OT (a little): Income Tax on Online Sales (eBay, etc.)

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ChazzC

ChazzC

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eBay is reminding members that there was only a delay in implementing the requirement that all online sales over $600 total per year must be reported to the IRS. To have a letter sent on your behalf by eBay to your members of Congress (House & Senate) telling them you do not support this action follow this link.
 
If they’re making you a business it may be advantageous to consult with an accountant.

Might end up with the IRS owing you $$$

John
 
matthewsx said:
If they’re making you a business it may be advantageous to consult with an accountant.

Might end up with the IRS owing you $$$

John
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Not making you a business: our "Elected Public Officials" want to change the tax laws which will require anyone who sells more than $600 a year to figure out how to explain the actual profit (if any). What it will probably end up doing is stopping a lot of people who sell stuff casually (like me) on eBay and look elsewhere.

FB MO hasn't said anything about this because they don't handle any money. However, it wouldn't surprise me if the new regulations would add questions like "Did you sell anything in a private transaction (Yard Sale, Garage Sale, Flea Market, FaceBook Market Place, or similar venue)? If YES, what was the total dollar value of the sale(s) and what was the cost?"
 
This is already part of the tax code, also you need to report lottery and casino winnings. The only thing going on here is requiring a sales platform to "report" you at a lower level. But, if you make a profit on anything, or get paid for anything, or find a dollar bill on the ground you are supposed to report it and pay your taxes.

Don't get me wrong here, I think it's kinda carpy. But, I still remember the first time my buddy who's band I did sound for handed me a 1099 form. The thing which has changed is the reporting threshold, which previously was $20k and now reduced to $600, same as what my buddy had to report for paying me for side gigs.

I can totally understand why eBay doesn't want to incur the additional overhead of sending the 1099-K forms out to probably millions of more people than they currently have to. I can also understand why those of us who just sell a few machine tools or parts wouldn't want the extra hassle on our taxes of dealing with these forms.

But, if you read the IRS explanation:

Understanding your Form 1099-K | Internal Revenue Service

Form 1099-K reports payments from payment apps or online marketplaces and from credit, debit or stored-value cards. Use it to help figure and report your correct income on your tax return.
www.irs.gov www.irs.gov

You'll see it also covers a whole lot of other folks like Uber drivers and Air B&B hosts that have probably been skating under the wire for quite a while now.

In reality, if you're in the category of now getting 1099-K's you should also check your local and state tax guidelines to make sure you're not messing up by not paying taxes to them too.

Taxes are a pain, but they're the price we pay to have an orderly society IMHO.

So, my advice stands. If you get one of these forms you should discuss it with your accountant or other tax professional. You may find out that your "hobby" now qualifies as a business which will require additional paperwork on your part. You may also discover that some of the things you buy are in fact business expenses which could potentially offset the profit made from selling on eBay or another platform.

I'm not a huge fan of this stuff but I ran my own businesses for long enough to realize it needs to be taken seriously. Hopefully this campaign by eBay will succeed and the new lower threshold will be removed. But, seeing how broad it actually is I have my doubts.

John
 
mmcmdl said:
Maybe we could convince the lawmakers to let us deduct the items we buy for $$$$$$ and later scrap for a write off ? The 600$ threshold is utter BS . Period .
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That's literally the way it works, you depreciate any capital equipment purchased for business and write it off against profit you make.

My dad explained it to me this way, "Schedule C loss vs. W2 gains". It doesn't work nearly as good as it used to but for many years our work trucks, cellphones, etc. were all business expenses that offset most of the income from out business. In fact, the year we made a profit my wife asked where her refund was and I had to explain that we did better than break even so there wasn't any refund.

As for the $600 threshold, I've had to deal with that for decades as someone who does freelance work. Write your congressman I guess....

John
 
matthewsx said:
So, my advice stands. If you get one of these forms you should discuss it with your accountant or other tax professional. You may find out that your "hobby" now qualifies as a business which will require additional paperwork on your part. You may also discover that some of the things you buy are in fact business expenses which could potentially offset the profit made from selling on eBay or another platform.
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You can only deduct expenses if it is being run as a business for profit. If the IRS determines it’s a hobby business, then you can’t deduct expenses, but you still need to report revenue, and pay taxes on that. But, your advice stands, talk to your accountant to see what you qualify for.
 
For anyone who has a yearly yard sale , garage sale , an occasional Ebay sale etc that would earn you $600 is not worth the cost of an hours worth of my CPA's time . Another money grab attempt by our leaders . :grin:
 
mmcmdl said:
For anyone who has a yearly yard sale , garage sale , an occasional Ebay sale etc that would earn you $600 is not worth the cost of an hours worth of my CPA's time . Another money grab attempt by our leaders . :grin:
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Yup! Between that and all the a$$holes you need to deal with while trying to sell something, I’ve either been giving it away, or throwing it out. I like giving it away, that way the state doesn’t get any sales tax revenue :). Maybe I should have a garage sale where everything is free, but have a cash donation bucket lol.
 
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