Sell on ebay? The $20,000 IRS reporting threshold is now been lowered to $600
tincup
Posts: 5,137 ✭✭✭✭✭
Not sure of all of the details... but ran across the following; just an heads up on what may be coming. Previously, If you were below $20,000 sales on ebay, you did not receive a 1099k form for reporting to the IRS. But now appears that may be changing to $600, from a clause added into the Coronavirus stimulus bill:
https://zerohedge.com/markets/freelancers-punished-new-irs-rule-covid-stimulus
"A few hundred pages into the latest $1.9 trillion Covid relief law, the “American Rescue Plan Act of 2021,” you’ll find Section 9674. It says that a “third party settlement organization” does not have to report to the Internal Revenue Service (IRS) any payments to contract workers under $600.
These third parties include Uber, Airbnb, Etsy, eBay, Freelancer, and other platforms which facilitate payments to gig workers. The problem is that this little amendment lowers the reporting threshold from $20,000 to $600. Previously, a gig worker could earn up to $20,000 on these platforms without the IRS being informed of their income.
What this means:
From this rule change the IRS expects to collect an additional $1 billion annually, presumably from the poorest gig workers who previously earned under $20,000 per year. These low earners previously flew under the radar.
But now they could be met with surprise bills from the tax man when it comes time to file. And as many of these contractors are living paycheck to paycheck, they may incur additional IRS penalties if they are unable to pay what the IRS says they owe.
Of course, the same politicians who snuck this into the bill are the ones who declared over and over that their tax policies would only affect millionaires and the ultra wealthy. But now, one of the first things they do is shake down the lowest tax bracket.
We hope these gig workers enjoy their stimulus checks. They are soon going to learn that nothing is free when it comes to the government. There are always strings attached."
Comments
And this is NOT intended to be a political thread. Only being posted since many here sell their coins and currency on ebay, and this is a look ahead on what may be on it's way.
Great, tax evasion on all levels needs to be stopped. Best news I've heard all day.
The whole worlds off its rocker, buy Gold™.
Tax evasion.
Hmmm that's a stretch, but get the gist what you mean.
20k in profit (that's a business) not a hobby or yard sale.
I don't think the 20k has to be profit... I believe that was for gross income / receipts.
I can't keep track of the billion good reasons to stay away from e-bay
ISO 1978 Topps Baseball in NM-MT High Grade Raw 3, 100, 103, 302, 347, 376, 416, 466, 481, 487, 509, 534, 540, 554, 579, 580, 622, 642, 673, 724__________________________________________________________________________________________________________________________________ISO 1978 O-Pee-Chee in NM-MT High Grade Raw12, 21, 29, 38, 49, 65, 69, 73, 74, 81, 95, 100, 104, 110, 115, 122, 132, 133, 135, 140, 142, 151, 153, 155, 160, 161, 167, 168, 172, 179, 181, 196, 200, 204, 210, 224, 231, 240
A taxpayer's self reporting threshold is $1.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
This,
Just because the reporting of 1099K was previously much higher doesn't mean that the income was not reportable. Yet another reason they would like to go to a cashless society. If there was no cash, all income would be traceable and tax collected.
My Ebay Store
I would think so. $600 in gross receipts per year would generate a 1099 is the way I read it.
As an amateur seller who doesn't track COGS that is a major pain. I'm not making money on eBay so this really limits me to under $600 a year in total sales it would seem.
No way I'm getting into accounting for every buy/sell in the hobby which is strictly for fun to this collector.
This part falsely partisan/misrepresents from the article as really both sides contributed as a result of going through the reconciliation process and countless committees, vote-o-rama, etc. Can't fixate on a tree and ignore the forest, what bill doesn't get amendments attached and accepted as initially proposed? Possible to actually negate expenses as well and lower tax burden too from proper reporting and accounting.
From an accounting standpoint, why don't they just monetize more debt instead of forcing more paperwork onto small timers? It's not as if gov.com is accountable for anything they do and we're going another $4 trillion in the hole in exactly that way. I'm not convinced it's about tax revenues as much as it is about abusing taxpayers.
I knew it would happen.
