khara
fully equipped rock polisher
Member since September 2022
Posts: 1,726
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Post by khara on Oct 30, 2023 5:47:39 GMT -5
I've said it before, but I'll try again: (1) You do not pay taxes on used items your purchased to use unless you sell it for more than you paid for it. Selling old household items does not generate a tax issue unless you make a profit. Stardiamond got it right--if you buy used items for the purpose of selling them for a profit, it is taxable. Otherwise it probably is not. (2) This is not a new tax rule. We were always responsible for taxes on items made to be sold. Congress just figured out a way to catch the people who failed to abide by the rule. (3) I fully appreciate the concern of those that haven't kept records and the difficulty of putting records together (which has always been required, but now is being watched). Here's a link that may be helpful--the IRS has some pretty good materials on its website and their guides are far more understandable than the majority of government agencies. www.irs.gov/businesses/understanding-your-form-1099-k#sellCorrect. The problem is that people who are NOT businesses now have a huge burden placed on them because selling sites such as eBay are going to be submitting 1099’s which will require the recipients of these to respond via their tax filing. It doesn’t matter that WE know we don’t owe taxes for selling an old toaster for less than what we bought it for 10 years ago. We now have to spend a bunch of time proving and documenting that we don’t owe taxes to the IRS. The concern isn’t over owing taxes, especially for those operating a business and already record-keeping, the concern is over the huge time and administrative burden this places on people who ultimately owe nothing because they simply sold some used items. This will hit the poorest the hardest.
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Post by susand24224 on Oct 30, 2023 15:33:36 GMT -5
[/quote]Correct. The problem is that people who are NOT businesses now have a huge burden placed on them because selling sites such as eBay are going to be submitting 1099’s which will require the recipients of these to respond via their tax filing. It doesn’t matter that WE know we don’t owe taxes for selling an old toaster for less than what we bought it for 10 years ago. We now have to spend a bunch of time proving and documenting that we don’t owe taxes to the IRS. The concern isn’t over owing taxes, especially for those operating a business and already record-keeping, the concern is over the huge time and administrative burden this places on people who ultimately owe nothing because they simply sold some used items. This will hit the poorest the hardest.[/quote]
No, not correct, Direct from the IRS website:
"Personal Items Sold at a Loss A loss on the sale of a personal item isn't deductible.
If you sold personal items at a loss, you have 2 options to report the loss:
Report on Schedule 1 (Form 1040) You can report and offset the Form 1099-K gross payment amount on Schedule 1 (Form 1040), Additional Income and Adjustments to IncomePDF.
Example: You receive a Form 1099-K for selling your couch online for $700, which is less than you paid for it.
On Schedule 1 (Form 1040):
Enter the Form 1099-K gross payment amount (Box 1a) on Part I – Line 8z – Other Income: "Form 1099-K Personal Item Sold at a Loss, $700" Offset the Form 1099-K gross payment amount (Box 1a) on Part II – Line 24z – Other Adjustments: "Form 1099-K Personal Item Sold at a Loss $700" These 2 entries result in a $0 net effect on your adjusted gross income (AGI)."
The IRS is not going to chase your $700 couch (or your toaster) to make sure you paid more for it, and at no time does the IRS in the above request a receipt. This is called the "yard sale" exception, and has been around as long as the rule has been around, which significantly pre-dates the change to $600.00. Now if you sell thirty-five couches and report all of them as a loss, you may have problems. If there are significant irregularities on your form other than the couch, you *may* get audited, which is when receipts come in. The IRS is not in this business to spend thousands of dollars to ensure that you indeed sold your couch at a loss, nor will they to ensure that your $600 1099k was indeed a loss.
When you are up in the thousands, they may care. I've been dealing with this for years since I donate a lot to several charities to sell, and I am required to *only* deduct the cost of my materials, not the ultimate value of the jewelry. I actually was audited one year (not over this issue) and was flat-out told that they didn't have time to worry about my charitable deduction; they were simply concerned about the sale of a partnership issue.
Bear in mind that most concerns are coming from folks that have completely dodged tax obligations for years because of the higher 1099K reporting. If the IRS was *really* concerned about these small amounts of money, it wouldn't have needed the 1099K change to go after these folks. Bank records, Paypal records, etc. can be easily subpoenaed and in a civil enforcement action do not even require notice to you. (Criminal is different.) For those that are looking at the difficulties of assessing the costs of materials purchased long ago (HankRocks laid it out well), the IRS has suggested to me that one should look at the current cost and adjust backward for inflation for such items as rocks, etc. that don't depreciate with use.
