Do you sell on eBay or online? If so, will you continue to do so with the $600 IRS threashold?

[avatar! | 1,973]

Not surprising, eBay wants sellers to help overturn the new $600 IRS-reporting threshold.

https://www.eseller365.com/ebay-asks-sellers-fight-low-thresholds-1099k/

That said, how will this affect you?

Edited December 15, 2021 by avatar!

[doner24 | 1,230]

Missing a poll option, will continue to sell as is, and do my taxes as normal with that included. 

[avatar! | 1,973]

2 minutes ago, doner24 said:

Missing a poll option, will continue to sell as is, and do my taxes as normal with that included. 

Fixed! thanks

Link to send email to your representative

https://www.ebaymainstreet.com/campaign/2021-federal-1099-campaign

Edited December 15, 2021 by avatar!

[Gloves | 12,453]

Being Canadian, this has zero impact on me.

[avatar! | 1,973]

3 minutes ago, Gloves said:

Being Canadian, this has zero impact on me.

Thanks, added to poll
By the way, do you have to pay some VAT or anything similar to 1099-k in Canada?

[Gloves | 12,453]

1 minute ago, avatar! said:

Thanks, added to poll
By the way, do you have to pay some VAT or anything similar to 1099-k in Canada?

Those words mean nothing to me. >_>

[MrWunderful | 2,933]

I make a killing selling so I dont mind paying the tax. Continue as is and just report my 1099. I pay someone to do my taxes anyways

[Brickman | 4,270]

No impact for me. I don't think something like this would happen here but if it did I'd probably feel less motivated to sell things on Ebay. I'd most likely stick to FB or forums. 

[DefaultGen | 5,802]

I mean I have to pay my taxes either way. I’m madder about corporate lobbyists making American tax prep as laborious as it is than I am about having to pay taxes. 

[docile tapeworm | 4,299]

@doner24 @DefaultGen how difficult is it to figure out this 1099 thing. Consider I’m a person who uses TurboTax for my w-2 and know nothing else. Can I just guesstimate the 8% and have the cash in my ninja turtles piggy bank? That way when this 1099 you speak of shows up (in the mail?) I can simply say “ah yes I have that in my piggy bank” and pay it.

[avatar! | 1,973]

Just now, docile tapeworm said:

@doner24 @DefaultGen how difficult is it to figure out this 1099 thing. Consider I’m a person who uses TurboTax for my w-2 and know nothing else. Can I just guesstimate the 8% and have the cash in my ninja turtles piggy bank? That way when this 1099 you speak of shows up (in the mail?) I can simply say “ah yes I have that in my piggy bank” and pay it.

From what I gather, and someone please correct me if I'm mistaken, the tax rate will be 15-20%. So, along with ebay's 15%, that's not an insignificant amount...

[FireHazard51 | 2,138]

12 minutes ago, avatar! said:

From what I gather, and someone please correct me if I'm mistaken, the tax rate will be 15-20%. So, along with ebay's 15%, that's not an insignificant amount...

15% of your profit.  You'll need to keep records of fees paid and the cost of the initial product you bought/sold.  I'd just assume you purchased the same year you sell it but I'm not an accountant so don't look at me for any kind of legal advice 

[Estil | 1,293]

1 hour ago, Gloves said:

Being Canadian, this has zero impact on me.

But you got taxes of your own though, right?

[docile tapeworm | 4,299]

53 minutes ago, FireHazard51 said:

15% of your profit.  You'll need to keep records of fees paid and the cost of the initial product you bought/sold.  I'd just assume you purchased the same year you sell it but I'm not an accountant so don't look at me for any kind of legal advice 

Why do I need to keep records of fees paid and initial cost? I bought it at a yard sale with cash and didn’t get a receipt. Oh man this is going over my head already. 

[Tanooki | 5,190]

1 hour ago, avatar! said:

From what I gather, and someone please correct me if I'm mistaken, the tax rate will be 15-20%. So, along with ebay's 15%, that's not an insignificant amount...

 

53 minutes ago, FireHazard51 said:

15% of your profit.  You'll need to keep records of fees paid and the cost of the initial product you bought/sold.  I'd just assume you purchased the same year you sell it but I'm not an accountant so don't look at me for any kind of legal advice 

You're both right.  It's 15% of your profit, but odds are unless you're actively buying and selling from a receipt given entity you won't have those receipts to prove that.  As far as they're concerned technically speaking, if you bought Breath of the Wild (Switch) 5 years ago or if you bought Zelda in 1987 they would want you to have a receipt so you could calculate the profit/loss on what went in vs went out (for the profit to tax.)  They don't care if you had it 20 days or 20 years.

