1099-k forms
judgebuck
Posts: 1,000 ✭✭✭
This may have been discussed before, but I can't find it.
I understand eBay will send a 1099-k if your total eBay sales for the year exceeds the 2024 IRS threshold of $5,000.
Questions:
Will the entire amount on the 1099-k be taxed as income, or may the amount be reduced upon a showing that you had paid say $2,500 for the items you sold?
At what percentage will the amount on the 1099-k be taxed? 28%?
judgebuck (David)
Always looking for Mantle cards such as Stahl Meyer, 1954 Dan Dee, 1959 Bazooka, 1960 Post, 1952 Star Cal Decal, 1952 Tip Top Bread Labels, 1953-54 Briggs Meat, and other Topps, Bowman, and oddball Mantles.
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Comments
When you file, you write off the cost of goods as well as any expenses associated with completing your sales, such as office supplies, internet, etc. The amount on your form should be equivalent to your Gross Sales for the year.
Gobble.
Depending on the amount, I would get a tax person handle your taxes. The IRS is still learning how to properly analyze the 1099K.
After the IRS got $80B to harass us, I received a tax bill for 2020 and 2021 based on the TOTAL 1099K and not the net my tax person filed. It has taken many responses to the many threatening letters I received to get 2020 cleared and hopefully 2021 gets resolved this fall.
And I make less than $400K, so all that IRS will go after only really rich people is BS. My tax person told me that a lot of his clients get so scared of the IRS letter that they pay up and deal with it after. DO NOT DO THAT until you talk to a tax account. My 2020 letter just got resolved and I would have been out 5 figures waiting to fix it, if ever.
Good luck
I would also recommend a CPA. Preferably someone with small business experience even if you’re not operating as a business. Depending on the amount moving forming a business has some advantages as well.
As for the IRS it’s not a shock that a 2020 return was pulled by the system in 2023. They are usually a few years behind and they have an advantage by waiting until you have little time to amend. You really have to spell things out for IRS agents. Good luck.
Yes, I do have a CPA to do my taxes. But this year will be my first 1099-k. I have read elsewhere that you should not treat it as a business for tax purposes (if you are basically just a collector selling off some items) but should treat it as a hobby fortax purposes. I've also read that the IRS taxes sales of collectibles at 28%. I'm just wondering if I get like a 1099-k for $6,000 if I can reduce the tax by showing my costs in the items I sold.
Always looking for Mantle cards such as Stahl Meyer, 1954 Dan Dee, 1959 Bazooka, 1960 Post, 1952 Star Cal Decal, 1952 Tip Top Bread Labels, 1953-54 Briggs Meat, and other Topps, Bowman, and oddball Mantles.
A general rule for most is you can’t deduct expenses if it’s hobby income.
Sorry man, but you rich people are so out of touch.
"A $400,000 a year household income puts you in America's top 1.8% income-earners according to the IRS. Therefore, by most metrics, you are considered rich with this income."
Ron - I make way less than $400K. Read the post again. My point is that the extra enforcement was supposed to be on the rich and not people like me. I got hit twice and wanted to share what I learned.
I am not one of those rich people that you dislike so much.
OP - Like bgr said, talk to a tax accountant. They will assess to your situation and make a recommendation. Everyone’s tax situation is different and the internet may not have the answer you seek
So. yes. since 2017 or so you cannot deduct expenses on hobby income - or whenever individuals lost the ability to use the misc deductions.
fed rate is 28% for alternative investments.
most states with state income tax use regular income rates.
If you received a 1099-k for $6000, and you paid $3000 for the item, you would report $3000 as your gross hobby income.
As an individual you would list the items, along with cost-basis and when you bought them (and a few other things) on your 8949 and attach it to your 1040... if you wanted to treat them as collectibles. Note: nothing in the tax code says that sports cards are collectibles.
If you were operating as a business you could probably file either a schedule D or a schedule C depending on whether you dislike or like money (respectively). If you were to have a business, you might look at a LLC which elects to be taxed as a S Corp. You'll have to pay taxes on your salary or salaries for your partners etc. Here's where a CPA can guide you through the amazing world of USC 212.
Good Day,
Back in 2009-2013 I ended up with Card Sales in the 30K to 50K for those 5 years. One year I have E-Bay Sales of $56K. (At the Time anything over 20K was 1099'd) I chose to treat it as a Business as I went to the National for 3 of those years, and other trips so had lots of expenses. If I remember correctly, if you run it as a Business, you can take a Loss in only 3 years of any given 5 year window. At the time my situation was complicated by having 5 Residential properties being run as a Rental Business. We ended up selling all the Rentals in 2012/13 due to the Housing crisis and sold most of my Cards in 2013 (Housing Crisis and Boy to College). Also my Comic Collection went at that time to Bail us out of a couple of Rentals, Sold 100K Privately (Paid/Worth $225K-$240K). End of Cards as a business after 5 years. 2 years were at a small profit, and 3 were for a loss, one year quite substantial. (Rental Properties again!) The rentals and Cards timeframe were just a coincidence, not planned.