So, in summary, take your 1099K form and write in what it was for and "Loss" on one form. If and when you get audited (which is highly unlikely unless you have other significant irregularities and/or you are a lawyer or CPA--the most audited groups), then get current value and adjust backward. I hope this is helpful to folks.
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Post by HankRocks on Oct 30, 2023 17:49:39 GMT -5
susand24224 Good information. I don't do Ebay, Etsy or even Garage Sales. My 1099K will be coming from Square as I use their Credit Card Reader. Keep in mind they only show Card sales. For me when the time comes I am going to use the law of averages. What is the average unit cost of anything I do. It will take a bit of assumptions. Say for instance tumbled stones, I do not sell by weight. They are either sold out of a bin 3 for $1 and larger pieces priced per each. Will probably just take the total dollar sales for tumbles, say $500 for the year and say that was for about 60 pounds and it cost me X dollars a pound to polish, done. Same for all the rest. Quartz crystals should be interesting, still thinking on those. As far as distinguishing between bought and self-collected just have to go by the type, Brazilians - all bought, Choyas - all bought, Thundereggs - both, etc, etc. Same with pendant stones, mainly just a unit cost to create per each regardless of material as I don't track what material the pendant, just how many I sold. My opinion is that as long as I am not being ridiculous with my numbers and I am showing some profit all should be good. As you mentioned audits are(were) rare and as long as a person does not venture into questionable deductions they are usually left alone. I am not paying myself a salary, I am not deducting my garage as a workspace, etc. The only other detail will be to align the Sales that I have reported to the State for Sales Tax calculation payments. It will definitely take more time and effort. I am hopeful that anyone from the IRS will not be able to argue that my reasonable assumptions used to create average unit cost numbers.
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khara
fully equipped rock polisher
Member since September 2022
Posts: 1,726
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Post by khara on Oct 30, 2023 21:06:19 GMT -5
Good info susand24224 Unfortunately your explanation really just illuminates my point. This is a huge extra time burden on people essentially having garage sales via the modern online selling sites. Most people trying to bring in some extra money to make ends meet or to declutter don’t have a single item like a couch that the 1099 is for. They have hundreds of items, like $5-10 clothes, toys, purses, etc, that they are selling used and at a loss. They can enter an exact dollar amount of loss to offset the 1099 amount on their tax return but because of the threat of potential future audit they need to also put together documentation to back their claims. If they are working with an accountant the accountant will most likely ask if they have receipts for the transactions and will want to know the expenses for the original purchases, which may be decades old, in order to ensure that there are enough to cancel out the 1099 amount on the tax return that they are preparing. Many people save receipts on big ticket items but most don’t save them for books, toys, clothes, etc. In this case we have to research and best estimate the original expenses to demonstrate they were sold at a loss. **I question, and can’t seem to get a straight answer on this but, if it does come down to an audit whether the IRS will accept estimates of original purchases vs actual receipts. Either way this garage sale seller is now facing a daunting task of record-keeping, much like a business, yet they are not profiting like a business. This post and many others I believe started as conversation by a seller operating as a business, engaging in the making of a product for the purpose to sell, but my impression is it’s also a fairly low income generating business, potentially on the borderline of profitability, and really just for the purposes of recouping some hobby expenses, rather than an income producing business. Many people believe they are just hobbyists, just selling for fun and to recoup some expenses, but will now need to delve into operating their hobby as a business just to complete their taxes each year. What strikes me is the IRS set out to catch people operating businesses unlawfully, who are intentionally not reporting income, but instead they’ve captured these “make ends meet” and hobby sellers in this wide net with this super low 1099 threshold. It is forcing people who are not operating a business and have no intention of doing so, to actually function and record-keep at the same level of a business. This is a huge time burden on people and is going to discourage them from selling. This discourages the lower income or down on their luck folks from doing the right thing which is to do whatever is needed to make ends meet, like sell some things! It will also push people out of hobbies like this one. The intent may have been to capture the unlawful but the result is a loss of quality of life for many more.