So for many who are selling old non-tracked stuff, whatever you made after ebay sponged off 15% they'll want another 15% off that 'profit' ebay reports.  Making matters worse ebay are assholes they only submit the total money you got in too, so that's before they take their slice and the money that goes to shipping too.  So it's a considerable hit.  If you have no receipt, sell an item for $100 shipped, ebay will report that 100 (assuming after the 600 threshold here) so despite them taking 15% (you're now at 85) and then let's say you pay 10 to ship it (now you're at 75)  you'll end up eating another 15 in taxes to the IRS so now you're down to $60 from that $100 sale.

That's why ebay is fighting it.  IF people are going to realistically largely end up losing like 30-40%+ (more on cheap stuff, think sub $10 items) people will stop bothering which will kick their asses in profit and maybe cripple ebay.

 

 

My poll answer was middle finger.  I already (technically) closed my ebay account as far as sales go, just turned it all off.  With the $600 limit I'm reserving that for money I get from people to SHIP items largely for uneven trades or whatever or in rare cases payment outright through forums over paypal.  Other than that the ugly trash filled world of local only cash only facebook, and if I don't want to put up with their crap, I'll just sell it for 20-40% of the value in money/trade value at half price books.

There's just too much loss involved for the effort put in when you figure ebays cut(15%+) then the fed for another 15-20%) on top of that.  I mean if you sell like a $10 shipped item now, you won't even get $5 back in the end, and that isn't worth the wasted time and effort, cheaper items will be sold as a loss, so I imagine ebay prices are going to go UP to offset this which will eat them alive.

[Tanooki | 5,190]

That link to ebay for complaining I did 2/3 of them.  I wrote a personal letter and explained my honest use of it this year and in the past, it wasn't just for fun but a lifeline with all our accumulated loss and debt.  I also did the form letter to the local 3 politicians (rep and 2 senators) too.  I won't be doing lame twitter nor having ebay robocall the same three to my phone as that's just harassment.

Personally I hope it's fixed, not restored, just fixed.  Maybe something reasonable in the 5-10K range.  I get where they're coming from off of 20K given those who abuse it, but sheesh...$600??  I used to pull a few k or so in (5 tops) a year dumping things, but I went into overdrive doing triple that this year because of this shit and from my experience given ebay does taxes that way off the full amount before shipping and sponging I lost nearly 40% of what came in vs I kept because most things I did sell were under $20 so the slice is larger and adds up bit by bit.  Tack on another 15-20% from the IRS... FUCK THAT...again, the middle finger option in the poll.

As an amusing aside, I actually asked the pup here about the donations for the auctions.  I was strongly considering offering up a couple items but I guess I'm too late, one being a lightly used A1Up countercade I have, but the other is my sealed pokemon game(yeah, seriously) because I don't want to deal with the burden of what sealed games go for, nor do I want to give them the taxes off that either wrecking my refund.  A charity would be better, no spongy bullshit, and some sick kid would get his/her meds, therapy, surgery, whatever from that.  I'd just hope to get a mint CIB one to fill the empty shadowbox it resides in now

[Brickman | 4,270]

59 minutes ago, Tanooki said:

 

You're both right.  It's 15% of your profit, but odds are unless you're actively buying and selling from a receipt given entity you won't have those receipts to prove that.  As far as they're concerned technically speaking, if you bought Breath of the Wild (Switch) 5 years ago or if you bought Zelda in 1987 they would want you to have a receipt so you could calculate the profit/loss on what went in vs went out (for the profit to tax.)  They don't care if you had it 20 days or 20 years.

So for many who are selling old non-tracked stuff, whatever you made after ebay sponged off 15% they'll want another 15% off that 'profit' ebay reports.  Making matters worse ebay are assholes they only submit the total money you got in too, so that's before they take their slice and the money that goes to shipping too.  So it's a considerable hit.  If you have no receipt, sell an item for $100 shipped, ebay will report that 100 (assuming after the 600 threshold here) so despite them taking 15% (you're now at 85) and then let's say you pay 10 to ship it (now you're at 75)  you'll end up eating another 15 in taxes to the IRS so now you're down to $60 from that $100 sale.

That's why ebay is fighting it.  IF people are going to realistically largely end up losing like 30-40%+ (more on cheap stuff, think sub $10 items) people will stop bothering which will kick their asses in profit and maybe cripple ebay.

