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It has begun. Paypal asks for SSN for 'new 1099-K reporting in 2022'

Discussion in 'Marketplace Discussions' started by ls35a, Dec 1, 2021.

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  1. ls35a

    ls35a Forum Resident Thread Starter

    Location:
    Eagle, Idaho
    January 1 if you get paid via paypal (or similar vendor) for selling an item online they are required to send info on that sale to the IRS so you can get taxed on the money you made.

    No idea on if you have the original receipt and can show you lost money on this deal if you still have to pay. I kinda think that's not going to be an option.

    So if I have a used dvd player and sell it on ebay for forty bucks.... that's forty bucks of taxable income.

    Ebay, Agon, etc... are gonna get clobbered by this. I sold a two thousand dollar preamp yesterday, I'm selling ALL my spare gear this month.

    So if you've got gear you've been meaning to sell.... do it before January 1.
     
  2. cendres

    cendres Well-Known Member

    Location:
    MSP
    Ugh. Thanks for the heads-up!
     
  3. Glfrancis2

    Glfrancis2 Overworked and underpaid state employee

    Location:
    Birmingham al
    Glad that I already sold my Chinook
     
    Chemically altered likes this.
  4. oregonalex

    oregonalex Forum Resident

    I suggesst you read the following before you panic or or disseminate incomplete or incorrect information.

    New U.S. Tax Reporting Requirements: Your Questions Answered

    Especially this section is of interest:

    "While banks and payment service providers, like PayPal and Venmo are required by the IRS to send customers a Form-1099K if they meet the $600 threshold amount, there are certain amounts that may be included on the form that are generally excluded from gross income and therefore are not subject to income tax. This includes:
    • Amounts from selling personal items at a loss
    • Amounts sent as reimbursement
    • Amounts sent as a gift

    So, for example, if you purchased a couch for $1200 and sold it for $800, this amount would not be subject to income tax."

    Emphasis mine. So no reason to worry about most used gear sales. You have to MAKE money on a transaction for the transaction to be taxable, and you only pay tax on the amount you MADE over the original cost.
     
  5. murphythecat

    murphythecat https://www.last.fm/user/murphythecat

    Location:
    Canada
    gotta laugh at this point

    if someone is crazy enough to sell using paypal, well....
     
  6. ls35a

    ls35a Forum Resident Thread Starter

    Location:
    Eagle, Idaho
    Keep your receipts for everything you own... forever.
     
  7. oregonalex

    oregonalex Forum Resident

    Not forever. Only 5 years after you sold them. Don't you keep your receipts anyway for insurance purposes in case of fire or theft?
     
  8. Ingenieur

    Ingenieur Forum Resident

    Location:
    Gone
    The threshold varies
    This will not hurt the small guy too much ( depending on the state). It may help: say you sell something for 1000 that you paid 2000 for, you may depreciate and possibly declare a loss.

    It will hurt for example sellers doing millions in volume and who are not reporting. Good.


    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.
    Some US States require merchant reporting at a lower threshold:
    • Vermont, Massachusetts, Virginia, Maryland: Have a $600 USD total payment volume threshold from sales of goods or services in a single calendar year. That’s regardless of the number of transactions.
    • Illinois: Has a $1,000 USD total payment volume threshold of goods or services in a single calendar year. And at least 4 payment transactions.
     
  9. cendres

    cendres Well-Known Member

    Location:
    MSP
    Doesn't PP require a SSN when you register? It has been a very long time, but I thought that was the case.
     
  10. wwaldmanfan

    wwaldmanfan Born In The 50's

    Location:
    NJ
    The likelihood of getting an IRS audit for something like this is remote, but a Form 1099-K will not itemize your transactions. They only report the gross income. It is on you to prove what you paid for the original item, i.e. original purchase receipt. You should keep receipts of everything you buy for this reason, if you ever think you might sell it.
    It's like when you buy a house and do capital improvements like building on a deck or replacing your roof. If you sell the house for a profit, you are subject to capital gains taxes (above a certain threshold), unless you can document the cost of any capital improvements you put in while you owned it.
     
    ddarch and oregonalex like this.
  11. violarules

    violarules Forum Resident

    Location:
    Baltimore, MD
    In the US, as long as you have lived in the house at least two of the last five years and the amount of profit is less than $250k ($500k if married), you are not subject to capital gains tax on the sale of a home. There are other details, but those are the broad strokes.
     
