Zelle exempt from 1099K reporting?
derryb
Posts: 37,141 ✭✭✭✭✭
Repetition of ignorance is ignorance raised to the power two.
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derryb
Posts: 37,141 ✭✭✭✭✭
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BHNC #248 … 130 and counting.
A lot of tax cheats out there.
I went to a coin show and a comic show this weekend. I always bring my resale certificates with me to give to dealers when I buy. This time, like every other time. They looked at me like I was crazy. Most didn't want it or know what to do with it. One humored me by taking a photo of it and handing it back.
At the risk of being flamed, I wish they would crack down on shows and all the other cheats. I would like a level playing field.
Why do you feel the need to pay taxes again on a used item where the taxes have already been paid on the item when new?
Serious question.
Remember The Irs really means "THEIRS".
USN & USAF retired 1971-1993
Successful Transactions with more than 100 Members
The IRS is only interested if a profit was made. The state usually collects taxes on all sales taking place regardless of any loss or profit (if I understood correctly with the state tax laws I have read). The resale certificate is shown to dealers so that the dealers do not charge sales tax to the individual because the assumption is the individual will resell it at some point and taxes will then be collected at that time unless its to another dealer. Every state has their own rules on this and perhaps some states do not have sales tax if I recall correctly.
The 1099K reporting is no big deal to a hobbyist who is buying and selling and not making any real profit in that sense since they are just enjoying their hobby by upgrading their collection or getting rid of some collectibles in order to buy others. If one sells for the purpose of profit and profits are established after accounting for all kinds of expenses, then that exposes one to income tax liability on one of the schedules on the tax form (I can't remember if it is Schedule C, D, or E, but something like that).
jmlanzaf, you seem like an upstanding guy! I like selling on eBay because then I do not have to worry about how I can pay my state sales tax. It's all done automatically. I keep a record of everything, so I can always show my sales minus expenses as being net negative, which means nothing to report to the IRS. It's a hobby for me. If my sales ever get robust, so be it, I will do my patriotic duty.
I think the expenses for some are being underreported or under estimated. I know it takes some time and energy to keep records, but once you got a system going, it makes life much more comfortable and you have a better overview of your business and its financial health. Expenses not only include the cost of the item for sale, they also include shipping materials and postage, miles driven, miles driven to shows, storage fees, internet costs if you have stuff selling online, etc.
BST: Tennessebanker, Downtown1974, LarkinCollector, nendee
Because it's the law. Serious answer.
You sell a widget for more than you paid for it, and there's a tax liability. You may have losses that affect the final calculation, but that one transaction has generated taxable income.
Yes, it really is that simple.
I'm sure you always drive the speed limit too. Tax reporting on my 10 eBay sales which I turn a whopping $450 profit is an absolute joke. If I don't have receipts it may actually cost me money to sell items
I do not have a coin business. My job pays me and withholds taxes on my income. I do not anticipate starting a business. If I do, I will comply with applicable tax laws. Cheers, RickO
Thread is not about cheating on taxes. It is about whether or not to expect a 1099K from Zelle. I'd like to know so it doesn't hold me up filing my taxes waiting for a 1099K that is never coming.
Repetition of ignorance is ignorance raised to the power two.
Isn't a money transfer from a bank account using Zelle essentially the same as paying someone with a personal check from that same account in which case the IRS knows about it?
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
1099K providers/IRS could care less if you have a business. Process more than $600 through any one of them (including ebay) and you will get a 1099K.
Repetition of ignorance is ignorance raised to the power two.
Because state sales taxes are due on all sales. Ever registered a used car you just bought, you have to pay sales tax at that time?
Same with income taxes. Every time the same dollar gets paid in wages it gets taxed.
Repetition of ignorance is ignorance raised to the power two.
actually not.
Gross proceeds under $600 are not required to be reported.
However, if as a result of the transactions, plus related expenses, you incur a loss, you may deduct it against any other income.
BHNC #203
IRS requires all income to be reported. It allows for deduction of expenses after entered on the tax forms.
Even the hobbyist will get a 1099K if he processes more than $600 through a payment processer such as Paypal or Ebay. IRS gets a copy and expects you to report it as income.
Repetition of ignorance is ignorance raised to the power two.