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Post by susand24224 on Oct 30, 2023 21:18:54 GMT -5
susand24224 Good information. I don't do Ebay, Etsy or even Garage Sales. My 1099K will be coming from Square as I use their Credit Card Reader. Keep in mind they only show Card sales. For me when the time comes I am going to use the law of averages. What is the average unit cost of anything I do. It will take a bit of assumptions. Say for instance tumbled stones, I do not sell by weight. They are either sold out of a bin 3 for $1 and larger pieces priced per each. Will probably just take the total dollar sales for tumbles, say $500 for the year and say that was for about 60 pounds and it cost me X dollars a pound to polish, done. Same for all the rest. Quartz crystals should be interesting, still thinking on those. As far as distinguishing between bought and self-collected just have to go by the type, Brazilians - all bought, Choyas - all bought, Thundereggs - both, etc, etc. Same with pendant stones, mainly just a unit cost to create per each regardless of material as I don't track what material the pendant, just how many I sold. My opinion is that as long as I am not being ridiculous with my numbers and I am showing some profit all should be good. As you mentioned audits are(were) rare and as long as a person does not venture into questionable deductions they are usually left alone. I am not paying myself a salary, I am not deducting my garage as a workspace, etc. The only other detail will be to align the Sales that I have reported to the State for Sales Tax calculation payments. It will definitely take more time and effort. I am hopeful that anyone from the IRS will not be able to argue that my reasonable assumptions used to create average unit cost numbers. I think you are fine. And you are correct, so long as your methodology is reasonable, the IRS will likely accept it. They simply don't have the time (or the desire) to attack small sellers--their job is to maximize collections and nickel and diming small sellers isn't what is going to do that.
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Post by susand24224 on Oct 30, 2023 21:30:40 GMT -5
Good info susand24224 Unfortunately your explanation really just illuminates my point. This is a huge extra time burden on people essentially having garage sales via the modern online selling sites. Most people trying to bring in some extra money to make ends meet or to declutter don’t have a single item like a couch that the 1099 is for. They have hundreds of items, like $5-10 clothes, toys, purses, etc, that they are selling used and at a loss. They can enter an exact dollar amount of loss to offset the 1099 amount on their tax return but because of the threat of potential future audit they need to also put together documentation to back their claims. If they are working with an accountant the accountant will most likely ask if they have receipts for the transactions and will want to know the expenses for the original purchases, which may be decades old, in order to ensure that there are enough to cancel out the 1099 amount on the tax return that they are preparing. Many people save receipts on big ticket items but most don’t save them for books, toys, clothes, etc. In this case we have to research and best estimate the original expenses to demonstrate they were sold at a loss. **I question, and can’t seem to get a straight answer on this but, if it does come down to an audit whether the IRS will accept estimates of original purchases vs actual receipts. Either way this garage sale seller is now facing a daunting task of record-keeping, much like a business, yet they are not profiting like a business. This post and many others I believe started as conversation by a seller operating as a business, engaging in the making of a product for the purpose to sell, but my impression is it’s also a fairly low income generating business, potentially on the borderline of profitability, and really just for the purposes of recouping some hobby expenses, rather than an income producing business. Many people believe they are just hobbyists, just selling for fun and to recoup some expenses, but will now need to delve into operating their hobby as a business just to complete their taxes each year. What strikes me is the IRS set out to catch people operating businesses unlawfully, who are intentionally not reporting income, but instead they’ve captured these “make ends meet” and hobby sellers in this wide net with this super low 1099 threshold. It is forcing people who are not operating a business and have no intention of doing so, to actually function and record-keep at the same level of a business. This is a huge time burden on people and is going to discourage them from selling. This discourages the lower income or down on their luck folks from doing the right thing which is to do whatever is needed to make ends meet, like sell some things! It will also push people out of hobbies like this one. The intent may have been to capture the unlawful but the result is a loss of quality of life for many more. Khara, perhaps I and the IRS are not being clear. For your yard sale seller, all they have to do is list the item (or group of items) on Schedule 1 and say (if they have a 1099K that says $700) $700 loss." The IRS specifically allows grouping of similar items. This requires no bookkeeping and takes about five minutes to an hour if you have loads of 1099ks. There is absolutely no reason to put together complicated purchase receipts when you are doing yard sale type work. Perhaps one in ten thousand will be audited for this, and I doubt even that. Again, what one does if they don't have proof or purchase and this is ONLY if notified of an audit, is get the present market value and depreciate from there. You don't have to say how much of a loss, only that it is a loss. The IRS is "out to catch" no one. The IRS did not write this law, it is their job to follow it. Were they out to force people out of this hobby, out of business, etc., they would have simply issued a subpoena to any of the processors of payments requesting all data concerning sellers who sold between $600 and $20,000. That's it. It didn't happen. Translation: if the IRS wanted to catch the hobby seller before, or the yard sale seller before, it would have done so. The IRS has written all types of guidelines to help people through this--may I suggest that you review what the IRS calls "the yard sale exception?" Don't believe the hype, it is a bit of pain but nowhere near what you are fearing. I suspect the IRS detests the extra work as much as everyone else. There may be some people who will find it easier to treat their sales as a business. It does not require a tax accountant or CPA to set up a proper expense income sheet--Schedule C to Form 1040 does it for you. www.irs.gov/pub/irs-pdf/f1040sc.pdf. Some people may be much more comfortable hiring someone to do this, especially if they detest dealing with a lot of numbers, and that is certainly their choice, but I do not find Schedule C particularly difficult. Whether a "business" or not depends upon the results as well as the intent. A hobbyist who is simply recouping some of their costs is not operating a business. I'm imagine some people here are operating businesses but probably not most of us.
