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

[docile tapeworm | 4,204]

5 minutes ago, mbd39 said:

Yard sale items are generally sold for way less than what you paid so there's rarely any profits to be taxed.

By the book thooooough! Pay your taxes you thieving mother fucker!

[mbd39 | 2,029]

19 minutes ago, docile tapeworm said:

By the book thooooough! Pay your taxes you thieving mother fucker!

That is by the book. You only owe taxes if you make a profit.

https://www.hrblock.com/tax-center/income/other-income/capital-gains-garage-sale/

 

[docile tapeworm | 4,204]

2 minutes ago, mbd39 said:

That is by the book. You only owe taxes if you make a profit.

https://www.hrblock.com/tax-center/income/other-income/capital-gains-garage-sale/

 

Lol thank you 

[docile tapeworm | 4,204]

@mbd39 so how does it work when I sell and item on E bay that has no receipt. I can claim I paid more for it than I sold it for?

[docile tapeworm | 4,204]

@mbd39 and your trying to tell me that everything anybody sells at a yard sale they paid more for it than they sold it for?

[mbd39 | 2,029]

Just now, docile tapeworm said:

@mbd39 so how does it work when I sell and item on E bay that has no receipt. I can claim I paid more for it than I sold it for?

I've wondered the same thing. I have games that I bought almost 20 years ago and I did not think to keep a receipt. I remember paying around $5 each from the video store in the early 00s but there's no way to prove it.

 

 

 

[mbd39 | 2,029]

6 minutes ago, docile tapeworm said:

@mbd39 and your trying to tell me that everything anybody sells at a yard sale they paid more for it than they sold it for?

Maybe not everything but that's usually the case. People don't typically profit from yard sales.

[docile tapeworm | 4,204]

19 minutes ago, mbd39 said:

Maybe not everything but that's usually the case. People don't typically profit from yard sales.

Miiiiiiiiike  you old dog you. 
aunt jeann just left us. This estate sale….it’s going in somebody’s pocket that didn’t pay for those things.

[Tulpa | 3,534]

41 minutes ago, mbd39 said:

Maybe not everything but that's usually the case. People don't typically profit from yard sales.

They do when your parents sell the video game system you bought while you're at college. Thanks, mom and dad!

[LeatherRebel5150 | 1,056]

1 minute ago, Tulpa said:

They do when your parents sell the video game system you bought while you're at college. Thanks, mom and dad!

I really want to know what these kind of parents are thinking. Mine rarely ever stepped foot in my room let alone touch anything that was mine. Or at least they ask/say something about it before doing anything. “Hey Im moving your X to somewhere else, its in the way.” or “ Hey do you want X anymore? can we get rid of it?” 

At the worst if I said no I want that, they would just say “well do something with it, take that shit to your room”

People that would just randomly get rid of your stuff have no respect for property.

[Kguillemette | 1,547]

I am under the impression that eBay will be forced to report the entire sale as *profit*. So if I flipped a $500 collection for $700, I can expect to to get taxed for the full $700 rather than the $100 I would net after fees making the sale a net loss after taxes. And how would that affect say pieces I chose to keep from that $500 collection. I know that's the way a lot of us operate and grow out collections, to buy larger ones and resell pieces we don't need or want. Do we just manually fill in the blanks on our 1099 when it comes in?

Or is this all Heritage Auctions lobbying the IRS to drive small part time eBay sellers out of the market?

 

Okay, that last part was sarcasm. But I am genuinely confused about how these 1099-ks will work. 

[LeatherRebel5150 | 1,056]

Just now, Kguillemette said:

I am under the impression that eBay will be forced to report the entire sale as *profit*. So if I flipped a $500 collection for $700, I can expect to to get taxed for the full $700 rather than the $100 I would net after fees making the sale a net loss after taxes. And how would that affect say pieces I chose to keep from that $500 collection. I know that's the way a lot of us operate and grow out collections, to buy larger ones and resell pieces we don't need or want. Do we just manually fill in the blanks on our 1099 when it comes in?

Or is this all Heritage Auctions lobbying the IRS to drive small part time eBay sellers out of the market?

 

Okay, that last part was sarcasm. But I am genuinely confused about how these 1099-ks will work. 

Thats a good question how do you assign cost to a lot you pulled stuff from? Do you divide the cost evenly among items? Assign a percentage based on individual value? Choose a random method based on what is most advantageous to you? This could be a clusterfuck

[docile tapeworm | 4,204]

13 minutes ago, Tulpa said:

They do when your parents sell the video game system you bought while you're at college. Thanks, mom and dad!

