Another eBay selling question
ElvisP
Posts: 1,073 ✭✭✭
I have never had to report my eBay sales on my tax return because I have always been under the $20,000 sales mark. This year I am now within app. $1,700 of reaching the $20k mark. Of course I do not want to reach that and have to report it on my taxes. Any options?
I really don't want to quit selling for 3 months as things are going well and I have built up some good customers/repeat buyers and I need the money. Any tips would be much appreciated.
0
Comments
You can do the options you mention, or, if you want to sell to specific customers, you can contact them by email or through the registry and complete your transactions away from ebay.
Also, you can keep selling on ebay but just keep a closer eye on your total as you close in on 20k and don't sell items that will put you over.
Or lastly, you could try to bump all your asking prices up by enough of an amount such that the sales prices would cover the difference of the resulting taxes.
Sort of related question to the OP: I sold a car through ebay over the summer, and that price is included with my running total for everything else. I may well have had this wrong, but for some reason, I had thought that a car sold on ebay motors did not count towards your usual 20k reporting threshold?
Thanks!! The $20k is actual sales and does not include shipping costs, correct? Never sold a car on ebay so can't help you with your question. Hopefully someone can answer.
If you are reported by PayPal, shipping costs are included. They just know the transaction amount and don't care what portion was shipping. They report gross payments received.
I have multiple PayPal accounts (micropayments and regular) and accept other forms of payment on other platforms (Stripe, Google wallet, etc.) to try and reduce the amount.
open a 2nd paypal account in your wife's name and link to another bank account; solved. another option, pay the taxes. Also, for consideration, it is more than just 20K in sales, read below:
Paypal will send a 1099 form to the IRS if you have both:
$20,000 USD in gross payment volume from sales of goods or services in a single calendar year
and
200 payments for goods or services in the same year*
*Except in Vermont and Massachusetts where the threshold is lower irrespective of the number of transactions.
Never heard of PP sending a form for sales for tax purposes. Just knew about the $20k threshold. from ebay. Do they really do that?
It is Paypal that sends the form, not Ebay.
yes, paypal sends the W-2
Wow, didn't know that. Interesting. Thanks for the info. Is there anyway to tell what PP says are your sales? I know how to get the info from ebay but not PP? If PP includes shipping then it will obviously be a good bit higher than what ebay says.
I'm not sure how many items you have sold but I believe the limit is 200 items and $20,000.
James
Not sure if TN is different, but Paypal does send the form and the $20k is inaccurate (or it's based on 200 sales OR $20k) I've received one the past 3 years and year one was close to $16k. I did not report because I was on the 20k bandwagon. Yes, I've had to make restitution on the past 3 years returns. Not a fun process and very shocking when you receive the 'penalty' info. Basically, if you receive a 1099 from Paypal, report it.
Thanks,
David (LD_Ferg)
1985 Topps Football (starting in psa 8) - #9 - started 05/21/06
I would assume that the 200/20k policy will mean getting a 1099 from ebay instead of paypal for the CY2019 tax reporting year, ever since payments started being direct deposited by ebay to bank accounts instead of going to a paypal account.
That is so odd, I sold over 200 items last year but didn't reach $20k and didn't get the form from Paypal.
You can always send your cards to an Ebay consignor. We all now who the biggest ones are. You can also sell on Facebook. There are several card groups. I have had good luck there. If you sell on Facebook ask the buyer to send the money as friends and family.
I could be mistaken, but I don't think it matters if it is sent F&F or not. I believe it is just the total amount processed thru Paypal. That would include anything that was sent as friends and family.
The rule is $20K in sales AND 200 transactions. So, if you hit one marker but not the other, they wouldn't issue the 1099-K
Unfortunately I have had 200+ transactions.
Well, I say I have. That is 200 transactions correct? For example someone buys 5 items and pays at the same time, that would count as one transaction, not 5 correct? Anyone know how to find out how many transactions you've had year to date? thanks!
H&R Block does our taxes. I can see I'm going to have to slip a $20 bill to our guy at H&R Block to keep his mouth shut about my Joe Louis card purchases.
It is also GROSS not net. Just looked this up.
Been going back and forth and it seems that the PP sales are lees than those from ebay. For example, here is a transaction of mine:
Sale of 113.07 Invoice including shipping; 116.57. PP money received 112.89 or approximately 3% which would be the PP fees so it looks like they don't count their fees toward your sales which is good. I also checked the September invoice from ebay and it is approximately 3% more than what PP says was money received. If all of this is correct, as long as you keep a watch on your ebay sales and not hit 20k you should not receive the IRS foe=rm.
