PayPal 1099-K changes

Discussion in 'Marketplace Discussions' started by markshan, Aug 23, 2021.

  1. blackhawkskid6

    blackhawkskid6 Forum Resident

    Location:
    boston
    My accountant maintains that as long as I have records of my purchases, the cost basis is what was actually paid. No depreciation....straight line math as the goods sold are considered inventory. If you sold for more than paid you have a gain. If for less, you have a loss. I believe it is on Schedule C. You will need copious record keeping. He (and I) may be wrong with this practice, but I trust him. I never bothered to research myself. I pay him for his guidance.
     
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  2. Lord Hawthorne

    Lord Hawthorne Currently Untitled

    Location:
    Portland, Oregon
    The IRS also allows listing cash purchases from garage sales, record shows and such, but you must keep a log of such purchases with pertinent info like date, address, type of merchandise, cost, etc. Don't get crazy with it, the IRS can easily disallow a listing in an audit, especially if you don't have a business license or registered company tax ID.
     
  3. kwadguy

    kwadguy Senior Member

    Location:
    Cambridge, MA
    Yes. Any transaction processing service (PayPal, eBay Managed Payments, etc.) is required to file a 1099-K.
     
    uzn007 likes this.
  4. kwadguy

    kwadguy Senior Member

    Location:
    Cambridge, MA

    Yes, if you are a private seller, then purchase price is going to be your cost basis.

    Most people do not have copious records of their purchases. Most people don't have any records, actually, especially for older stuff.

    If you got audited, it would be at the IRS's discretion what cost basis they would allow, but it would probably be less than you paid, if you didn't pay <= the going price for a new, non-collectible, item at the time of purchase.
     
  5. giantleech

    giantleech Lord of all fevers and plagues

    Save your receipts and deduct your expenses (and talk to your tax preparer.)
     
  6. Spitfire

    Spitfire Senior Member

    Location:
    Pacific Northwest
    Problem is I have a collection that's 40+ years old and I don't have receipts for most of it especially my LPs. I guess I need to sell my higher priced items this year. This is going to suck next year.
     
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  7. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
    If I had a tax preparer I wouldn't be asking here (well, not 100% true, but I don't have an accountant).
     
  8. kwadguy

    kwadguy Senior Member

    Location:
    Cambridge, MA
    You'll have to guess, and hope you don't get audited. Most likely, if you declare a reasonable amount of profit from the sales on you 1099-k, you won't get audited. If you were to get audited, the worst that could likely happen is that they'd reduce your cost basis and you'd have to pay some penalties on the undeclaration.
     
    uzn007 likes this.
  9. giantleech

    giantleech Lord of all fevers and plagues

    As far as I'm concerned, the reporting threshold should have gone down from 20k to $0.01.

    Why should I (and the rest of the less than half of the working/income producing American citizens who are required to file Federal income taxes) have to fork out a **** ton of my earnings in the form of taxes (to contribute against my will to a governmental empire of near limitless graft) while others get to keep 100% of their profits (based on some arbitrary earnings cutoff) to do with as they please? No, make EVERYONE who earns have to chuck up a percentage of their spoils into the Federal hog trough. Then, maybe more people will come to care and pay attention to the $$$ draining policies that are inflicted upon us and then help find a way to put an end to all of this profligate madness.
     
    showtaper likes this.
  10. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
    You could move to Kabul.
     
  11. giantleech

    giantleech Lord of all fevers and plagues

    If you're fine with how the confiscated loot is spent here then you shouldn't be having any complaint of having to contribute a percentage of your Discogs earnings to Sam (which you are already required to be reporting/doing in the first place.) Cough up the hogs, baby!
     
  12. Michael

    Michael I LOVE WIDE S-T-E-R-E-O!

    so there will be positively no 1099-K for people selling under 20K this year 2021...the new $600.00 rules will start Jan 1 2022... at the end of 2022 they will officially send the 1099-K forms out for the 2022 taxes that will be due in April 2023. Correct?
     
    markshan likes this.
  13. kwadguy

    kwadguy Senior Member

    Location:
    Cambridge, MA
    It depends on what state you live in. A number of states have already adopted the new rule.
     