I bought that and “it went to a good home”

[Kguillemette | 1,547]

1 minute ago, LeatherRebel5150 said:

Thats a good question how do you assign cost to a lot you pulled stuff from? Do you divide the cost evenly among items? Assign a percentage based on individual value? Choose a random method based on what is most advantageous to you? This could be a clusterfuck

Oh yeah, my online selling business lost a fortune. I keep buying and can't make a profit. Nobody is buying the copies of Madden 07 and NBA 2k5 from that GameCube collection I bought for $600!

Perhaps the IRS doesn't need to know there was a cubivore and gotcha force I never had an intention to sell in that collection.

[docile tapeworm | 4,204]

Hopefully nobody saw that lol

Edited December 16, 2021 by docile tapeworm

[FireHazard51 | 2,051]

1 hour ago, Kguillemette said:

Oh yeah, my online selling business lost a fortune. I keep buying and can't make a profit. Nobody is buying the copies of Madden 07 and NBA 2k5 from that GameCube collection I bought for $600!

Perhaps the IRS doesn't need to know there was a cubivore and gotcha force I never had an intention to sell in that collection.

well one way of accounting is to assume profit from the product once it's in your inventory of goods to sell....I'm not going to go into detail on this but that IS a thing.  But realistically when you buy a lot of shit you can logically apply a cost per item.  IRS isn't a video game auditor.  You bought 10 games for $1, that means each game is $0.10 no matter what it's REAL worth is.  IRS has specific requirements for "businesses" that don't show any profit after so many years.  But they do expect when you start a business you won't show profit for some time because the cost to start the business.  Also they have a cap on what you can claim is part of your start up cost and how much.  But can you game the system....yeah.  These are those tax loopholes that everyone vaguely talks about.  If you actually make money selling shit online there are likely legal ways to deduct existing costs you have so that to the IRS your "business" barely made a profit.  Otherwise you have a Hobby in which you make money to fund your hobby but in the end you don't make a net profit so you can't be a business, you have a hobby.

Edited December 16, 2021 by FireHazard51

[avatar! | 1,827]

8 minutes ago, FireHazard51 said:

Otherwise you have a Hobby in which you make money to fund your hobby but in the end you don't make a net profit so you can't be a business, you have a hobby.

I feel that many people on eBay fall in this category. Purchase something, sell it later, sometimes for profit, sometimes at a loss. I'm guessing with the new regulations the IRS is treating everything as a business, but as you noted, for many many it's just a fun hobby. Now, it's a real mess...

[spacepup | 2,411]

I can't really address all the questions and misunderstandings, but I'll make a few comments here.

When a payment processor or company sends you a 1099-K, all it is, is them reporting to you (and the IRS), how much money they collected and sent to you.  They are not making an assessment on whether you are a business, they are not calculating your profits, and they are not saying it is all taxable income to you.

It is up to YOU, as the individual, to report the information on your return, depending on your own situation.  If you get a $1,000 1099-K form form ebay/paypal, it is up to YOU to determine and calculate / report on your return what type of income that is, and how much ultimately is taxable.  

As has been pointed out several times on this and other threads - nothing changed about the actual tax law.  The only thing that changed, is the requirement for these companies to report this information.  

Personally, what I'd have liked to see, is a slightly higher threshold simply for practical reasons, but as the law stands, it is $600.  

People have been evading taxes by not reporting their video game sales, collecting sales, etc. for years and years and years.  I'm not making a moral assessment on that here, but just stating, I know it happens and tons of people have done it.  Now it will be slightly harder to do that.

We've known about this now for several months.  If you sell online using these processing companies, prepare yourself, get educated on how to handle it, and/or seek a tax professional to help you with your tax return.  

If you aren't making a lot of money, the impact won't be significant regardless of how you treat it.  If you are selling a LOT, then you should seriously consider paying a professional to advise you if you don't understand how this works.

[Kguillemette | 1,547]

4 minutes ago, avatar! said:

I feel that many people on eBay fall in this category. Purchase something, sell it later, sometimes for profit, sometimes at a loss. I'm guessing with the new regulations the IRS is treating everything as a business, but as you noted, for many many it's just a fun hobby. Now, it's a real mess...

@FireHazard51

This is the category I fall into. I'm concerned my hobby would be recognized as a business. On average my hobby annually nets me $3-4k in sales, but less than $500 in actual profit. Just a fun little exercise that costs me time more than anything else. 

@spacepup answered my questions as I was typing this. I'll just fill out the 1099 as honestly as possible. Paying out taxes on $500 is feasible to do where paying it on 4k is not. Realistically, it's highly unlikely I would be audited on my hobby with such small dollar amounts. Next year will probably be business as usual.

 

[fcgamer | 4,753]

9 hours ago, MrMark0673 said:

Well what's the alternative?  We sell stuff, we pay taxes.  It sucks, but that's sorta been the deal for a very, very, very long time.

I have a business.  I sell stuff.  I get taxed.

I'm a school teacher.  I make a salary.  I get crushed in taxes.

I don't *love* the system, but it's the current price of living in the US.