Isn't their a time limit as when 1099's must be sent out? If so, is it 31s of Jan or 15th Feb or is their even a time limit. Truly serious question.
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
@derryb ... Thanks, I forgot that point. I have not seen that happen at gun shows though. Those private sales happen all the time. Undoubtedly not conforming to tax laws. Cheers, RickO
derryb,
You made some good points. However, my reporting will amount to negative revenue after all is said and done and that will deduct/offset from other income if put in one of the Form Schedules. I thought we can show a loss only two years out of five? Does this mean I can rack up 5 years in a row of losses that I can use to offset my other income such as wages? I thought the IRS does not want hobbyists to make their loss making activity into a business generating negative revenue that can offset other sources of income. I guess I have to do some more reading.
I have not had a 1099 generated from eBay, PayPal or the like, or else it would have gone straight to the accountant.
BST: Tennessebanker, Downtown1974, LarkinCollector, nendee
Not on a 1099K. They are still required to be reported, by the taxpayer, as income.
Repetition of ignorance is ignorance raised to the power two.
Zelle is an electronic payment/transfer process. If you write a check to a business for fixing your roof, the Bank does not report such to the State. Its up to the business to charge the applicable sales tax and remit accordingly. If they don't and get audited, their records, and deposits may pose an issue. No different with Zelle.
Yes, however, the 1099 K has the same reporting requirements as others, like the 1099 Miscl.
$600
For returns for calendar years after 2021: Gross payments for goods or services that exceed $600, AND. Any number of transactions.
Google is your friend
please research before reporting as fact.
BHNC #203
I don't. I pay income taxes on the PROFIT if I seek out for more than I paid for it. New or used makes no difference. I also pay taxes on SALES which had nothing to do with new or used.
But I'm not advocating for or against taxes. I'm advocating for EVERYONE playing by the same rules.
I wasn't implying that you were. But you mention the sudden preference for Zelle.
I mentioned no such preference. I simply asked a question in the thread title.
Repetition of ignorance is ignorance raised to the power two.
By issuers of 1099K's. All income is required to be reported by the taxpayer. At the $600 and below threshold the IRS is simply not requiring 1099K issuers to rat out taxpayers.
Repetition of ignorance is ignorance raised to the power two.
He asked a question; I answered. You apparently choose not to obey the tax laws; not everyone is so cavalier.
I think the subtle difference with Zelle is it is a peer-to-peer cash transfer application, Not a credit card processor.
If the IRS thinks I’m going to report income because I had a yard sale, they are dumber than I already think they are.
Zelle is saying they are not an online marketplace but a financial transfer ... the regs on which are much more stringent. Unlike PayPal goods & services, Zelle doesn't know WHY you made the transfer.
Given who backs them, I'm pretty sure they paid for high-quality tax advice, vs. rando shrubs you meet on the internet.
ANA 50 year/Life Member (now "Emeritus")
The article you linked to mentioned a sudden preference for Zelle.
edited to add... To make my point clear, one might reasonably think if someone starts a thread to post a link and nothing else, that he's mentioning whatever is mentioned in the link.
That is not the same as me mentioning a preference. I simply asked a question and provided the link that made me ask the question.
It's no different than you asking "Can dogs really talk?" and then posting a link that says they can.
Repetition of ignorance is ignorance raised to the power two.
There's a reason IRS is hiring 87,000 new agents. lol
Repetition of ignorance is ignorance raised to the power two.
If your yard sales are selling things for more than you paid, you're going something very unusual.
There seems to be lots of confusion and conflating going on here.
A 1099K puts you on the radar and requires you to explain your "income" to the IRS. You might have nothing but losses or break-evens, but you still have to account for it on your tax return if they issued a 1099K.
Also, I don't believe that losses on sales of collectables can be used to offset gains. And the tax rate is higher.
Thread is pretty clear that income is required to be reported whether or not a 1099K is issued. Keep in mind that the requirement for the payment processor to issue a 1099K is the IRS's way of making anyone required to issue a 1099K "rat out" those who receive more than $600. The 1099K you receive is your reminder of income that needs to be reported and is your notice that the IRS is aware of such income. Remember, the $600 theshold was recently lowered from a much higher dollar amount as the IRS gets more agressive in finding tax cheats.