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Post by Rockoonz on Oct 31, 2023 2:38:14 GMT -5
@hanksrocks if you have registered with your state and are indeed a sole proprietor of a business intended to make a profit, you definitely need to show a profit at least one out of every 3 years to avoid red flags and audits. If you are like me, and set up a DBA with the state to deal with sales taxes, but operate to subsidize my hobby and destash literally tons of rocks before I die, you never have to show a profit. The only real difference is you don't get to lump all your income together and deduct your losses from your total income, AND as a hobby you don't have to file anything but whatever basic tax form you normally use. You can make your own spreadsheet for profit and loss, and if it does make a profit you can simply add it to whatever tax form you use as additional income, even with the 1099k.
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khara
fully equipped rock polisher
Member since September 2022
Posts: 1,726
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Post by khara on Oct 31, 2023 2:43:11 GMT -5
susand24224 Don’t get me wrong, I do hope you are right. I simply don’t trust the IRS. And it’s not based on hype but personal experience. I’m guessing you’ve never had the experience of multiple agents telling you as well as your accountant on numerous occasions that a notification was sent in error and to disregard it, only to have them, four years later, reneg on these instructions and send a penalty because you, upon their instruction, didn’t do what the initial notification instructed. This was a very expensive lesson I learned in not trusting the IRS. I wouldn’t have worded it like you did, as “out to get me”, but in hindsight that’s pretty much what happened. I did everything right. I did what I was told. I did due diligence in asking questions, until I was blue in the face, to ensure everything was copacetic, and it did me no good. I didn’t owe any taxes, they simply penalized me for following the instructions of several IRS agents, and then actually added on four years worth of interest. For the four years that it took them to change their minds. This is not an organized or trustworthy agency. The tax code is complicated and gets more so every year. The average person, not in the industry, can’t possibly keep up with it. It’s getting to where we all need to hire accountants. Thus, my anecdotal scenario above. I didn’t initially have an accountant but even after I hired one, they still couldn’t believe the IRS would do what they did. I don’t actually believe the purpose of this new code is to force people out of selling or out of hobbies, I simply think that’s going to be the result. Cause and effect. I have a hard time believing the IRS is going to be willing to overlook 1099’s in the tens of thousands. My sales on eBay routinely appear to be double to triple my actual payouts simply due to the shipping costs that eBay includes. One could easily end up with a 1099 showing 30k when really they only brought in 10k, and all at a loss. I just don’t believe the IRS is going to be fine with seeing this 30k listed as a “garage sale items” grouping and as a loss with no records. Hopefully I’m wrong, but I’m very leery of it. I think what’s going to happen really is this is going to cause such an administrative nightmare for the IRS that it’s likely to change. We shall see…
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Post by HankRocks on Oct 31, 2023 5:33:32 GMT -5
@hanksrocks if you have registered with your state and are indeed a sole proprietor of a business intended to make a profit, you definitely need to show a profit at least one out of every 3 years to avoid red flags and audits. If you are like me, and set up a DBA with the state to deal with sales taxes, but operate to subsidize my hobby and destash literally tons of rocks before I die, you never have to show a profit. The only real difference is you don't get to lump all your income together and deduct your losses from your total income, AND as a hobby you don't have to file anything but whatever basic tax form you normally use. You can make your own spreadsheet for profit and loss, and if it does make a profit you can simply add it to whatever tax form you use as additional income, even with the 1099k. I was aware of the "showing a profit in 3 years" rule. It's why I intend to show a profit each year and report it as such. Will look into the DBA option and see what it involves. Bottom line is that I am currently only doing 4 Shows a year, 3 Craft Shows and 1 Rock Show. My earnings will never reach 5 figures and should be well short of that. The Rock Show sales usually exceed the 3 Craft Shows. It may be that I add one now and then and being in the Houston area I could easily do a Craft show almost every weekend in the Fall and even some in the Spring if I was so inclined, which I am not. Way too much work!! The 3 Craft Shows are High School fund raisers, FFA and Band. It took me about 2 years of doing various shows with an occasional poor show and feedback from my wife and her "crew" on which Craft Shows draw better crowds. It's usually the ones with more Vendors and better demographics. Those are also better run as they have an adequate number of volunteers, always the key to any successful group. As I mentioned in an earlier post I am the only person at these shows selling rocks, "Where's the Rock Guy". Have also made efforts to move to end of an aisle, easier to spot and more aisle frontage. The Schools all use the same venue, 6 miles from the house, always indoor. I have also managed to build a small clientele of sorts whom I usually see at most shows. It's always good to see those folks and chat with them. Same with Vendors who know me. With some health luck I should be able to keep doing these shows for another 10 years into my 80's, they are fun! Henry
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Post by Rockoonz on Oct 31, 2023 12:57:09 GMT -5
@hanksrocks claiming the mileage for the NW shows and purchasing we do, as well as the purchases related to the sales side of the hobby, ensure that we won't be showing a profit anytime soon. Even if it's just across town you should claim mileage, and 50% of any meals away from home. I still need to talk to the tax guy about the places we stayed on our trip to determine what days we can claim and what days we should not, since we spent some time doing family and friends stuff while we were on the road. Seems a little complex, but since we keep a log of everything we do and where in real time, it's easy to sort it all out.
