That seems cumbersome, but maybe a Google doc link in your signature. That might be a really good idea. Thank you.
I don't know if this is true for everyone, but I only see signatures on my computer. I don't see them when I'm on my phone. Not saying that negates the idea, just but it is an issue.
Well, I think that’s technically illegal, isn’t it? You can make a needle drop copy if you continue to own the album, but if you sell off the album and keep the copy, that violates copyright law. So anyone okay with that may not be a boy scout when it comes to strictly adhering to tax law.
If you get a 1099, one is issued electronically to the IRS at that time. You can even get 1099s late after you did taxes, in that case you add them the next year.
The thing is your original question has been answered within the first couple of pages of this thread. See post #24, 34, 44 by @Chris Gerhard, @Gabe Walters, @kwadguy. Schedule C, deduct your cost basis (whether it’s best effort guesstimate or meticulously documented), pay taxes on the net profit. That’s all. You don’t need to be a business to file Schedule C, nor do you need an accountant. If you want to remain skeptical of that, you’re never going to get the assurance you want from an online music forum. You seem to still be worried, confused, or skeptical on it, so I tried to put it into practical perspective in post #78, which in retrospect was a waste of time, since you come back with snarkiness and an outlier case because you apparently wanted to find a counterexample to something I said. which is still covered by the previous guidance, btw. So nothing new there. So yes, you can always nitpick a line or two in someone’s response, and continue to worry and dwell upon it if you want, but the question has already been thoroughly answered in the posts listed above. If you truly want a definitive answer to whatever concerns you have left, try here: https://www.irs.gov/help/navigate-irsgov
I came back with snark because your post had nothing to do with tax law, it was just a way to make yourself seem superior. There is a lot of great discussion here but I don't have time for that.
Apropos of this discussion... if you keep your collection in Discogs, I recently discovered that you can add custom fields to the collection page. About a year ago, I added fields for "Date purchased", "Price paid" and "Purchased from." It was just for my own information, but that would potentially be a quick & easy way to track your cost basis. Sometimes I find an old record with the pricetag still on it, and I can go back and enter the "Price Paid" retroactively.
Glad I have unloaded so much merch during recent previous years. I've also saved all of my receipts for a decade now to prove what I have paid for all this stuff. I'll be more than fine at tax time.
So to summarize…as a hobbyist with no interest in pretending to be a business ….if I were to continue to sell vinyl utilizing the PayPal platform in tax year 2022; the IRS will receive an electronic notice of funds paid out to me if those funds reach or exceed the $600 threshold. I would receive the same 1099 and be expected to report that income on my 2022 tax filing. The only available method of reducing that tax burden would be to apply a cost basis to the inventory that was involved in creating the funds reported on the 1099. And use the appropriate schedule. Because of the 2018 Tax Cuts and Jobs Act (HR1) hobbyists cannot deduct expenses such as shipping materials and shipping costs. That used to be an option, but no more. If I don’t have an accurate and verifiable proof of cost basis, then I have to report the entire amount of funds indicated on the 1099 as income and pay taxes on the entire amount. I’ll be pleased to be corrected if I’m wrong about anything above.
Pretty close, but is something that you would want to talk to an advisor who knows the law about. There's more subtlety to it than just documented cost basis of inventory. Other things on Schedule C are worth reading up on.
If you don't have records, you can still declare a cost basis. Honestly, if you're a hobbyist and you've been doing this for years, you almost certainly do NOT have records for everything. You can make something up and declare it as a cost basis. That's what a lot (probably most) hobbyists do. Provided it's not ridiculous, the IRS it's not likely to kick you out for an audit because of that. I mean, if your 1099-K is for $40k, and you claim a cost basis of $40k, you're just asking to be audited. But if you declare a cost basis that leaves you with a reasonable profit, you're not probably gonna get audited. That said, YMMV, and anyone can potentially be audited. This is not a forum for binding financial advice. IF you were to get audited, the IRS might ask for documentation of your cost basis. If you can't provide it, the next best thing would be to create a narrative that explains where you got that cost basis. They would decide whether to accept your narrative or reject it. Worst case scenario in most cases is that they would disallow the entire cost basis, and you'd owe back taxes + penality for underpayment. But there would be no criminal fine. Just an annoying financial hit. Again, if you are clearing big money and claim you're not making anything, then you are putting an audit target on your back. In that case, you should be prepared with documentation.
Thanks for taking the time to respond to this. From what I’ve seen here on this forum we have sellers that use PayPal as a platform because it’s required. Some sellers are just clearing out items they don’t really want to collect anymore and want the space. Some are selling to offset the cost of their hobby. Some are selling because they have multiple outlets for their inventory and this just happens to be one of them and some are selling as a business of sorts. Many are selling at a loss or a discount because there is a type of fraternal atmosphere to the audiophile community. I’m not interested in the business ramifications - though some here might be - I’m interested in minimizing any future financial impact that might occur due to my failure to adjust to the way others are handling my transactional records. While my first reaction is to simply opt out of this system of supporting my hobby, I appreciate the input of people like you who shine a light in the darkness that is the IRS black hole of publications and tax law. But I suppose a simple log book wouldn’t be too much of a hassle.
So we get taxed on the income we earn. We buy the record and pay sales tax. We sell our record and pay any gains tax. The IRS just killed my desire to collect vinyl. I'll buy a few copies here and there.
It's not as bad now, as it will be come 2022. After that ... Anything over $600.00 is supposed to be reported to be taxed. You're supposedly to pay tax on the "profit" that you sell a particular item for. The quandry is ... if you bought, say a CD or LP 20 years ago and that CD's or LP's value has gone quite high, how do you prove the price you paid on the outset? How many sales receipts does one keep for decades. I'm not a business, per se. I'm just selling stuff to keep m' head above water. It's friggin' stupid. I just report the sales to my accountant and let them work it out, then pay the friggin' piper. Meanwhile, conglomerates use a smorgasbord of loopholes to avoid paying taxes. It's messed up. The onslaught of able-bodied ****wads sucking on the coffers of Social Security (due to various "disabilities") is an ever-hard slap in the face of honest people. The "little man" will never win. As Neil Peart wrote : "The most endangered species ... the honest man - will still survive annihilation". But FFS, at what price? Apologies for the rant.
No, dear Sir -- Did you not recognize the term "able-bodied"? Of course, there are those who are actually, truly disabled. I'm talking about people who are CHEATING the system (which in turn creates a clog in the process). Certainly you're not defending those people, are you?
I'm not convinced that you get the term able bodied. I never like seeing the term disabled in quotation marks and immediately mistrust people who feel a need to do that.
I'm not sure you "get" that some people want to get a check for doing nothing. Again .... I'm not referring to people who have a genuine disability.
I get that there might be a tiny percentage. I also get that this thread was started because of an IRS change prompted by corporations who were paying subcontractors via PayPal in order to cheat us out of what they rightfully owe. I also get that their dishonesty is often to the tune of seven figures or more, so I don't really get that lathered up about a few people illegally jumping through hoops for $800 a month. Onslaught, LOL.
correct? from Jan 01-Dec 31st 2021 we are still on the $20,000 threshold...we will NOT receive a 1099 for 2021 tax year...THEN on Jan 01, 2022 starts the new $600.00 LAW...
