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PayPal 1099-K changes

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

  1. What? I sure didn't say anything close to that nonsense. I do not think that people who only make between $600 and $20,000 are rich but they could be since wealth can be inherited and often is. I can't imagine how you jumped to that conclusion.
     
    bru87tr likes this.
  2. I just spent time managing my listings here and eBay, at the rate my items are selling, I don't think I will reach the $600 threshold with PayPal or eBay next year. I have raised the prices I ask to cover increases in shipping, packaging, and fees charged and my sales have plummeted. I am a long term low volume seller and since I don't collect eBay sales through PayPal it is looking like $600 total for the year may not be reached on either. My only hope is that enough low volume sellers will drop out to avoid having to deal with the new 1099 rules and my volume will increase as a result. Competing with high volume, lower fee sellers who get huge discounts on shipping and selling fees has always been difficult, now it may be a waste of my time.

    Lowering my prices to attract buyers will make selling not worth the effort to me, the net after all costs would be too small. PayPal, eBay, and USPS increases have each been about 20 to 25% this past year. I recently quit a minimum wage part-time job, $11/hr., and I don't think I will net $11/hr. spent selling CDs. I should have quit selling and kept the job. I don't mean making $11/hr. profit after purchase price, I mean net $11 selling ignoring the purchase cost.
     
  3. Does anybody know if eBay will send a 1099 accumulating gross sales, instead of the actual amounts I am paid? Since eBay now deducts the eBay fees and sends net payments only, I think their 1099s should be net amount. With PayPal collections, the gross amount would hit my account and I would pay the eBay fees each month from my account, meaning 1099 totals would be gross receipts.
     
  4. R. Totale

    R. Totale The Voice of Reason

    I suspect it will be gross. There are places on Schedule C to write off fees and taxes.
     
    markshan likes this.
  5. SixthSpeed

    SixthSpeed Well-Known Member

    Location:
    California
    1099s are always on gross sales. Even if you get returns and chargebacks, the original sales count towards the 1099 figures. I agree, 1099s should be the net amount of what you actually received into your pocket.
     
  6. uzn007

    uzn007 Pack Rat

    Location:
    Raleigh, N.C.
    It looks like this is the Paypal corporate website (i.e. information about the company) as opposed to the website for the Paypal app, which is at paypal.com. Just a guess.
     
  7. avanti1960

    avanti1960 Forum Resident

    Location:
    Chicago metro, USA
    this is going to hurt the audiophile industry which relies on buying and selling.
     
  8. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
    Why? Define hurt.
     
  9. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
    This will make a lot of extra work for sellers and immediate 20% inflation for consumers on the secondary market, which could actually benefit the Acoustic Sounds of the world.
     
    uzn007 likes this.
  10. avanti1960

    avanti1960 Forum Resident

    Location:
    Chicago metro, USA
    if people are like me that sell something to upgrade, audiophile churn if you will, then a reluctance to sell based on 1099 reporting will in turn mean a reluctance to buy.
     
    KOWHeigel likes this.
  11. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
    I would be very surprised if that became a major issue. People who are truly buying their records and then selling them at a loss only have to turn in a schedule C and that won't cost them anything.
     
    uzn007 likes this.
  12. Gabe Walters

    Gabe Walters Forum Resident

    Except time and aggravation. I spent several days last year preparing my Schedule C as a record seller and I’m about to have to do it again. It’s a major pain in the ass and sucks a lot of joy out of the hobby. Apparently I was meant to be accounting for hobby income all along, but I guarantee the majority of hobbyists don’t know that. The $600 threshold for payment processors to issue 1099s will quickly spread the message.

    But, I didn’t stop selling records.
     
    Spitfire and markshan like this.
  13. Carl Swanson

    Carl Swanson Forum Resident

    I don't mind paying my fair share of taxes, but I would never trust PayPal with my SSN. I'd just move on.
     
    uzn007 likes this.
  14. sons of nothing

    sons of nothing Forum Resident

    Location:
    Illinois
    Would income taxes have to be paid on shipping charges like media mail? You're not selling the shipping, but the product in the envelope.
     
