PayPal 1099-K changes

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

  1. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
    So, as I read that article, the provision in the American rescue plan reporting over $600 is still in place.
     
  2. SixthSpeed

    SixthSpeed Active Member

    Location:
    California
    This affects any and all electronic payment transactions that occur on any platform. This includes eBay, Amazon, Discogs, Etsy, Mercari, Facebook MP, etc.....and cash apps such as Paypal, Venmo, Zelle, etc...

    Personally, I think it's ridiculous. I buy something, I pay sales tax on it, and if I decide to sell it later (whether at loss or profit), I have to pay taxes again???...silly.
     
  3. Joseph.McClure

    Joseph.McClure Forum Resident

    Location:
    Memphis, TN
    We need to Build Back Better....
     
  4. When you buy something, you are often required to pay sales tax on the purchase, that has nothing to do with any income tax due on profits when selling something.

    You don't have to pay income taxes if you lose money on sales and the calculation of taxes due during the year is not on an item by item basis, it is based on the total for all sales for the year. If the net total is a loss for all sales, there is no tax due, even if you did have profit on selected sales. The $600 1099 requirement doesn't mean income tax rules have changed, no profit on sales, no tax due. All expenses to purchase the items and all expenses to sell the items are deductible on the tax return.
     
    markshan likes this.
  5. SixthSpeed

    SixthSpeed Active Member

    Location:
    California
    If you're a hobby seller, with a full time job and W-2 wages, you always take the standard deduction. You cannot deduct any expenses from selling online. So, any money reported on the 1099-k, it's all taxable. No thank you...
     
  6. Michael

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

    ah, such a small change;

    WHAT HAS CHANGED AND YES IT'S BIG TIME! PREVIOUS; $20,000 AND $200.00 in SALES TOGETHER NOT APART GENERATED A 1099...no reporting to the IRS without achieving those results...NOW $600.00 IN SALES A GUARANTEED 1099...

    that is disgusting for the small collector who sells on eBay, Amazon, etc...

    GEE, IT'S ALL GOOD.
     
    Last edited: Nov 12, 2021
  7. Nonsense, you can absolutely deduct purchase price and any costs to sell, file a schedule C.
     
    R. Totale and Gabe Walters like this.
  8. Profits from selling was always taxable income, receiving a 1099 or not. This position can be posted as often as you like, it will never be correct. If you wanted to commit a crime and not pay tax on profits, this 1099 change does make that more difficult.
     
    uzn007 and R. Totale like this.
  9. Gabe Walters

    Gabe Walters Forum Resident

    Listen to him, people, he’s right.

    Again, VA has done this before the feds, and I got a 1099 from PayPal for my record sales, more than $7k in revenue. I filed a Schedule C. My cost basis and expenses to sell those records brought my taxable income on those sales down to just over $500.
     
    uzn007 likes this.
  10. Spitfire

    Spitfire Senior Member

    Location:
    Pacific Northwest
    Problem is most of us haven't been tracking our cost basis or expenses over the years. I wasn't thinking back in 1982 when I bought that Iron Maiden record that I should keep the receipt because one day far in the future I would need it to determine a cost basis when I sold it.
     
    Ro-Go, Dave and DarkSideOfTheMoo like this.
  11. Gabe Walters

    Gabe Walters Forum Resident

    Yep. Just put down something reasonable.
     
    uzn007 likes this.
  12. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
    As I understand it, when you get the 1099k you also file a Schedule C to show your expenses against that amount and that adjusts it. This happens before deductions, etc.. However, I am far from an expert and welcome other thoughts on this.
     
  13. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
    Well, starting Jan 1 I will be running a spreadsheet for every transaction. It sucks, but it sucks less than being charged twice as much tax as I should be.
     
    uzn007 likes this.
  14. SixthSpeed

    SixthSpeed Active Member

    Location:
    California
    I won't be selling anything. They're not getting any more of my tax money. This is ridiculous.
     
    Ro-Go likes this.
  15. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
    Whatever. Post wrong information then throw a pity party. Post again when you've actually got something to say.
     
  16. PHILLYQ

    PHILLYQ Forum Resident

    Location:
    Brooklyn NY
    Keep trackof your expenses and report them also. That'll at least(on paper) reduce your profit.
     
    markshan likes this.
  17. A strategy you may want to consider, if it looks like you will have a profit selling music this year and you are like me, you have hundreds of mass market CDs, worth very little, sell them. I purchased hundreds of CDs from BMG, Columbia House, and Yourmusic.com and the popular CDs are almost always worth very little now. Select a bunch of them, sell them locally or here on Steve Hoffman Forum or to Decluttr or FYE or other, the loss will deductible from the profitable sales and you will get a little cash. Sell enough to negate the profit in total if you can.

    I have all of my receipts for online purchases, saved in an email folder. Yourmusic.com purchases were usually between $5 to $7 each and are mostly worth $1 or less today. I will just sell enough to wipe out the profit in the unlikely event I will have a profit from the more valuable items. If anybody can actually make a profit selling CDs these days if following that strategy, my hat's off to them. Even if you don't have the receipts, it won't be difficult to know what you paid for the CDs if you recall where you purchased them.
     
    uzn007 likes this.
  18. Considering your last sentence ; Isn't the "proof of purchase" (and the actual price paid) necessary in the equation of original purchase vs. selling price, in the amount of tax owed (if any)?
     
  19. No, if you don't have receipts but recall where and for how much, list that in your spreadsheet. Of course if you can find evidence of that price at that time from that seller online, that would be good support. I mentioned my purchases from Yourmusic.com, I have all receipts but even if I didn't, actual prices for items from the service are well documented online. If you don't recall anything, I would suggest you take the lowest possible price at the time of purchase, probably one of the online sellers and document that.

    Whatever you do, be reasonable and honest when listing prices paid without actual receipts. You want to sell whatever you have at the best possible price, of course, losing money selling items below market as a tax avoidance strategy is a fool's game. In my experience selling mass market ordinary CDs, today's market value results in a significant loss. Do not sell a bunch of CDs to friends or family for less than market value to get a deduction, that is tax evasion, not tax avoidance, a crime. All sales at a loss must be arm's length transactions, between a willing buyer and seller.

    If you are completely at a loss to come up with anything regarding purchase price, don't make up nonsense would be my advice, proceed with caution. I am not an attorney and my advice is just what I consider a common sense approach to this problem.
     
    uzn007 and DarkSideOfTheMoo like this.
  20. Combination

    Combination Forum Resident

    Location:
    New Orleans
  21. Combination

    Combination Forum Resident

    Location:
    New Orleans
    ellingtonic and uzn007 like this.
  22. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
  23. SixthSpeed

    SixthSpeed Active Member

    Location:
    California
    You mean like the rich, who make profits, and don't pay taxes. I wonder if the new 1099-k reporting requirement will affect them.
     
  24. The 1099 reporting change doesn't change the tax for anybody, no new taxes, period. All income taxable before this 1099 reporting change is still taxable now, no taxes added. This is a 1099 reporting change only, if you received taxable income but no 1099 before this change, it was taxable despite not receiving a 1099.

    If you are asking does this change make it more difficult for the rich to evade taxes, I would say yes. I would also say it makes it more difficult for all chasses to evade taxes, poor and middle class included. For many it will be a tax reporting nuisance with no impact on taxes.
     
  25. kwadguy

    kwadguy Senior Member

    Location:
    Cambridge, MA
    If you think people who made between $600 and $20k are"rich", your definition of "rich" is much different than mine.
     
    Dave and Spitfire like this.

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