It's over, going off course.
AUandAG
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Registry: CC lowballs (boblindstrom), bobinvegas1989@yahoo.com
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Yep.... they appear to be requiring more and more.
Must be why they are hiring 67,000 new IRS employees. To check more and more returns....
Done!
Dave
Yup, schedule C plus the 15.3% self-employment tax.
Coinlearner, Ahrensdad, Nolawyer, RG, coinlieutenant, Yorkshireman, lordmarcovan, Soldi, masscrew, JimTyler, Relaxn, jclovescoins
Now listen boy, I'm tryin' to teach you sumthin' . . . . that ain't no optical illusion, it only looks like an optical illusion.
My mind reader refuses to charge me....
Done
Whether fair, legal, honest or not these types of well-intentioned regulations drive people to work under the table.
I contacted my Senator and hopefully he will respond, but truthfully, I do not feel it will matter. It seems the govt. is digging deep to come up with funds anyway they can to cover the ridiculous spending spree, even if it does not really gain any funds. This is just my opinion so unleash away.
Jim
When a man who is honestly mistaken hears the truth, he will either quit being mistaken or cease to be honest....Abraham Lincoln
Patriotism is supporting your country all the time, and your government when it deserves it.....Mark Twain
87,000
If you're a real small operation, by the time you've added up the cost of coins sold and everything else, you should owe them very little. It will probably cost you more of your time than your money to deal with this.
"Seu cabra da peste,
"Sou Mangueira......."
Sell it directly to one of us and done report it to the i*s. or maybe move off of Ebay to some other auction site that does not keep track, imho.
I'm not in that category, but as an ex contractor I assure you, the SE tax is your worst enemy, Hand the coins down to your heirs or donate them to charity and get the deduction. Screw the feds.
Doesn't passing them down allow a step-up cost if ...they...decide to sell?
Maybe, they are looking to eliminate the stepped-up basis.
They are well over a year out in processing amended returns. Also a good backlog of 2020 returns still to process. Their workforce has a lot of older folks ready to retire in the next few years. Replacements need to be trained soon.
Ebay is only doing what the IRS tells them to do. What auction site is exempt from this reporting? I would guess none.
Personally, I would like everyone who owes to pay. It's only fair. If you don't owe anything, you don't pay anything. Filing is not that big of a deal if you sold $2000 worth of coins and made a couple hundred bucks.
There in lies the problem...
Filing IS a big deal with thousands upon thousands of IRS pages, interpreting laws Congress has enacted.
The US Tax Code is up to 60,000+ pages!
One needs to hire a tax professional to ensure they are filing correctly, including taking the proper deductions, etc. Then they have to pay for that tax professional (that they can then deduct the cost of the tax professional), etc...
Now $2000 worth of coins sold is a loss to the seller.
Oh, but wait, there's more - now the Loss can be used three out of the next 5 years to offset other earnings!
Yes, Filing is EASY!
/s
BST references available on request
The problem is the tax cheats. I know a guy who has been selling collectibles on ebay for almost 20 years... and never declared the income until recently. How, you ask? I'll tell you.
Back in the day neither eBay nor PayPal had to report to the IRS. So he ignored the income. He did about 50,000 gross. I don't know his net. When PayPal was forced to report to the IRS at the $20,000 mark, he created separate accounts for his wife and daughter to keep all 3 counts under $20k.
Only now with the lower threshold is he going to be forced to declare. And he's PISSED. He's threatening to stop selling on eBay and go back to just selling at flea markets where he can continue to hide the income.
It's people like him that the IRS is trying to find. And they should. He's not only avoiding the taxes he owes, he's also creating an unfair sales advantage with the stolen money. He, of course, also doesn't charge sales tax at the flea market.
No one likes taxes. But fairness requires that everyone plays by the same rules. And when people don't voluntarily report, the IRS needs to go looking for them.
I wish the NY sales tax folks would go to coin shows and flea markets and nail those cheats also. Unfortunately, it's too large an enforcement job.
I sell $200,000+ on ebay every year. I'm a chemist bit an accountant. I've filed with TurboTax every year, never hired a professional and never had a problem.
YES, IT IS EASY. It's 3 boxes on a Schedule for someone selling a couple thousand in coins for little or no profit.
Do you have a purchase price and receipt for EVERY COIN you own? I wonder how many collectors do.
SOS...more paperwork.
I am not an accountant but there may be other tax advantages in being self employed and filing a schedule C. You might be able to deduct health insurance premiums, write off a portion of your house, expenses to attend a coin show to buy coins for sale, contribute to a roth ira. Keep in mind you pay taxes on the profits only, not gross sales. Be sure to check with your tax professional. I use H & R Block tax software which can handle these concepts for a schedule C filer.
