OT - New 1099K Federal Tax Thresholds

If you are a casual seller on eBay be prepared to pay Federal Taxes on all sales of $600 or more even if it was one transaction; you will receive a 1099k even if you took a loss which you will need to prove. The 1099k threshold was previously $20,000 or 200 transactions. This is irrationally all part of the American Rescue Plan.

Contact your Congressman today to rescind this egregious misguided assault on average taxpayers.

https://www.ebaymainstreet.com/issues/1099-k-federal-tax-reporting

I don't like the new rules either, but I'm afraid you are misstating the facts.

You always did owe taxes on any net profits from sales (though losses also count against that). The only difference now is that the new rules have lowered the threshold for platforms reporting sales activity, period. That's what's actually happened.

>2 whytewolf1: I trust you have made your voice heard through the eBay Mainstreet link. I also personally wrote my Congressperson.

>1 HugoDumas: As long as you have records, you would not have to pay tax on items you are selling at a loss, as eBay states on its site: "you only pay taxes on profits. You won’t owe any taxes on something you sell for less than what you paid for it. For example, if you bought a bike for $1,000 last year and then sold it on eBay today for $700, that $700 you made would generally not be subject to income tax."

And so if you sold that bike for $1,200, you would only owe tax on the $200 profit, subject to the mentioned threshold.

Please know that I am not advocating for or against this aspect of the ARPA; I just thought I should mention this info.

>4 AMindForeverVoyaging: I am aware if that. But I sometimes sell things I purchased 10 or more years ago. Who keeps receipts that long? In addition nearly everyone is paperless and in the digital age there are no receipts only line charges with no description.

I hear you. I’ve started selling a lot of items on ebay this year. Most of my items are recent purchases from where I can show email receipts, but some are items from 10 years ago. There’s no way I am paying 35% taxes on a $50 sale when I paid $100 for it 10 years ago. Even though I don’t have a receipt, there should be some kind of allowance for sale on personal items. I will still claim it as a loss even though I don't have a receipt to prove it.

>5 HugoDumas:
I do; mostly digital but some paper receipts if they're important enough. Don't get me started on companies pushing paperless accounting, though. Seeking out and collecting PDF statements from all entities one does business with just to make their paper costs go down would be worse than a second full time job. There's just no time for that nonsense.

25+ years gets too analogue, though, so the rule is I can't make a profit anything I've had that long. haha

Actually, eBay's other change from a year or so ago is what keeps me from selling anything through them anymore. They've required direct access to a checking or savings account ever since the final separation/disintegration with PayPal.

>5 HugoDumas: just make a Google folder or Dropbox at the start of each year for stuff you buy (books) that you'll potentially sell. Download directly to that folder and it will all be there when you need it. It takes one or two minutes to set up and am extra 10-15 seconds to download. Much faster than printing and storing.

For people that collect books, it's smart to do that for insurance anyway.

>8 SDB2012: I suspect then you have never filed a 1099k on eBay sales. This will be a tax preparation hassle. The IRS will consider you self-employed because you sold personal possessions and therefore you will be subject to double the employment tax plus tax on the sales. The TurboTax instructions are not very clear on the various forums for reporting 1099-k on your tax form.

I bought my books never intending to sell them, and never have, and still don’t intend to, so I’ve kept no records. I suppose this could be a problem for my heirs, but their estate lawyer will have to deal with it.

Collectors of all sorts — coins, stamps, baseball cards, beanie babies — will have the same problem unless they bought with the intention of eventually selling them at a profit. Most collections end up being sold at a loss, but I don’t know how we’d prove it absent detailed record-keeping that few hobbyists do.

>9 HugoDumas: No but I've filed dozens of 1099s for contractors I've employed. Usually around 20 or so per year. Many of them are barely over the $600 threshold. Some of them make a lot more than that. It takes less than an hour to enter them, print them, and mail them. The info is already in the system. It's just part of the doing business.

Self-employment taxes would be extremely minimal on someone that sells a few items here or there and could easily be offset with costs of doing business or losses from other sales. If someone is doing it for their livelihood, they should be paying taxes like the rest of us. Now, if you said the tax system in the US is screwed up and favors meg-corps and uber wealthy versus small businesses and average people, I'd wholeheartedly agree.

>1 HugoDumas: Agreed. The issue is not paying taxes on profits, but the additional paperwork needed to avoid paying taxes on LOSSES, which are the majority of my eBay sales. I don't make profits on eBay, so why should I be have to keep receipts, spend extra time during tax season, etc., just to avoid paying taxes which I don't owe in the first place?

I too find this trend onerous. About a year or more ago when they started this change, i dtopped selling books or anything else on ebay. I have no record of what i paid. Once ebay takes their huge cut and i pay for shipping materials such as boxes and bubble wrap i was keeping about 60 percent of the purcase price. throw taxes on that, as i have no records that i sm likely selling at a loss, and it is just not worth it

so i offer my books to a local bookshop for credit only, and what they do not want is donated to Goodwill.

too much tax complicationfor for too little money

>13 sdawson: I have had a similar experience on eBay. It often really isn’t worth the trouble to list on eBay. I am sticking to Kijiji and Facebook.