 

 

My poll answer was middle finger.  I already (technically) closed my ebay account as far as sales go, just turned it all off.  With the $600 limit I'm reserving that for money I get from people to SHIP items largely for uneven trades or whatever or in rare cases payment outright through forums over paypal.  Other than that the ugly trash filled world of local only cash only facebook, and if I don't want to put up with their crap, I'll just sell it for 20-40% of the value in money/trade value at half price books.

There's just too much loss involved for the effort put in when you figure ebays cut(15%+) then the fed for another 15-20%) on top of that.  I mean if you sell like a $10 shipped item now, you won't even get $5 back in the end, and that isn't worth the wasted time and effort, cheaper items will be sold as a loss, so I imagine ebay prices are going to go UP to offset this which will eat them alive.

Sounds like a shit tax. I know this was discussed in another thread but it sounds like a tax against the poor not the wealthy.

Just wondering in your example though, couldn't you claim the ebay expenses like shipping and fees on your tax as part of cost of doing business?

What about selling on forums? You could do paypal or bank transfer to get around the $600 limit?

[Tanooki | 5,190]

13 minutes ago, Shmup said:

Sounds like a shit tax. I know this was discussed in another thread but it sounds like a tax against the poor not the wealthy.

Just wondering in your example though, couldn't you claim the ebay expenses like shipping and fees on your tax as part of cost of doing business?

What about selling on forums? You could do paypal or bank transfer to get around the $600 limit?

It is, and you're using the exact words I used earlier this year when it was figured out.  It's a tax against the poor and middle class, the people the so called guardians of the people democrats claim to fight for.  As I said, it helped me for the last many years, I never wanted to sell more than I had to to grow things, but the money was just gone, and now it's really gone as that tax is an unaffordable burden.

And to your first question, yes, you can apply anything you can rack up a small business would.  Supplies, mileage(X cents/mile), etc.

To the other, no, if you're selling on or offline, if you use digital currency in any form, they'll track it for the government, then rat you out to the IRS with a 1099 to you and a copy to them.  Then again the burden is on you to prove you didn't earn anything, or you pay the tax all the same.  The only around I'm aware of is actual cash and probably a money order would work too if you cashed it out and didn't deposit it.  Bank transfers will be monitored.   Before the end of the year I'll need to figure out which account to move my funds out of and into as I have the online bank I setup due to managed payments, then paypal, odds are I'll empty my paypal out entirely and that'll need to be done before 1/1 or it'll get snitched on for moving over $600.

Edited December 16, 2021 by Tanooki

[CMR | 549]

I guess I'll just have to sell on here :3

[Brickman | 4,270]

45 minutes ago, Tanooki said:

It is, and you're using the exact words I used earlier this year when it was figured out.  It's a tax against the poor and middle class, the people the so called guardians of the people democrats claim to fight for.  As I said, it helped me for the last many years, I never wanted to sell more than I had to to grow things, but the money was just gone, and now it's really gone as that tax is an unaffordable burden.

And to your first question, yes, you can apply anything you can rack up a small business would.  Supplies, mileage(X cents/mile), etc.

To the other, no, if you're selling on or offline, if you use digital currency in any form, they'll track it for the government, then rat you out to the IRS with a 1099 to you and a copy to them.  Then again the burden is on you to prove you didn't earn anything, or you pay the tax all the same.  The only around I'm aware of is actual cash and probably a money order would work too if you cashed it out and didn't deposit it.  Bank transfers will be monitored.   Before the end of the year I'll need to figure out which account to move my funds out of and into as I have the online bank I setup due to managed payments, then paypal, odds are I'll empty my paypal out entirely and that'll need to be done before 1/1 or it'll get snitched on for moving over $600.

Geez that's so extreme to go to the lengths of tracking people's paypal transactions. How can they prove that what you received was for a sale of an item? People use paypal all the time for non purchases. What about friends and family payments? I don't get how they can view a bank transfer as selling items, people send other people money every day which has nothing to do with selling items. I would have thought the admin for this would be a nightmare when it comes to paypal and bank transfers.

Ebay is low hanging fruit for them though, so I can see why they will target that the most.

[avatar! | 1,973]

27 minutes ago, Shmup said:

Geez that's so extreme to go to the lengths of tracking people's paypal transactions. How can they prove that what you received was for a sale of an item? People use paypal all the time for non purchases. What about friends and family payments? I don't get how they can view a bank transfer as selling items, people send other people money every day which has nothing to do with selling items. I would have thought the admin for this would be a nightmare when it comes to paypal and bank transfers.

