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Tax question

I

iamcorey

Well-Known Member
Joined
Oct 24, 2018
Messages
2,716
So how’s this new $600 tax reporting going to affect you gear recycle program?

I’m no accountant, but from what I understand too many ($600 or more) goods and service transactions will be reported by PayPal and their ilk. This leaves the common man to address it on their return.


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I don't use Paypal because I don't like their position on some things, which I can't explain without breaking house rules. But it's also not required to use any electronic payment platform in order to do commerce in used goods. But certainly less convenient.

Usually when something like this is implemented, the companies involved do a decent job summarizing everything on some kind of 1099 form that's not terribly difficult to plug into TurboTax or give to your accountant.
 
If your total sales for the 2022 tax calendar year equals more than $600, so it’s the TOTAL for the whole year of $600 or more of goods and services transactions you will be issued a 1099 by paypal, somebody else can get into the details of what happens next I’m not dealing with any of it, friends and family transactions are exempt from this for now.... so basically unless you kept all your receipts and want to make selling your used gear a part time business... I suggest Paypal goods and services can take a ride down a wet piece of Oplux with a safeguard, friends and family for me and if anybody has doubts about buying something of mine they can have my phone number and speak to me, a human, the old fashion way, the way business used to be done.
 
Dcomer55 said:
On paypals website..
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I have seen this but how do you account for it to the IRS? If you just don't put it on your return it looks like didn't report something and if you add it to your return it would increase taxable income amount. Rock and a hardplace situation to me.
 
CPA here, to this type of audience it's mostly much ado about nothing.

It's not any new tax law, it's the IRS closing loopholes in existing tax law and probably should have been closed years ago FWIW. I think taxation is theft too, but if you think it's fair that you and I pay taxes on income but uber drives and people selling knicknacks on Etsy rarely do because it's all self-reported, then I'm not sure what to tell you, you probably can't be reasoned with. Fix the tax laws, don't criminalize honesty.

First, it's all for goods and services so you can continue to use the personal transfers worry free. The IRS lowered the threshold from $20,000 and 200 transactions to just $600 for G&S. It applies to all credit card processing platforms, not just Paypal. Venmo, Zelle, Stripe, CashApp, they'll all be sending 1099's for G&S transactions.

Per existing tax law, individuals selling personal items at a loss don't have to report income, but be aware you could have to substantiate that if audited. So that should apply to pretty much every transaction on the classifieds save for the occasional Madrock Safeguard shakedowns and whatnot of that nature. In that case I'm honestly not sure if it's a capital gains or taxed in full as the "hobby tax" because I work with business taxes and just know the basics of personal, but one of those two would apply.
 
elk yinzer said:
The $600 threshold doesn't kick in until this tax year, 2022. Did you really get one for 2021?
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Not an accountant but I think they always send one to the individual. Now they just report it to the IRS, so the individual has to address it.

I saw on the internets to have buyers include a memo essentially saying “reimbursement for xxx”. Take that for what it’s worth.


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So @elk yinzer if I indeed sold all my items for less than I paid, do I have to enter this 1099k on my return at all? And if the answer is yes, how do I offset that income?
 
bowhuntr09 said:
So @elk yinzer if I indeed sold all my items for less than I paid, do I have to enter this 1099k on my return at all? And if the answer is yes, how do I offset that income?
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No, which begets another question, what difference between what's reported on the 1099 vs. 1040 is going to flag a return for further data analysis or audit? We don't know yet.

bowhuntr09 said:
Yep, got one last year too. Apparently VA started requiring it before the Feds.
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Ah, that makes sense.
 
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