    R. Totale likes this.
  14. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
    Show me one post where I complained. You can't do it because it isn't there. I am gathering information on how to comply with the rule change. You are the leech who drives on public streets and says that you pay against your will. The closest I came to a complaint was pointing out that this rule change wasn't prompted by the IRS suddenly getting thirsty for a few bucks from hobbyists but rather because corporations were paying contractors via PayPal to avoid the appropriate taxes, proving once again that it's usually the giants who look for ways to cheat the system.
     
  15. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
    That's how I understand it. Don't you find this thread useful so that you know the change is coming and can hopefully plan accordingly?
     
  16. Michael

    Michael I LOVE WIDE S-T-E-R-E-O!

    very useful. thanks for creating it.
    so this year 2020 we get a free ride to make under $20,000 unreported to the FEDS...for the states that have not yet adopted the $600.00 threshold. How nice...what a shame this all is...
     
    markshan likes this.
  17. Michael

    Michael I LOVE WIDE S-T-E-R-E-O!

    gotcha, but I'm referring to the states that have not adopted this yet.
     
  18. 4-2-7

    4-2-7 Forum Resident

    Location:
    SF Peninsula
    Ask for personal checks for payment.

    Well you would need to know if this is taking effect this year for you.
     
  19. giantleech

    giantleech Lord of all fevers and plagues

    "This will have a major impact on many hobbyists (myself included)." - OK, so this statement of yours could possibly be considered something of just a simple statement of fact, but the inclusion of the descriptive "major" to describe the degree of "impact" gives your post just enough of a tinge (a soupçon, if you will) of complaint.

    At any rate, you are required to report these earnings from your sales to the Federal government on your Federal income tax form whether Discogs/PayPal sends that information to the IRS or not. I personally look forward to the IRS coming down like a ton of bricks on anyone who has not been reporting that income and also for Discogs/PayPal to report sellers annual earning of no less than $0.01 to the relevant taxing authorities. A case of people no longer having the ability to evade having to lie in the bed they have helped create for all of us.
     
    Last edited: Aug 29, 2021
  20. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
    Sure, dude, whatever.
     
  21. kwadguy

    kwadguy Senior Member

    Location:
    Cambridge, MA

    If you're selling locally, you can get cash.

    If you are selling on a platform that does not insert itself in the payment part of the transaction (e.g. SteveHoffman.tv forums, for example) you can ask for a check or a trade-in-kind for something like an Amazon Gift Certificate. AGCs are the currency of the realm on a lot of platforms: You can get them issued for free in any denomination, and the seller can quickly validate the payment. The only downside is that you're then stuck with Amazon "money". For many, that's OK.

    Of course, something like a AGC is only reasonable for smaller transactions. If you're talking big money, you're gonna have to go to something like Bitcoin if you want to stay off the radar.
     
    4-2-7 likes this.
  22. giantleech

    giantleech Lord of all fevers and plagues

    You bet. It's all good. Report your monetary income earnings ("hobbyist" or otherwise) in full and do as the taxman say.
     
  23. Spitfire

    Spitfire Senior Member

    Location:
    Pacific Northwest
    I think part of the argument is that we are selling a lot of this stuff at a loss but without a good cost basis all of it's going to be taxed as profit. I'm selling CDs to Declutter for 5 cents a piece that I know I bought for 20 bucks but I have no proof. I'm also selling some items for more than I paid but again with no cost basis. This is quite a big jump to go from $20,000 to $600 in one swoop.
     
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  24. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
    Okay, let me try this one more time and then let it go. This thread is full of useful information and I would hate to see it get shut down over a meaningless p*ssing contest.

    The reason I started this thread is exactly because I wanted to "do as the taxman say". The fact that you read my clinical statement of fact as a complaint says more about your heart than it does mine. If there is one thing I think is a drag in this, it's not paying my share. I believe in paying my share. It's that I will now have to keep detailed records of my hobby. But okay, whatever, I'll learn how to do that because I wish to keep participating in this hobby. I am a medical professional by trade. I didn't get into that field because of a deep, abiding love for paperwork either, but I understand that you gotta do what you gotta do. That's because I am an adult.
     
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  25. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
    Yes. Once again, we are trying to play by the rules, not be fleeced by them simply because we can't afford an accountant.
     
    uzn007 likes this.

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