Ebay is low hanging fruit for them though, so I can see why they will target that the most.

If you sell something and get paid via PayPal, I believe it's logged as a sale, and I imagine they will forward that to the IRS just like eBay does. As for giving gifts, there actually is a tax on that, but I believe you have to gift someone over $15k before it takes into effect. So, if someone gifts you a bit of money via PayPal, as far as I know it does not get taxed. Somehow, I think there are going to be many many more PayPal payments as "gifts" this coming year...

[Kguillemette | 1,660]

I will mostly be retiring from eBay. Money I would get from eBay sales would be a straight loss so I'll sell the $600 and be done with it for the year. I don't have the time to set up and track business expenses for a very part time hobby. I may continue to sell locally.

[Tanooki | 5,190]

1 hour ago, Shmup said:

Geez that's so extreme to go to the lengths of tracking people's paypal transactions. How can they prove that what you received was for a sale of an item? People use paypal all the time for non purchases. What about friends and family payments? I don't get how they can view a bank transfer as selling items, people send other people money every day which has nothing to do with selling items. I would have thought the admin for this would be a nightmare when it comes to paypal and bank transfers.

Ebay is low hanging fruit for them though, so I can see why they will target that the most.

Filthy and extreme yes, but have you ever looked at how Paypal handles transactions?  I mean beyond the surface.  If you don't look but at the surface there are friends and family, and then goods and services...right?  WRONG.  All that means is who gets stuck with the processing fee, that's it.  Internally with Paypal any money that comes in is a rolling balance, everything that is a deposit adds another penny to the pot.  You could trade a bunch of gaming stuff and each of you cover the shipping, that's a 'profit' towards the $600.  Mommy could wire you $500 because you had 2 flat tires, that's part of your $600 as it's a profit to them, an increase in the balance.  They do NOT care, it's automated, tallied, and once it hits the benchmark, a 1099 suddenly appears.

The thing is paypal isn't an actual bank like Chase, BofA, Wells Fargo etc.  That squawk earlier in the year people got mad over then blew over was about that level, because banks would then have to report any amount over $600 that hits your account, it's not allowed to have personal info, but it's racked up, and then accounted for on the banks side like if it's a paycheck or otherwise personal.  Unless paypal is allowed to do that, it'll be no different in the end than ebay, mercari, facebook marketplace, etc where they'll just keep a rolling total and when you break the magic number, you're teed up for the IRS forms.

In the end 1/1/22 cash is king, trades, money orders, or other means of exchange will be secondary.  After that, well, better start tracking every little thing you do: gas, mileage, wear n tear, office supplies, receipts for any related (including stock) purchases and write off all you can.  And if that sounds like a job within a job, quit.

[avatar! | 1,973]

This is what paypal currently  notes

https://www.paypal.com/us/smarthelp/article/how-does-paypal-report-my-sales-to-the-irs-will-i-receive-a-tax-form-1099-k-faq729

Will PayPal report my business sales to the IRS?

PayPal tracks the total payment volume on your account to determine whether it meets the IRS threshold in a calendar year:

• $20,000 USD in total payment volume from sales of goods or services in a single calendar year and, 
• 200 payments for goods or services in the same year.

It does say "from sales of goods or services" and not gifts. But, I'm not an expert and things are of course changing for the worse

[FireHazard51 | 2,138]

Hot take but people are complaining about being forced to do what is legally required.  Granted I get that when you hold a yard sale and make a ton of money from selling a ton a shit......no one claims that as income.  If IRS could easily track that income do you not think they would track it?  I think the real issue is the tax law.  I personally started looked into ebay selling as a legit business and read up on all the requirements assuming that in a couple years it could be a actual good side hustle so I wanted to start good habits and start tracking all money spent and earned like a business.  Still need to set up a seperate checking account actually but  I've basically pushed pause on side hustle for a while.  But I've already registered my business with the State and got a IRS number thing for filing.  Things that most ebay sellers don't need to do but again I'm doing steps that WOULD be needed if it took off.

Any way it's been interesting to see how to start a small business and looked at it as a learning experience instead of a road block.  But I do get what people are complaining about.  But realistically.....your beef is with the tax law and how you could previous get away without properly claiming income.  I see nothing wrong with encouraging side hustles with SIMPLE low taxing.  But roads don't get built/maintained for nothing.  Taxes is just part of life.