Just taken right from the ebay/PP site.......
Form 1099-K is an IRS tax form that includes the gross amount of all payment card and third party network transactions you received within a calendar year. If you’re a managed payments seller, we’ll mail you a Form 1099-K by January 31st if you exceed both of the following thresholds:
You received more than $20,000 in gross payments from the sale of your items
You had more than 200 payment transactions
Thank you. I guess the next question is how can you track your gross sales? Does gross sales include the shipping cost you collected. Is the total sales that is posted on your monthly invoice correct or incorrect? Thanks again.
How would PayPal know your net?
I was just copying and pasting.....it says gross. Gross means the whole shabang.
Yes. Gross would include shipping you collected. You would then deduct the actual cost of shipping, selling fees incurred (both paypal and ebay), and cost of product to get to your net taxable income. Use a spreadsheet to keep track.
Grading fees are another business expense I deduct...any subs you use for pricing as well.
Very informative thread. This will be the first year I will be getting a 1099. Can I deduct my monthly eBay store fees?
From your my-ebay page, under the pull down menu from the Activity link towards the upper/middle left, it gives you the options of Summary/Watch/Sell/Seller Hub. Select Seller Hub. In the row of header links, click on the forecast level link immediately below Seller Level Forecast (e.g., Top Rated, et.al.). From there, scroll down to just below Transactions & sales, where you will see the link called See Monthly Breakdown. Click on that for your 12-month rolling totals. The table presents the amounts for the most recent 12 months. That way, you will see not your running CY total, but more important, how much you sold in the months that will not count towards your CY2019 tax reporting year (Oct/Nov/Dec 2018 from this example) and therefore how much total $ towards 20k you still have to play with before the year's end.
This means that if for example ebay's continuously updating tax records shows you being at a 12-month rolling total sales of $23,000, but from November & December 2018 you sold $4,000, then you could slam the breaks on selling for a bit (or just consign your items for a couple months) and end up with a CY2019 total of $19,000 and therefore stay below the reporting threshold.
miwlvrn- Thanks so much. Very helpful!!
Only issue with this is that the 20k threshold and 200 transactions is a paypal requirement for taxes, not ebay. So I would recommend that he also counts up all of the rest of the private deals and other payments he has accepted within Paypal as well. Paypal also has a method to get this within a report where you can then manually tally up the totals. However, it is sad that neither company offers an actual report that would show you this information clearly, especially since they are sending you a 1099 for it!
Agreed; however, while I think that was sufficient for CY2018, there will be some confusion/learning curve for CY2019 relative to whether ebay, paypal, or both, issue 1099's, due to the mid-year switchover to ebay Managed Payments with the direct deposit transactions having replaced payments that otherwise formerly would have gone to the seller's paypal account instead.
Slightly related note, has anyone here ever received any sort of tax documentation from a consigning seller such as COMC, PWCC or the rest?
On the PP total received would funds received from family and friends be included, not for product be included? If so why?
Again, I believe it is everything that goes thru Paypal and that would be friends and family as well.
I have received a 1099 from paypal for last 3 years.
1. all grading fees are exp, deducted from sales
2. ebay fees are exp, deducted from sales
3. any cogs, cost to acquire product are deductible
4. shipping expenses are deductible
5. other expenses, such as vcp, psa membership, gas, home office, etc are expenses and therefore deductible
in the end, you pay taxes on profit, as well reduce your overall income in a loss scenario, if you sell enough to generate a 1099, you should set up a business {although, I am not an accountant} but there are many other advantages to do doing so.
Here is a good thread, with lots of info and great advice you should check out
https://www.blowoutforums.com/showthread.php?t=424854
I have to much S**t; so if you working on sets or are a player/team collector, send me your want list, with conditions desired. Keep in mind I have a another job so please allow me a few days to respond.
Here is from the FAQ on Paypal's website:
Are personal payments that I receive counted in the total that will be reported to the IRS?
No. Personal payments that are not payments for the sale of goods or services will not be counted when determining if the IRS thresholds have been reached and will not be included on your Form 1099-K if you exceed the thresholds. However, all payments received for the sale of goods or services will be used to calculate the gross payment volume to be reported. PayPal monitors accounts to ensure that personal payments are not being used for sales of goods and services.
But, you should check your 1099-k anyway to make sure none of your personal payments were included. Good record keeping is always key.
Thanks lahmejoon, thank goodness. I was so close I was sweating it. I asked a friend today that always goes over and he said that F&F is not included. I have even put money onto my PP account so it would make no sense for them to count that and other F&F. Maybe I can sleep tonight, LOL.
1099 form, not a w2, unless you work for PayPal