Note that I had a "run-in" with the IRS in 2020 when I reported the sale of precious metals as a capital asset on Schedule D and I received a 1099K from paypal for the ebay sales of the assets. Appears the IRS computer program was looking for the return to report 1099K sales as business income on a Schedule C. Their software did not match up my reported Schedule D sales with the 1099K from paypal so I receivd a tax bill on the 1099K reported income. It took a few weeks of phone calls and correspondence to finally get the IRS to see that the 1099K income was fully reported on my return, just not where their program looked to find it. For this reason my personal advice is to avoid reporting sales on Schedule D that will possibly result in a 1099K. I now treat them as business inventory on a Schedule C. At a minimum all of my ebay sales are now reported on a Schedule C because I know ebay will likely issue a 1099K for them.
The hiring of 87,000 new IRS agents reinforces the need for taxpayers to be truthful and forthcoming when filing their tax returns. Who knows, they may even show up at Slowhand's garage sale.
Repetition of ignorance is ignorance raised to the power two.
If the new congress doesn't fund this army of agents, it will never happen.
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Ah, don't wish evil on me
Again, NO ONE is accusing you of having a preference. My response was based on the information in your link and had nothing to do with your personal feelings on the matter.
9K.
They certainly can if reported on schedule C as business income.
1099k or not, I can get you put on their radar. When I get audited, I'm supplying all of my purchase records which will include payments to private parties who may not have reported those sales. Wouldn't take much for the IRS to make the connection.
The bottom line is that sales income is reportable and taxable. 1099k or not. I have zero sympathy or affection for anyone who chooses to simply evade those taxes. It is simply unfair to those of us that do.
Let's say we both buy a $100 widget for $80. I sell it for $100 but that includes NY State 8% sales tax and income taxes on the remaining $13 profit making my net sales price $86.50 for a profit of $6.50. The tax cheat can sell it for $93 and pocket the whole $13. So, who is going to buy from me when they can save $7 by buying from the tax cheat? So the tax cheat, by "virtue" of their criminality, makes more money and more sales.
An audit upon all your houses!
Gambling is obviously very different but most private transactions are conducted only on Zelle. PayPal and Venmo are no longer being used.
Unless you are audited by the IRS and the audit includes scrutiny of your bank accounts the IRS doesn't know about the checks that you write or receive, especially if you cash them instead of depositing them.
I think it depends upon the 1099. The ones from brokerage houses are usually mid February or later. Most others by 01/31.
Depends upon the loss. IIRC hobby losses are not deductible. Search irs.gov to verify.
A couple years ago when I first had to use TurboTax I neglected to report some 1099 income which also carried over to the state return. I understand that the IRS finally gets around to matching up returns with 1099s or other income statements in August or thereabouts. Thus far neither the state nor the Feds have caught the error.
Central Bank Digital Currencies (CDBC's) will solve that problem for the IRS. They will have access to information on every penny you earn or spend. All transactions will be via CDBCs.
Repetition of ignorance is ignorance raised to the power two.
But I am not a business.
Maybe we need two threads, one for businesses and one for us regular people.
Also, if you aren't set up as a business you can't deduct the sorts of expenses and costs that a business can deduct.
of course hobby losses are3 not deductible, I was talking about a business.
No need to verify, I read it about 30+ years ago
BHNC #203
It wasn't clear to me to what you were referring. Every time this discussion comes up there are always those who aren't in the know so some repetition can't hurt. Same for discussions about shipping, USPS and whatnot.
If you profited from sales, you're a business. You don't need to be an LLC or anything else. You're a "sole proprietorship"
"Hobby losses" is a term of art in tax law; essentially, one cannot deduct losses incurred in carrying on a hobby from other income.
But one can deduct losses incurred in that hobby from gains achieved in that hobby, to reduce the tax consequences of those gains. If the net gain/loss is a net loss, you cannot deduct that net loss from other income; but if you have a net gain in a tax year, there is a tax liability generated.
What?!
If I sell one coin at a profit I'm a business?!
I don't think that's true at all. The IRS does not let you deduct losses on hobbies, and they don't let you deduct expenses on hobbies, other than the specific item's cost basis.