,477]

4 minutes ago, Tanooki said:

Yes.  Formerly 200+ sales and 20K in profits earned per year on items.

2022 it takes just 1 item at $600 or higher to pay tax.  I could be 600 dollar candy bars, or a $600 NES cart.


@spacepup still confusing. And with the old levels as they were, why would anyone on that site really be responsible if they're not an actual business to report second hand sales?  If that were required all along then it should have been reported from the get go.  I see a bunch of shoulda but didn't comments, but it doesn't change the fact there is going to be a huge shift next year and it's going to hurt a LOT of people.

I am not a business, sure I buy lots, keep some, sell the rest to offset, and I do have a decently larger sized collection of games/toys still and I do sell them off as I can so that's where my concern is from.  If I were a real LLC, sole proprietor, or whatever with a business license and tax ID then sure this wouldn't bother me in the least.  I haven't had one of those in over 15 years now so I don't keep track of every toy, game, electronic whatever Ive bought since then, before then, hell even last week.

So that's the concern, will they report it and I have to pay?  Do I have to start keeping every receipt for new items so I can prove a break even or loss?  What if it's a 20 year old that I feel unlike before, it's crap now and I don't want it?  It's just garage sale goods basically, but online.  There are just so many questions and the answers aren't great as of yet.

20K in profits a year sounds like a business to me.

My rusty tax knowledge thinks that older things are taxed at a lower rate - maybe capital gains. They do mention collectibles in the tax code if you want to google.

[goldenpp72 | 1,229]

8 minutes ago, Californication said:

20K in profits a year sounds like a business to me.

My rusty tax knowledge thinks that older things are taxed at a lower rate - maybe capital gains. They do mention collectibles in the tax code if you want to google.

I'd have less issue if there was a way to know like.. What your item was worth, the reality is most people don't keep a detailed record of what we pay for things because it isn't any kind of deduction (to my knowledge). So suddenly saying hey, if you sell your game for 500 bucks, we're going to tax you on 500 unless you can prove  you paid 300, just seems kind of ridiculous to me. They shouldn't be able to.. retroactively alter taxes as such for things that are impossible to prove, they won't just let you make up what you paid you know?

I myself don't sell much but in the event I needed to, this hurts a lot as I have 15 years of stuff not documented receipt wise (aside I suppose whatever the last 3 years eBay keeps)

[Tanooki | 4,929]

@goldenpp72that's my worries which is why I said what I did in the last post.  I've got 35 years worth of stuff, dating beyond myself to when they really came out I've got stuff that's like 40-90 years old, a few into the 100+ range.  I have no damn clue what it was worth to me, parents/gifter, or whatever years back.  It's ridiculous.  Do I need to figure out the inflation on a Nintendo cart from 1987 because I sure as shit don't have a receipt.  What about a $40 3DS game from 3 years ago with no receipt, and it's now worth like $80... how I do prove there was $40 in profit and not $80 in profit.  It's confusing, asinine, and a bit scary really.

I've been looking at my shelves before I learned of this last month and started choosing to offload most my older toys, a good number of video games related items too this year.  Now I'm feeling pressured and motivated to hit as much with a hammer as possible, because otherwise it's no better than getting ripped off for 10 cents to the dollar at half price books, maybe getting lucky with cash on facebook locally, or just throwing shit out when I'm done with it, which is such a waste.