  15. Gabe Walters

    Gabe Walters Forum Resident

    No. You list the shipping charges on the Schedule C to subtract it from the reported revenue. You only owe taxes on the profit.
     
    uzn007 likes this.
  16. Chee

    Chee Forum Resident

    Location:
    Denver
    Paypal will eventually get hacked big-time. I would never give up SS and other numbers
     
  17. R. Totale

    R. Totale The Voice of Reason

    It's almost like people who wouldn't think twice about doing think it's a Fortune 500 company with tens of billions in yearly revenue, rather than a few guys in a garage on a cable modem.
     
    joachim.ritter and markshan like this.
  18. sons of nothing

    sons of nothing Forum Resident

    Location:
    Illinois
    What if you're not doing a schedule c? Or do you have to do a schedule c period?
     
  19. quicksrt

    quicksrt Senior Member

    Location:
    City of Angels
    Just create a spreadsheet with each item sold, next column total price with shipping, then fees paid at selling venue, next column fees paid pp, and next column shipping cost, and next column mailer box / bubble wrap cost. Final column: your take after all the fees are subtracted from that total price paid by the customer.

    Once you set up the sheet and fill it in after each sale, it should get easier. At the end of a quarter, one could quickly figure out how much profit was made. Then the cost of your stock (if you saved receipts) can be subtracted from that net sales.

    And at the end of the year, you don't have a nightmare to deal with, it's all tidy and near perfect. There might not be much profit at all to pay taxes on.

    I've been saving receipts from my new and used record purchases all along. As well as postal receipts. While I am disappointed that the $600 limit is set unrealistically low, I am not worried about documentation, or showing how little I will end up owing the IRS. I've covered my ass over the last 7-8 years with stacks of sales receipts all tucked away by year. I may not even turn any net profit during the next few years if they want to get technical about it.
     
    WarEagleRK, bjlefebvre and uzn007 like this.
  20. R. Totale

    R. Totale The Voice of Reason

    Do you drive to the Post Office to mail packages? Do you drive to record stores, other retail outlets or record shows to acquire stock? 50+ cents a mile adds up.
     
    uzn007 likes this.
  21. markshan

    markshan Forum Resident Thread Starter

    Location:
    Pittsburgh, PA
    Speaking of spreadsheets, can anyone recommend a good free spreadsheet that will add the columns for you if you ask it to?
     
  22. Gabe Walters

    Gabe Walters Forum Resident

    If you're not doing a Schedule C, you'll owe taxes on your revenue, rather than merely on your profit. Very bad idea.
     
  23. quicksrt

    quicksrt Senior Member

    Location:
    City of Angels
    I do sometimes, other times I walk to the PO. Both POs are very close. But I'd like to have my books so in order that they never do get to even question things like gas mileage, or like some a home office deduction. I want them to look at my paperwork and sales receipts, and go "wow, nothing more to see here, let's move on" and get outta my life. If I get my bottom line showing $200 made in profits, I might not bother with any other deductions. I'll ask my tax guy what more I can do as well. Thanks.
     
  24. R. Totale

    R. Totale The Voice of Reason

    Google Docs

    Having a tax guy would be a help, as would reading the IRS instructions for Schedule C if you don't have a tax guy.
     
  25. quicksrt

    quicksrt Senior Member

    Location:
    City of Angels
    I have in previous years filed a Schedule-C attachment.

    but I gave up running my own business because I could not deal with filing state sales tax quarterly. It became too much and too soon. But now with ebay, Amazon, and Discogs taking care of that end (sales tax to state), Schedule-C but once a year is nothing.

    Oh and there were strict City/State rules for selling used goods, even online sales like ebay required more permits and a police scan. Yes, a lot of required. Or it used to be required. I actually do not want to know about business permits right now. But you see, state sales tax is filed quarterly, police scan, retail business permits renewed annually (I believe). The whole thing can turn into a nightmare, as it did for me. After two years I shut it all down and said never again am I going to try to go full legit above ground as a solo business operator. One needs several people to really do it right.

    This whole thing about paying taxes on eBay or Discogs income could turn into a real nightmare very quickly. I'm going to try and quietly pay my share.
     

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