So got back into Cards 2 years ago, and now Comics. Last year when the threshold was at 20K I was at 17K on Fee-Bay and 1.5K on MySlabs. So by IRS Rules I was NOT 1099'd so nothing to declare. I purposedly scaled back on my Listings this year, right now I am at $3800 Sales on Fee-bay and $0 on MySlabs. Just scaled my spending back as well. So in Nov/Dec if I am still under 5K, which I expect to be, I'll just put my Store in Vaca Mode till the end of the year or end the listings. No 1099.
But next year is the question. Having gone through this before, this is what I can tell you, I was never audited, but was prepared....And its Simple: Records, Records, Records. I just looked at my 2 each 4" 3 ring Binders for 2012 (Over 300 sheets of paper in each). This, and all the years that I still have binders for 2009-2013 and 2022, 2023, 2024. Each of those binders are made up of a printed copy of EVERY Single Order/Purchase I ever did on Fee-Bay, MySlabs, PSA Boards, PSA B/S/T, Card Shops, Shipping supplies, packaging supplies, PSA Sub costs, and on and on. The Monthly Card show I do in Tempe and every other expense that is rightful and my CPA says I can take! I still have a few items from back in the 2009-2012 era and can pull a Binder out and determine Exactly what I paid for it 10-15 years ago.
I added up what I've Spent so far in 2024, I'm right at $11,200, so with $3800 in Sales this would be a Loss year if I choose to get above 5K in Sales with Fee-Bay.
So the Bottom line to me is Keep Your Records!
YeeHaw!
Neil
I’ve never kept cost records
Looks like that’s something I need to change
They should be called Special K's as they make you lighter in the wallet.
It's the singer not the song - Peter Townshend (1972)
Ron you are correct in your numbers but ndleo stated he is not in 400k bracket.
BTW in several Metro areas 400k really is not all that much. However it's a prob I'd love to have
It's the singer not the song - Peter Townshend (1972)
I’m wondering what rich people are out of touch with. Taxes?
>
The extra enforcement(87,000 additional agents) are certainly going after the little guy, as they want (or in the phase) of your measly six hundred bucks.
Terry Bradshaw was AMAZING!!
Ignore list -Basebal21
I wonder if you can put sport cards as assets in a revocable trust and the beneficiary get the stepped-up basis when inherited? You know like real estate, stocks and bonds.
The trust isn't required here generally. Usually a revocable trust has a primary provision that "all my personal property is in the trust" and it would work pretty much the same as any untitled asset. I'm not saying living trusts are a bad idea, but just speaking as to the benefit related in taxation, which even gets muddy when there are shared assets. I guess all I am saying is that revocable trusts with titled or untitled assets have the same step-up with respect to inheritance and are taxed the same if the asset(s) are sold in the future.
Ok, sorry. Tree fiddy?
>
Good to know. Say you bought a '52 Topps Mays PSA 6 for $600 years ago, you die tomorrow, your kid wants some cash and sells it for 15K, last sales and PSA value it about 19-20K. No tax. Can kid write off a loss also?
It would be treated the same as asset subject to capital gains with respect to basis. When they sold the asset they would realize the loss.
Then it will depend on whether they are filing as a business or an individual. As an individual they are limited with using that to offset individual income - such as salary from employment or social security. It can be used to offset capital gains in the future. Tax loss harvesting is all the rage.
I never get "political" but Occam's razor and the entire History of the World both dictate;
who are they going to go after? Those that have the ways and means to defend themselves (and likley successfully) or those who do not.
It's the singer not the song - Peter Townshend (1972)
I would add to this that ALL income is taxable. Just because you were under the 20k/5k ebay 1099 threshold does not mean you are not responsible for paying taxes on that income. It only means ebay/myslabs etc were not required to issue you a 1099.
George Brett, Roger Clemens and Tommy Brady.
What we've been told is the IRS hiring frenzy is partially meant to counterbalance significant portion of the workforce set to retire. So, although total workforce is increasing, it's not as significant as it sounds, in that 30 to 40% of those folks are meant to replace retiring employees.
What we're currently seeing is an uptick in correspondence audits, where they send a notice that they wish to examine a certain aspect of your return, which requires you to provide them backup for that position. However, I have never seen a correspondence audit for a Schedule C - if you have a business activity reported on Sch C, you are more likely to have a live agent assigned.