It's the price of having an American citizenship, it's irrelevant if you are residing in or out of the country.

[fcgamer | 4,753]

Due to the threshold, I'm out. I'll sell some things on local auction sites, and take trades for anything else.

I don't have a PayPal account as ten years ago a competitor got tired of me undercutting him with my sales, so he reported me for selling pirates games (the stuff I was selling were originals though), and that was that. Since then people just pay my mom's account, and she transfers into my account. No way I'm going to add complications to my parents' taxes over 5k or whatever I sell in a year.

I don't mind paying taxes, I'm working to publish a book on Amazon, and I will be paying taxes on that; however, having to conjure up receipts for items you bought at a flea market or purchased fifteen years ago, that's unreasonable, and I do take issue with that.

[Tanooki | 4,950]

9 hours ago, mbd39 said:

That is by the book. You only owe taxes if you make a profit.

https://www.hrblock.com/tax-center/income/other-income/capital-gains-garage-sale/

 

Convenient considering no sane individual who may have a 30 year old (game, toy, etc) collection kept receipts.  Odds are a good bit if it were original purchases ended up selling for less because outside of collectors most people tossed everything but the game out.  But, despite it not being a profit, you can't prove it wasn't, so you get reamed anyway.

So yeah the 97% reduction in before it gets reported sucks.  If everyone should be paying, they should have had NO grace at all before reporting and this wouldn't be an issue.

LIke @avatar! point out, supposedly the government had some allowances under hobby.  Other than this year, I would have fit that mold because I've probably sold on ebay very very lightly since like 2000, but it was to buy a little, sell a little, buy a lot of games to get a few I wanted, then dump the rest at a general loss to hopefully break even or come near that.  I don't have a way to account for that, and as @fcgamer put it...I take issue with having to conjure up receipts for stuff I bought years if not decades ago to try and negate a tax bill, that's impossible, impractical, and utterly asinine.

I wouldn't have any issue at all had a more practical floor been made, maybe 1/2 the current, even a 1/4 ($5K) because right now $600 is going to kick so many peoples collective asses in 2023 it's ridiculous.  And as pointed out, this won't hurt business owners or millionaires, this is straight up squeezing the people who truly honestly needed this bit of grace the most.

[arch_8ngel | 1,597]

16 hours ago, docile tapeworm said:

Miiiiiiiiike  you old dog you. 
aunt jeann just left us. This estate sale….it’s going in somebody’s pocket that didn’t pay for those things.

Estate sales are different.

Heirs get a stepped up cost basis, so what was paid for a thing is irrelevant.

The only thing that matters is whether the total value exceeds the estate tax exclusion.

[mbd39 | 2,029]

9 hours ago, Tanooki said:

Convenient considering no sane individual who may have a 30 year old (game, toy, etc) collection kept receipts.  Odds are a good bit if it were original purchases ended up selling for less because outside of collectors most people tossed everything but the game out.  But, despite it not being a profit, you can't prove it wasn't, so you get reamed anyway.

So yeah the 97% reduction in before it gets reported sucks.  If everyone should be paying, they should have had NO grace at all before reporting and this wouldn't be an issue.

LIke @avatar! point out, supposedly the government had some allowances under hobby.  Other than this year, I would have fit that mold because I've probably sold on ebay very very lightly since like 2000, but it was to buy a little, sell a little, buy a lot of games to get a few I wanted, then dump the rest at a general loss to hopefully break even or come near that.  I don't have a way to account for that, and as @fcgamer put it...I take issue with having to conjure up receipts for stuff I bought years if not decades ago to try and negate a tax bill, that's impossible, impractical, and utterly asinine.

I wouldn't have any issue at all had a more practical floor been made, maybe 1/2 the current, even a 1/4 ($5K) because right now $600 is going to kick so many peoples collective asses in 2023 it's ridiculous.  And as pointed out, this won't hurt business owners or millionaires, this is straight up squeezing the people who truly honestly needed this bit of grace the most.

Again, your tax obligation hasn't changed because of this. It was always there. The only new requirement is that you be sent a 1099.

[arch_8ngel | 1,597]

14 minutes ago, mbd39 said:

Again, your tax obligation hasn't changed because of this. It was always there. The only new requirement is that you be sent a 1099.

What has changed is the direct need to file the paperwork since a reported 1099 without a matching line on your tax return is bad news.

 

Yes, you "should have" been doing this anyway, but for yard sale like selling (cleaning house of old stuff and potentially less than paid) most low volume sellers would have skipped the hassle of the paperwork.

 

 

The other actual problem this 1099 creates is that for hobby sellers, they get screwed by shipping, fees, and sales taxes being included in the reported gross.  Only businesses can take those deductions, and if you are really a hobby sellers, not a business, it is up to you whether to take the risk of claiming those deductions.