For MA Residents selling their cards on eBay -1099-K reporting requirements
jdip9
Posts: 1,894 ✭✭✭
I suspect there are many MA residents on this board that buy and sell on Ebay quite often. And almost everyone uses PayPal to process the sale. Well, in late November 2017, MA lawmakers passed TIR 17-11, which lowers the Federal thresholds for reporting PayPal transactions (not F&F trans) of $20,000 in sales and 200 transactions, down to $600 (!!!) and no minimum transactions. The real kick in the nuts is that they retroactively applied it for 2017. Basically, they are taking a federal law aimed at small businesses and applying it to individual taxpayers. Beyond that, they did it in a way that didn't let taxpayers adjust their behavior. It's sickening.
The upshot is many MA collectors, such as myself, that sold thousands of dollars worth of cards on Ebay in 2017 now have to report them on our taxes. Obviously, you can deduct the purchase price of the cards you sold and the shipping costs. But Ebay doesn't keep transactions records forever, and while we might have logged our purchase price using the registry for those cards we bought years ago, I don't know how well that will hold up should we face an audit.
The bottom line is this - if you live in MA and want to eliminate the hassle of accounting for the 1099K, you should consider doing a few things:
- Only sell in these forums, or Craigslist, or at shows, using PP F&F (I get that some buyers get squeamish doing this)
- When you make a purchase on eBay, save the transaction somewhere, so you have a record of the transaction for when you go to sell the card.
- Open a new eBay and PayPal account using an out-of-state relative (and stay under the $20k limit so they don't get a 1099 form).
- Move to another state (not VT, because they've also lowered the reporting requirements).
Comments
Got it yesterday as well, I have many questions.
Federal needs this reported as well??
It says only >20K and 200 transactions they have to provide to IRS, otherwise they would not know??
I did not sell >20K or 200 transactions
TIN number correlates to my social??
Yes, if this is the case I’m done selling with intermediary for payment
Taxachusetts strikes again. I live here and will never live anywhere else, but the nickel and diming does get old.
With federal funding for the IRS down, though, I doubt that anyone will follow up on this unless a lot of money is involved. A related example: state quarterly taxes are generally due on the 15th of the months they're due. I'll send a payment in around the 2nd of the following month. Have done so for years; no one has ever lifted a finger. No one's really paying attention.
That said, my neurosis has paid off, because I've kept every Ebay receipt since 2007. It's a fun trip down memory lane to go through your old invoices. Although sometimes, when you realize exactly what you paid for that card, it's sobering.
Dan - I haven't gotten my 1099 yet to read the fine print (I expect it tomorrow). My friend that got one said that it will be sent to the IRS, So, at that point, I believe it needs to be accounted for on your Federal taxes if you don't meet the Federal thresholds.
Ben - good on you, but I suspect you are in the tiny minority that have records going back that far. At the end of the day, you are probably right - the dollars involved for most of us, likely won't raise many eyebrows, when we report a basis at or near than the sales transactions to offset the income. For me, my anger stems from the way MA rolled out these requirements retroactively in an effort to fleece the taxpayers. It's complete garbage.
Thanks, I have no problem reporting a small profit, demonstrating that I bought and sold goods and had a cost, however some of my 71 transactions date back to the early 90’s. I am ready to start rolling the tea into the harbor downtown because this is bs.
Any other states affected?
Sorry this happened guys. I think it is BS they made it retroactive for 2017 if voted on just this past year.
That is a real gut punch so now eBay fees PayPal fees, shipping costs, postage costs went up and taxes god help you if you use promoted listings.. seems what would be the point in selling at all especially low value cards. Its absolutely criminal. We should organize a blackout day to show eBay what it'd look like if we all pulled our stuff off eBay. Collectors are the life blood of eBay.
Has nothing to do with eBay. The government (state and federal) are starving for tax revenue.
Robb
Vermont is the other state that has the same reporting requirements. I live in Illinois and I wouldn't be surprised if this is in our near future.
True just frustration mainly. I know it is not on PayPal or eBay
You are just waiting for an audit if you have ANY income not reported. This is only a hobby for me, but I have been reporting all of the income for as long as I can remember.