Revocable living trust is always a good idea when it comes to delineating what happens with your assets when you pass, as well as a mechanism to avoid probate. It isn't a tax savings mechanism, though
LLCs and S-corps can be cost-prohibitive in some states. In California, the cost of doing business as either entity comes with a minimum tax of $800 annually. LLCs do not provide any additional benefit than being a sole prop, other than you have liability protection (which I don't think there is much exposure when it comes to selling cards, unless you're selling high dollar stuff). S-corp comes with the added layer of "reasonable comp." People abuse try to abuse S-corps to circumvent having to pay self-employment tax. The government requires an S-corp officer to take "reasonable compensation," which forces you to pay yourself a wage, thereby paying into social security and medicare.
Never a one-size-fits-all solution for everyone. Every path has items to consider and is not always a stright-forward answer.
Morning,
I'd like to re-iterate something that perhaps was not mentioned by me in my earlier post.
Lets be Clear: I did Not Ask for this. The IRS has Forced me into doing my E-Bay thing as a business I spend at least 2-4 times as much on my collectibles as I've ever Sold on any site in any given year. This year I've spent north of 9K with Sales of $3800. If I boost that to 5K this year I'll get 1099'd for it. Last year I spent $22K on Sales of 1$17K.
I'm a Collector, Not A Dealer!
Since they did away with the Misc. Expenses category that many used to put their Collectibles in. We have no real viable options, except to go the Business route. I don't want or Need this headache, but am given no choice.
I do what I do as a Collector, and have never seen Selling as anything but a way to slightly defray some of my purchases costs by say buying Lots, taking what you want and selling the rest for Less than you paid for it! But you defrayed some cost.
So I hear what your saying Craig, and agree. Except you assume that overall there is a Profit to be taxed. If I'm under the reporting threshold, and have no profit, why Should I have to go through those coniptions. If you spend more that you get in in the same year, that's a Loss. I'm playing by the rules the IRS laid down. If they choose to start having Everything over $600 1099'd next year, then that's the rule I'll play by. Oh, and BTW, my Tax guy is making it real simple on this, he is using Costs of Goods (And everything that entails) Minus Sales = Profit or Loss. Simple, just keep Records.
Just a little inside joke, as I was into Residential Rentals in the 90's-2012ish, and at one time owned 5 each. My Tax Attorney at the time, told me and I Quote " If you can't lose money (On Paper) at Real Estate Rentals your in the Wrong Business!"
The IRS just created a Whole new category of Crime, Manipulation of 1099's. The IRS has created a Headache with this rule change that none of us have any idea of the outcome. I recently read an article about what happens when the threshold is lowered to $600 next year. and every Garage Sale Flippers, Goodwill Flippers, Craigslisters, Thiefs who are resellers and hundreds of thousands more have to deal with this. Sheesh I met a guy last year that makes 3 figures a year Re-Selling GoodWill stuff. The article I read (And I need to find it) estimated that somewhere north of 400 thousand households and Self Employed Contractors (This is the only group I find at least palatable) will be affected and maybe as many a Million, they just Don't Know!. Can you imagine what this nightmare will be at the IRS! Look for your 2025 Refund in 2027!
YeeHaw!
Neil
Thank Architects Paul Ryan who slunk off to work for one of the Corp enitites that benefitted most from the tax changes, and Mitch McConnell
The money from eliminating Misc Expense goes to firms like Chase, Citi, Apple,Microsoft,Alphabet,ExxonMobile,Mckesson,Amazon,Chevron,etc so they could pad their already bloated bottom lines.
All this makes it sound like you need to be a dealer with a legitimate business to make a profit or someone with another established business to run sales through but being just a casual collector who buys/sells throws up red flags everywhere.
I haven’t done the self-employed /DBA in years because the audits started to almost become a guarantee. I just didn’t want to bother anymore.
Frankly, I would love to have five rentals that cash flow and wouldn't care if I had taxable income from them. Depreciation knocks taxable income down, so that could create your paper loss, but if it doesn't, what an awesome problem to have! Over time, asset appreciation and cash flow.
1099-K related question:
Say you sold Taylor Swift floor seats in Nov 2024 and got paid by Ticketmaster soon after for a concert in Feb 2025. Does this show up as a 2024 1099 activity? Or 2025?
Thanks
Really good question. Does it go by Date of Sale or Date of Event? But lets get to the Real question: Taylor Swift Floor Seats, I am not a Fan, but those had to retail at 1000's each? How Much? Also did you sell them for less or more than you paid? That is just as important info as well! What was TicketMasters Cut? I bet TicketMaster could answer this question for you.