The OP is asking for help from us to contact Congress not for some of us to take this thread off course by debating the merits of the law.
This has been debated ad nauseam in previous threads🙄
Edited to add that I agree with OP request and completed the letter task. When you follow the link you need to scroll down and click on 1099-K and it will take you to the letter link😉. Took less than 1 minute to complete the task😎
If you don't have other income except for Social Security and you are not selling several thousands on eBay just report it all and your standard deduction should end up with no extra taxes or any extra forms to fill out. Accountants correct me if I'm wrong but if I just treat that eBay form as if it was all income from sales of goods even though only part of it would be taxable using schedule C and my income total is low enough my taxes would still be zero after the basic standard deduction.
Nothing is too large of an enforcement job for NY State.
I recall reading (years ago) that NY State spent over $100 million on their enforcement efforts, just on cigarette tax enforcement, due to the amount of tax revenue generated in cigarette sales for NY State.
If NY State feels there is a significant amount of money being lost to "tax cheats" (your words) at coin shows, NY State would go after them. It all comes down to priorities for the state and if they believe it is a money making operation for them.
BST references available on request
Maybe some of the off course discussions can better educate people into various sides of the issue (and how it relates directly to the buying and selling of coins), so that they can be better informed to come up with their own arguments to write their congress critter with. I believe any tax discussion, IRT the buying and selling of coins, is related to the OP's original ask.
Of course, no one should go Political in this discussion (believe me, I've tried to avoid going down that rabbit hole).
BST references available on request
Not every individual one. But the IRS is very reasonable. The one time they asked, they took my word for it.
Hmmm... so you're just doing it as a favor to the OP, even if you disagree? If I start a thread asking you to support the law, will you just write Congress supporting it? People might want to consider the merits before formulating an opinion.
Of course, you are correct. They clearly haven't considered it a high priority.
Don't forget about the 15.3% self employment tax. If you end up with a profit of over $400.00 on your Schedule C you will owe 15.3% of that. Self employment tax is not the same as "income tax" and is owed even if you owe no income tax.
it's crackers to slip a rozzer the dropsy in snide
i know when i started collecting several decades ago, i made some bad buys on coins, just offset some of the profits with the coins you will lose money on, sell them on a no reserve auction
Done
"Why waste time learning, when ignorance is instantaneous?"- Calvin and Hobbes
...and thus, the above examples are where it's not "easy" for some to do taxes, as there are many nuances, that someone either needs specialized software to guide them, or pay a trained professional to figure out.
At the root of this, (and I don't mean to go political), is that we have a taxation complexity problem in this country, whose root cause is a from a "spending problem"...thus, which leads to more reasons to tax anything and everything, including grandpa's coin collection selling.
BST references available on request
Which will never change until enough people are dissatisfied enough to do something about it. As long as "not my problem" is the reaction of most people when it comes to record keeping and reporting because they don't have to deal with it, nothing will change.
@HoneyMarket - You just nailed it.
Dave
I believe only payment processors provide a 1099 currently. eBay definitely is one. Great Collections, on their site, indicate they don’t. I haven’t checked other sites. Of course, laws change and it could end up being different later.
Of course one could choose to report the 1099 as simple income and pay the 28% capital gains tax and avoid dealing with the other issues. And if you do have proper receipts then it should be easy to reduce the overall burden from the total to the actual profit.
I think you're correct
new simplified IRS tax form
How much money did you make last year? $_________________________
Amount of taxes due: amount of money on line 1:
Send it in
The problem is coins are a low margin business. Dealers are lucky to get double digit margins, and collectors on average lose money.
What does this mean for someone with $600 in sales, or even $20,000 in sales? On average, it probably means $60 or $2000 in profit, respectively. Or no profit for a hobbyist.
The IRS will assume a cost basis of $0, implying income at least 10x the true economic profit, for anyone who fails to document cost basis or expenses. This is a problem for hobbyists who enjoy the coins more than the paperwork, accountants, tax lawyers, and audits.
Some people here assume the IRS will be "reasonable" and "take your word for it" if you have an undocumented cost basis or an undocumented expense. The answer to this is twofold: "it depends" and "it's foolish to assume". It might have been true that the IRS was lenient in the past, and it might still be true in the future if the vast majority of your paperwork is accurate and your lifestyle accords with your reported income. But given the enormous resources the IRS is throwing at a small problem, it would be foolish to assume you will be okay without a meticulous paper trail. And again, the risk is asymmetric due to the low (or no) margins on most coin transactions.
I deleted my eBay account a decade ago as soon as they asked for an SS#. It was simply not worth it when coins aren't my income source, and aren't fun due to paperwork hassles. It's also why I studiously avoid dreck and widgets. Dreck and widgets have a paperwork liability attached to them that exceeds any return potential.