Blue states love to spend other people’s money. With the new tax cut law kicking in they will be looking for new revenue. I’m willing to bet NY and CA will be next.
Elections have consequences and I suspect your in a blue state. Very unfortunate. I would ask them to narrow the requirement and dig deeper perhaps you can get a waver for 2017 since they never said you needed to retain the records early enough. Just because you get a tax report does not always mean you have something to report.
Best place to buy !
Bronze Associate member
Not that I live in one of these states, but can this be avoided by consigning to say, Probstein to auction your items on Ebay? I never went into all the details of it, but I thought he only charged 10%.
Unless it's cash, there's a record of it
Liberalism at it's best.
The majority party crafts Federal tax legislation that specifically hurts taxpayers in blue states. When the pendulum swings --as it always does -- Dems will craft Federal tax legislation to hurt taxpayers in red states. US treasury predicts a 995 billion dollar deficit for 2018 and just had a 666 billion dollar deficit in 2017. Seems like whoever is in charge likes to spend money they don't have whether they are red or blue.
In the end RipublicanMass is the one that is 100% correct. Income is income regardless of how you derive it or what you use it for.
Robb
SALT was a subsidy that was unfair to 46 of the 50 states. It took money from taxpayers to give to other taxpayers. It was not right and now that it has partially be corrected, perhaps those who spend will see the error of there ways. It was taxation without representation.
Best place to buy !
Bronze Associate member
kkathyl that is one misbegotten way of looking at it. However in that light I'm pretty sure any tax or federal expenditure could be reviewed in the same light. We will see how red states like it when Dems increase their taxes or decrease their federal benefits since the blue states are tired of subsidizing all the red states.
Back on topic, not sure anyone should be surprised by this MA decision. The writing has been on the wall since the 20k or 200 transaction threshold used by Paypal started. Of course for people that are truly outraged they can just move. Trying to use PP F&F or other avenue to purposely under report your income just makes you a tax cheat.
Robb
I am not in MA, and also I have yet to start sending any items to COMC but instead sell my stuff myself; but, if you are in MA and sent your items to COMC for sales, would you still end up getting the 1099K? For that matter, if you are in a different State and are above 200 items sold and $20k but selling through COMC, do they send you a 1099 relative to the payout?
This is one reason why I do not use a paypal balance to purchase my items on ebay. I get a 1% cash back using my CC, but every month I print out my transactions which has my ebay purchases listed and it works great for record keeping. I report all income and like most, usually buy more than I sell, but like has been mentioned before, I dont want to be the one person the IRS decides to "lube up" on a slow day
For those who have never been audited, in my experience, the IRS isn't looking to get you. All they want is to see that you have been doing your best to follow the law. They may disallow or disagree with a valuation or expense but if so you pretty much just owe the tax on the difference. As long as you have been trying they will waive any penalties -- most of the time. My business has been audited and my brother is a CPA who has assisted individuals being audited. It is when you don't report income at all or make up fictitious expenses to lower your taxable income that you get into trouble. They don't like tax cheats.
That said I doubt many folks on this board will ever show up on the IRS' radar. With the reductions in funding and staff due to the Republicans, the IRS mostly focuses on high dollar returns, high profile tax payers and corporations. There just is not enough money involved with the small fish. An audit takes time and requires the auditor actually know what they are doing. Why bother with a return that might net them a couple thousand dollars when they can use that same auditor to audit a $5 or $50 million business? For my corporate audit my accountant was able to provide all the documentation/proof required for all the challenged transactions and I ended up owing nothing but did need to restate some returns.
Robb
I called Paypal and they said it is only reported to Ma. they used the Federal report because there isn't a Ma form yet.
The form is not being sent to the IRS unless it is over $20,000
Joe
Regardless is you get 1099 or not, if you make money selling cards it should be reported on your 1040. Obviously there is a difference between hobby and business, but you can do the research on that.
IRS does match up 1099's to tax returns using their super computers so if you receive one that is reported to IRS I suggest you file a schedule C for your activity, or you will be receiving a love letter from the IRS.
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