@jmski52 , i agree. The IRS goal is to find $1B in "new" tax revenue, while the gov does 4000 times that amount in debt spending over a year period. It doesnt't make a lot of sense, unless the objectives is to drastically grow the IRS or to expedite the transition to a cashless society, or both.
Tax revenue is one of the tools used to transfer the cost of government provided goods and services from those who have to those who do not. It use to be supplemented by the printing press, the roles are now reversed.
As long as dollars are the only acceptable means to pay a tax bill, dollars will be needed.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
where do you people live? In Mass its been 600 for at least 5 years
I wonder what Commiefornia is?
Make a note to short EBAY stock in December just before all those forms get sent out and the internet freaks out about it
Well, I'm in Oregon, and have no sales tax. Ebay automatically withheld $1400 in "Tax Collected by Partner". I shouldn't have tax buying or selling.
That's not including my Ebay buys that, for some reason, were also taxed.
These people belong in jail.
I sell very little on ebay as it is.
Most of which has been kicking around the house for years and just looking to find a new caretaker.
Didn't keep track of what I paid for an item years ago and dam sure not going to do any type of paperwork just to find it a new home.
The bay can sit and spin as they are really messing up a good thing.
Out of The last 10 items.
6 were actually not even mine, but belonged to a friend that figured I'd realize higher dollars selling on the bay.
That would require me to pay for selling someone else's stuff.
No thanks...
I am guessing many of these people still reported the income, just now it gets reported on a 1099.
I get 1099 for people I have already invoiced. It creates a double reporting of sorts and the ebay one will cause me a headache as those sales are already reported.
"Tax collected by partner" is the sales tax that buyers had to pay because their state of residence has a sales tax. PayPal received the taxes as part of the payment to you from the buyer but then remits the tax amount back to eBay who then transfers the collected tax to the state. You didn't have any money taken from you....the buyer paid the tax, PP returned it to eBay, and eBay transferred it to the buyer's state of residence. The only thing in this arrangement that adds an additional cost to the seller is that the PP fee on the taxable amount is bourne by the seller.
. . . and the tax collected is incorrectly included in the total income reported to the taxpayer and the IRS on the 1099. Taxpayer needs to keep a record of taxes collected in order to report correct amount of income processed by ebay/PP and needs to be prepared to explain difference in the two income totals if audited.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
" . . and the tax collected is incorrectly included in the total income reported to the taxpayer and the IRS on the 1099. Taxpayer needs to keep a record of taxes collected in order to report correct amount of income processed by ebay/PP and needs to be prepared to explain difference in the two income totals if audited."
This. You get the privilege of paying tax... on the amount of tax collected collected by ebay. Unless you write it off or subtract the amount on your income tax form; but as mentioned the IRS may come knocking on your door if there is a difference from that shown on the 1099k form.
In fairness to ebay/paypal... they didn't create this mess. If I recall, the situation arises because of a court decision on interstate internet sales regarding taxes... and politicians hungry for more ways to dip into your pockets. Ebay and paypal are trying to comply with the result... and since every state has different laws (that can be ever changing at any time) regarding the taxes it has to be a nightmare of complexity.
This can be avoided by reporting all of the income the 1099 shows (including the tax collected and reported as income) on your tax forms and then reducing that total by the tax collected amount just as you do with your other expenses. Because the 1099 includes the tax collected you in turn treat it as an expense. Doing so will result in you reporting the same gross income to the IRS that the 1099 reports to the IRS and at the same time prevent you from having to pay income tax on the sales tax portion reported as income to you (and the IRS) on the 1099.
In essence, the 1099 assigns the sales taxes to you as income and you in turn are removing them from that gross income by treating them as one of your expenses. To do this you have to know the actual amount of sales taxes collected. I record the sales tax in my spreadsheet as one of my individual line item expense for each sale just as I do shipping, grading and other expenses. Others rely on the year end spreadsheet available in Paypal. For ebay's "managed payments," I'm not sure how this annual total will be provided.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I have never sold on ebay... Have not purchased anything in a long time from ebay... Reading this thread makes me think of how ebay was in the late nineties.... Buy/sell anything and everything... very few scams....and some great deals. Now, a different world - taxes, scams, reporting forms... bad enough when we see state tax collected... wondering if soon they will add county taxes as well.... Buh-bye ebay... at least for me. Cheers, RickO
Meanwhile some married couples are getting up to $20,400 unemployment compensation tax free. The moral of the story: don't work.