@TurtleCat said: "Great Collections, on their site, indicate they don’t"
No idea how this is possible. Every other auction site I know of is considered a third-party payment processor under this.
www.brunkauctions.com
You would have to ask them. So far I haven’t found any article that would indicate a place like GC functions like a payment processor but I’m no CPA.
I would agree with you if this topic hasn't already been discussed in previous threads. All the OP is asking is for us to click the link and file the letter.....
The IRS will only assume a zero cost basis if you don't provide a non-zero one.
Which requires documentation. I'm not familiar with an IRS that "takes your word for it."
And what if the IRS disagrees with your reasonable approximation? Just because you make an estimate using the Cohan Rule, that doesn't mean they are obligated to accept it. In today's quickly changing tax climate, is there a possibility that they toughen up thir unwritten/undocumented acceptance criteria of the Cohan rule?
it has been discussed, at length. fwiw
i just am posting to agree about the statement about the OP and the intent of this thread.
just as a side-note, i wonder how this affects the status some people have for filing for hobbyists under the 20k threshold vs the 600 one. it seems like in order the considered a hobbyist, the standard(s) will be much more difficult now.
That's what I was thinking in my original post if your actual income is low enough just report it all and the standard tax deduction should take care of it. I wasn't thinking of it as a self employment type of thing but more like treating it as a sale of goods like income from a garage sale. Surely can't imagine the IRS thinks everyone that sells more than $600 is running a business. Then again who knows!
>
I think the main difference between Hobbyist and Business is schedule D vs schedule C. Hobbyists get a lower tax rate (long-term collectible) vs Business (income plus self-employment tax) but Businesses get to deduct lots of expenses like rent/home office, insurance, travel, websites, accounting, etc.
Of course the IRS can challenge the above election, but the main issue for people with $600 to $19999 in coin sales is that few are making money and even fewer make enough to cover accountants and tax attorneys. That's why the reporting requirement is onerous in a low margin hobby/business. It simply isn't worth participating, and is bad for ebay's revenue.
The other issue for a Hobbyist... suppose you have a 100k "real job" and 10k in "fun coin trades". Do you really want to get audited over an unprofitable ebay hobby when the IRS might decide to explore everything else, too?
Actually, they did take my word for it. You would only need documentation in an audit. You don't file documentation with your 1040. And the IRS will accept a reasonable cost basis because they know you didn't get it for free.
It happened to me. I called them. They asked me to write up the justification - no documentation required. They accepted my amended return with the letter of justification and sent me a 64 cent refund instead of the $12,000 bill.
So, you can assume this is going to be a huge problem. But for 99% of people, it won't be a problem at all.
I would also add that you either owe tax or you don't. Getting to hide your sales is MORE illegal and more problematic than missing a few receipts. You're just not likely to get caught unless the dollars are large.
Well, I'll grant you that it is a legitimate point, but I would also disagree on both practical and moral grounds.
There are tons of taxes out there that are commonly unreported and uncollected. Gambling winnings and use tax are the two most frequent, but technically every barter transaction should also be reported.
Why doesn't a gas station issue a tax form any time someone wins $100 on a scratch off? 1. Usually the person has offsetting losses which they don't bother to track. 2. The paperwork is cumbersome. 3. The government would lose lots of money as people would be angry that every scratch off win is met by a chef's kiss from the IRS.
Why isn't use tax collected by payment processers rather than merchants? It would be easy for Visa to remit use tax to California when you go on a spending spree in Vegas... Instead most people "break the law" by taking their goods home with them, unreported. And require all coin transactions to go on a card... so that the government can get its cut.
Even barter is technically taxable. You agree to mow the neighbors lawn during his vacation, in exchange for him plowing the snow while you are at the FUN show. But no one is issuing a W-4 to their neighbor...
The point is all of these are nuisance taxes: they reduce transactions, reduce utility, and probably reduce revenue. I think hassling people over reporting every coin transaction is harmful to the hobby, but it does give dealers a slight edge over collectors which I think is your objective. Anyway, it's clear I have an axe to grind, as do you, as does everyone. It will be interesting to see how ebay handles the revenue loss. Good luck!
P.S. One other point. If everyone's sales line is going to be automatically and accurately reported by software, what are 87k new agents going to do? Clearly they will be challenging the cost line. The problem with making a system much more efficient (as claimed for new reporting rules) but also demanding a vastly enlarged enforcement force is... they have to do something!
The only way to be rid of these nuisances is if enough people are affected by them to encourage them to do something about it. "Not my problem" isn't a motivator but increasing the number of people who are impacted by record keeping and reporting requirements is a move in that direction.
Just a thought...