  12. Spitfire

    Spitfire Senior Member

    Location:
    Pacific Northwest
    Myke and R. Totale like this.
  13. yamfan

    yamfan Forum Resident

    Location:
    Missouri
    The tax code is so complex that it's not that easy to be 100% compliant. There are a record number of US citizens renouncing their US citizenship that live abroad(like Tina Turner--yes that Tina Turner) because the tax code is so complex even different tax lawyers cannot agree on what is legal.
    Ordinary people don't have the resources to fight a legal case against the govt.
     
  14. Ontheone

    Ontheone Poorly Understood Member

    Location:
    Indianapolis
    I'm pretty sure this is the same as last year. Has anything really changed in reporting requirements for online sales and reporting of any net profits? Strikes me that all is exactly the same as last year...but perhaps I'm wrong.
     
  15. Spitfire

    Spitfire Senior Member

    Location:
    Pacific Northwest
    It's going down to $600 for Federal too
     
  16. Statistical data on Federal prosecutions of all white collar crime, from August 2016:
    White Collar Crime Prosecutions for August 2016

    Relevant data points:

    total number of prosecutions, August 2016: 468
    percentage of prosecutions for tax fraud: 12% = 53

    number of times that Federal prosecutions of ALL white collar crime exceeded 1000, between the beginning of Federal Fiscal Year 2004 and the end of FFY 2015: twice

    IRS audit rates significantly increase as income rises | Internal Revenue Service

    chances of audit (including by mail correspondence) for a tax filer earning less than $200,000/yr: less than 1 in 200

    https://www.quora.com/How-much-on-a...ed-on-to-the-individual-being-audited?share=1
     
    Last edited: Dec 1, 2021
  17. wownflutter

    wownflutter Nocturnal Member

    Location:
    Indiana
    Doesn't the new bill they are trying to pass give a buttload of money to hire thousands more IRS agents?
     
  18. WildPhydeaux

    WildPhydeaux Picture withheld by The Authorities

    Location:
    A Parade in Dallas
    Ever wonder why, at least in Canada and I assume the US, in criminal cases you are presumed innocent unless proven guilty whereas with the taxman you are guilty unless you can prove otherwise...

    Cheers,
    Robert
     
  19. avanti1960

    avanti1960 Forum Resident

    Location:
    Chicago metro, USA
    got the request from ebay not too long ago. they are not getting my ss no.
    they can all kma.
     
  20. avanti1960

    avanti1960 Forum Resident

    Location:
    Chicago metro, USA
    yes. 87,000 of them. but they are only targeting incomes above $400K. umm hmmm.
     
  21. Chee

    Chee Forum Resident

    Location:
    Denver
    Start looking for the high-end records, artwork, posters, audio gear being listed.
     
  22. Chart of criminal investigations and indictments by IRS, 2013-2018
    https://www.thesagenext.com/blog/wp-content/uploads/2019/12/download-3-768x432.png

    percentage of IRS audits by mail: 75%
    in-person audits: 25%

    from 10 Major Internal Revenue Audit Trends For 2020

    Federal prosecutions for white collar crime, August 2020 Prosecutions for August 2020

    percent change from 5 years ago: down 75.2%
    percent change from 1 year ago: down 42.6%
     
    avanti1960 likes this.
  23. wwaldmanfan

    wwaldmanfan Born In The 50's

    Location:
    NJ
    To be accurate, the plan was to monitor everyone's bank account with more than $600 in annual transactions. Then, that was raised to $10,000 in annual transactions. It has nothing to do with your income. And, it has yet to pass congress, but we'll see, won't we?
     
    avanti1960 likes this.
  24. Jerry

    Jerry Grateful Gort Staff

    Location:
    New England
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