Modern solutions to modern problems.
Since you are planning on taking your loot & coins "with you. " Your heirs, instead of getting "good ole greenbacks," will be stuck with the task that you avoided. Yup, just like most anything else...pass it on to the next generation to resolve, take care off, or get stuck with.
To me, booming times ahead for the BST, garage and sidewalk sales beginning 2022. Makes me wonder, how the BST forum will be able to circumvent that.
the BST forum doesn't have your SS#
and live in poverty
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
but paypal does
@OPA.... My life, my property, my business.....Thanks for staying out of it. Cheers, RickO
If by poverty you mean ice cold A/C, a flat screen TV and iPhone...
Loves me some shiny!
Maybe. But the $20,400 tax exemption applies to incomes up to $150K which isn't exactly poverty. In a 22% tax bracket, that's basically like an additional $4K+ tax credit.
one man's castle is another man's poverty.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
True. I used to watch it occassionally but still held off till 2000-01 to make my first purchase on eBay.
Recently tried to get the service reps twice to double check the amount withheld as state taxes but nothing much came out of that. Maybe file a complain and get the attorney general's office to look into it.
https://www.pcgs.com/setregistry/u-s-coins/quarters/PCGS-2020-quarter-quest/album/247091
Lol if momma and I didn't work that would cut our salaries by 75%. Plus we'd be bored out of our minds. No thanks!
The whole worlds off its rocker, buy Gold™.
More time for knocking boots with Mrs dude
m
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Anyone want to share a spreadsheet they use to keep track of purchases and sales for tax purposes?
Is there one online to buy?
Thanks
Frank D
create your own with Excel
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
The key is to print details of each transaction. I would print a copy of the eBay sale detail, the PayPal transaction and then if you have one, the purchase invoice. Staple together and put it in a file. eBay/PayPal may or may not have usable records when the IRS comes knocking. As derryb stated, create an Excel file and enter each sale by auction number. Create columns for the various components of the sale (sales price, tax, shipping) and then the various expenses (item cost, selling fees, shipping expense, taxes remitted by eBay, etc.).
How I do it.
Every coin, bar, etc. I purchase gets entered as a line item on my Excel "INVENTORY" spread sheet. If I buy a quantity, 10 coin roll of coins for example, I will enter it as a single line item. If I decide later to sell individual coins I can at that time turn the single line item into 10 line items.
Warning to the wise about Excel. It is sometimes, not often, not very forgiving when you make a mistake. Save your data often and if you get to where you can't fix something, close the app without saving and start over where you last saved.
When I buy I start a line item on the "INVENTORY SHEET" and when I sell I complete the data for the line item. When line item is complete I cut and paste the line item to a duplicate "2021 SALES" sheet. First sheet provides me a running total on cost my current inventory. I keep an updated note on this sheet with a running total of ounces of each bullion metal I hold in the inventory. Second Sheet provides me all the data I need to complete my annual income tax return.
Note that these sheets are for inventory control and for compiling tax return data and do not give me a current value.
Let Excel's "formulas" do all the work:
M = H + I + J + K+ L
N = F - D - M
And set up running totals at the bottom of columns at your discretion.
Column F includes the sales amount plus any taxes collected from the buyer (H) by your payment processor and is the "gross amount" on your paypal transaction page. These taxes are later removed from your net as one of your fees. Reason you do this is because your 1099 "gross income" from your payment processor (copy to the IRS) incorrectly reports these collected state sales taxes as income to you. Knowing the total amount of these taxes enables you to reduce and correctly report your correct gross income when you file your income taxes. I use three decimal places on the taxes because there are cases where I sell more than one item at the same time, the sales tax amount total is an odd number, and I have to divide the taxes collected by the number of items to determine the amount for each item.
Receipts and printed hard copies of all transactions to support all data entries should be maintained. Current shift from Paypal to Ebay's managed payment system requires a little more work to gather and print the data. What used to be a paypal fee is now included in the Ebay Fee. Sales that do not involve Ebay, Paypal or grading simply get a zero in the respective column.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey