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Post by labbypaws on Mar 8, 2021 2:49:37 GMT
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val2525
Chaos Manager
Posts: 30,780 
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Post by val2525 on Mar 8, 2021 19:46:09 GMT
Works for me.
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Post by somany on Mar 9, 2021 3:48:20 GMT
Me, too. I did not get a 1099 this year, and while I have my yearly sales report to work from, I prefer a number to tie to. ebay's report wasn't too bad as it only included sales, refunds, and one miscellaneous that I haven't looked into yet. Paypal's was always a bit of work parsing the numbers to report since it included purchases from ebay and other online sources, ebay fees, shipping, paypal fees, etc. I hope the fees will be readily available for next year's report.
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Post by Emerald_Door on Mar 9, 2021 14:21:58 GMT
I think there are still a lot of casual sellers who are selling personal items that they no longer want or need, such as their children's outgrown clothes or an inherited collection of china teacups, for example. If someone sells $35 worth of these items per month along with $15 shipping, they'll meet the requirement of receiving $600 in payments. They're unlikely to have receipts for the items they have sold and will end up having to report all of this as income (other than the shipping cost). They might also need to hire a tax preparer to help them sort it all out.
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Post by Pantlandia on Mar 9, 2021 17:00:35 GMT
It's a double-edged sword, I think. I think the $600 is too low for the reasons Emerald mentioned. I could see $1800-2400 maybe, that is $150-200 per month and I think that level is where you start outgrowing the casual seller who is only offloading kids clothing.
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val2525
Chaos Manager
Posts: 30,780
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Post by val2525 on Mar 9, 2021 18:43:26 GMT
The casual seller can report it as hobby income on Schedule 1, line 8. No expenses can be deducted, but also no self employment tax will be due. You do not do a schedule C for hobby income. $600 hobby income on a 1040 isn't enough to make a difference usually.
I think a better option would have been to make the 1099K issued if there are 200+ transactions OR $20,000 in income, and not both. One or the other. The IRS would catch more casual sellers that way without having the hobby folks have to report their $600 or so.
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Post by Pantlandia on Mar 9, 2021 22:01:35 GMT
The casual seller can report it as hobby income on Schedule 1, line 8. No expenses can be deducted, but also no self employment tax will be due. You do not do a schedule C for hobby income. $600 hobby income on a 1040 isn't enough to make a difference usually. I think a better option would have been to make the 1099K issued if there are 200+ transactions OR $20,000 in income, and not both. One or the other. The IRS would catch more casual sellers that way without having the hobby folks have to report their $600 or so. The solution of 20K OR 200 transactions is much better. My CD supplier would close his store once he reached $19k in sales every year. He went full time seller this year so now he's not going to do that, but changing it to OR would have held him responsible for his taxes. |
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Post by somany on Mar 9, 2021 22:34:58 GMT
All income is taxable, even if it is under $600. The $600 is just the cut off that an employer can use to determine if they need to provide a 1099. Same for the $20K or 200 transactions.
Should Jeremy's CD supplier get audited for the first tax year he reports his income, and an auditor realized he had been in business prior to that tax year, every prior year could potentially become auditable and therefore taxes due even though he did not get a 1099 in those previous years. I can't remember how the rule is stated, but at some point I learned if I screwed up one year's taxes and an auditor caught it, prior year's returns could be audited--the statute of limitations does not apply for prior years if there is an error found on your return. I never knowingly take any risks on my taxes.
I just googled "how long should tax records be kept", and the resulting verbiage includes "Keep records indefinitely if you file a fraudulent return."
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Post by zoesam on Mar 10, 2021 2:53:27 GMT
Unless they've made $$ on those sales, they're not going to owe tax on them & the casual seller is not going to make money on those sales b/c they paid retail to begin with. Granted it may make their taxes unnecessarily complex, but I don't even think it's a hobby if you're selling your kids old clothes at a loss. I'm not positive though, it's been awhile since I looked into it, in detail. p.s. Val val2525 love the new color scheme! |
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val2525
Chaos Manager
Posts: 30,780
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Post by val2525 on Mar 10, 2021 3:16:44 GMT
Unless they've made $$ on those sales, they're not going to owe tax on them & the casual seller is not going to make money on those sales b/c they paid retail to begin with. Granted it may make their taxes unnecessarily complex, but I don't even think it's a hobby if you're selling your kids old clothes at a loss. I'm not positive though, it's been awhile since I looked into it, in detail. p.s. Val val2525 love the new color scheme! thanks! The problem with the 1099k for $600 and up and someone selling their kids clothes is that they WILL receive an inquiry letter or revised 1040 (or both) if they don't report the 1099 total on their 1040 somewhere. |
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Post by somany on Mar 10, 2021 18:13:21 GMT
You are correct, zoesam. Garage sale proceeds are not taxable as long as you do not get more than you paid for them, so that probably would apply to ebay income (and cause issues with the 1099 as Val said). |
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Post by Pantlandia on Mar 10, 2021 21:40:56 GMT
Yeah, the 1099 isn't going to care what you paid, it's only going to show that you had sales over $600.
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Post by zoesam on Mar 13, 2021 20:48:02 GMT
Unless they've made $$ on those sales, they're not going to owe tax on them & the casual seller is not going to make money on those sales b/c they paid retail to begin with. Granted it may make their taxes unnecessarily complex, but I don't even think it's a hobby if you're selling your kids old clothes at a loss. I'm not positive though, it's been awhile since I looked into it, in detail. p.s. Val val2525 love the new color scheme! thanks! The problem with the 1099k for $600 and up and someone selling their kids clothes is that they WILL receive an inquiry letter or revised 1040 (or both) if they don't report the 1099 total on their 1040 somewhere. Yes. Hence my "unnecessarily complex" comment. They will have to def have to report the 1099. |
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