YeeHaw!
Neil
Good question. When I’ve resold tickets through Ticketmaster, the money doesn’t change hands until a couple days before the show - I would think that date is considered the sale date, but I don’t know that for sure.
Jim
My guess it's the date the funds are received
It's the singer not the song - Peter Townshend (1972)
Let say I sell one card for $7,500 on eBay and get a 1099-k for $7,500. But I gave $5,000 for the card and can prove it. Will I pay taxes on $7,500 or $2,500?
Always looking for Mantle cards such as Stahl Meyer, 1954 Dan Dee, 1959 Bazooka, 1960 Post, 1952 Star Cal Decal, 1952 Tip Top Bread Labels, 1953-54 Briggs Meat, and other Topps, Bowman, and oddball Mantles.
I started this back in July 2024 when I read on eBay that the threshold for getting a 1099-k would likely be $5,000 for 2024. A few days ago, I got a message from eBay stating that the 2024 threshold for getting a 1099-k would be $600 in total eBay sales. Guess a lot of us will get 1099-k forms this January.
Always looking for Mantle cards such as Stahl Meyer, 1954 Dan Dee, 1959 Bazooka, 1960 Post, 1952 Star Cal Decal, 1952 Tip Top Bread Labels, 1953-54 Briggs Meat, and other Topps, Bowman, and oddball Mantles.
The 7500 is the gross amount received, which is not necessarily taxable. Your taxable amount should be 2500. That is your profit on the card.
But you will need to show the math on the appropriate schedule.
I thought it was $5000 for 2024 and then drops to $600 for 2025.
Regardless of the amount the 1099K it has no bearing on a person's responsibility to report their earning threshold to the IRS which has been $600 for decades. If you have not been doing so, whether you have been Caught or not, you have been committing a federal crime.
IMHO the $600 should account for inflation which would make it around $1500 so now compared to when it was instituted.
It's the singer not the song - Peter Townshend (1972)
1099 threshold is $5k for 2024 tax year. unless it gets changed, the IRS announced it would be $600 for 2025 tax year.
as was stated earlier, you are liable for all tax bills whether or not you receive a 1099
George Brett, Roger Clemens and Tommy Brady.
When sending a 1099-k, does eBay search our sales and distinguish between which sales are "collectibles" and which are items such as used clothing, household items, etc., that many people sell on eBay?
Always looking for Mantle cards such as Stahl Meyer, 1954 Dan Dee, 1959 Bazooka, 1960 Post, 1952 Star Cal Decal, 1952 Tip Top Bread Labels, 1953-54 Briggs Meat, and other Topps, Bowman, and oddball Mantles.
I dont believe that to be that case.
George Brett, Roger Clemens and Tommy Brady.
eBay will do the minimum required to satisfy the regulation at lowest cost to them. The only delineation I'd expect would be for eBay Motors
No, eBay does not do the bookkeeping for sellers. 1099-Ks are not just for "collectibles". They are issued for any combined sales total over the current dollar threshold. It doesn't matter what the product is you're selling.
It is the seller's responsibility to keep proper record keeping for tax purposes.
The 1099K is just a statement that a certain amount of money was paid to you. Unlike other tax forms that reflect wage or divided income, for example, the 1099K could even show money that represents only a loss.
The issue with that form is that it puts you under IRS scrutiny and you must account for the money even if there was no profit involved. It also makes filing your taxes more complicated.
The most cumbersome aspect of this, IMO, is if you are selling cards, but then also selling used household items that were personal use. You wouldn't be on the hook for income tax on those items, so the proceeds would need to be backed out, not to create a loss (assuming you paid more for the item than what you sold it for). Show gross from 1099-K and then show a deduction for proceeds related to personal-use items.
Exactly.
Ebay is just following Congressional mandates that a few years ago were scrutinized more closely by the people we pay to make laws......the kicker words here.....'without regard....'
The 16th Amendment to the United States Constitution gives Congress the power to levy income taxes without regard to population or census.
Thanks for all the comments. One more question: Do you get 1099-k forms when you sell collectibles through auction houses such as REA, Memory Lane, Love of the Game, Heritage, etc.? What about when you sell after consigning to gregmorriscards and other eBay consignors?
Always looking for Mantle cards such as Stahl Meyer, 1954 Dan Dee, 1959 Bazooka, 1960 Post, 1952 Star Cal Decal, 1952 Tip Top Bread Labels, 1953-54 Briggs Meat, and other Topps, Bowman, and oddball Mantles.
I know Heritage does not issue tax forms…
seems those that don't believe taxes should be paid on hobbies, etc, are going to be having third parties sell their cards for them or they are going to sell a lot of their cards at card shows for cash...