For me sales tax is the most difficult. We collect it in AZ but Oregon has no sales tax, so my total sales number doesn't work for the calculation. In AZ every zip code may have a different rate with the county and city stuff added to the state base. WA used to do that too, but simplified it so as long as we were under a pretty big amount of revenue to just using my home zip code. Fortunately we only sell at the show in Mesa, we haven't sold out of our home at all, and paypal took care of the little bit of online sales in other states.
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Post by susand24224 on Oct 31, 2023 15:50:34 GMT -5
susand24224 Don’t get me wrong, I do hope you are right. I simply don’t trust the IRS. And it’s not based on hype but personal experience. I’m guessing you’ve never had the experience of multiple agents telling you as well as your accountant on numerous occasions that a notification was sent in error and to disregard it, only to have them, four years later, reneg on these instructions and send a penalty because you, upon their instruction, didn’t do what the initial notification instructed. This was a very expensive lesson I learned in not trusting the IRS. I wouldn’t have worded it like you did, as “out to get me”, but in hindsight that’s pretty much what happened. I did everything right. I did what I was told. I did due diligence in asking questions, until I was blue in the face, to ensure everything was copacetic, and it did me no good. I didn’t owe any taxes, they simply penalized me for following the instructions of several IRS agents, and then actually added on four years worth of interest. For the four years that it took them to change their minds. This is not an organized or trustworthy agency. The tax code is complicated and gets more so every year. The average person, not in the industry, can’t possibly keep up with it. It’s getting to where we all need to hire accountants. Thus, my anecdotal scenario above. I didn’t initially have an accountant but even after I hired one, they still couldn’t believe the IRS would do what they did. I don’t actually believe the purpose of this new code is to force people out of selling or out of hobbies, I simply think that’s going to be the result. Cause and effect. I have a hard time believing the IRS is going to be willing to overlook 1099’s in the tens of thousands. My sales on eBay routinely appear to be double to triple my actual payouts simply due to the shipping costs that eBay includes. One could easily end up with a 1099 showing 30k when really they only brought in 10k, and all at a loss. I just don’t believe the IRS is going to be fine with seeing this 30k listed as a “garage sale items” grouping and as a loss with no records. Hopefully I’m wrong, but I’m very leery of it. I think what’s going to happen really is this is going to cause such an administrative nightmare for the IRS that it’s likely to change. We shall see… khara , LOL, Khara, not at you but with you. I have indeed had one of those "episodes" with the IRS, not because of a complicated tax code--but because of the craziness of the IRS. Long story short, my secretary (at one time, never again) was responsible for filing quarterlies, and screwed up and sent the tax money to the Unemployment Commission and vice versa. Not having time to deal with it, I hired a CPA--who filed amended quarterlies. The IRS thought the amendment was "in addition to" rather than just the actual amount that was due. We're talking a few thousand dollars here--and ultimately they levied on both my personal and business account. After hours and hours of writing and talking, with penalties, I think I owed them about $12.50, which I paid. But--and this is a big but--I'm a lawyer who did tax work and thus in the group the IRS loved to pick on. The IRS is less crazy now than it was years ago, thanks in part to Clinton, who reworked its priorities. It is always possible for a nightmare to occur anywhere. But based on my experience (other than the above) it is *extremely* unlikely that the IRS will be concerned about small sellers; it is simply not worth the effort. The IRS balance sheet with entries such as "spent forty man-hours and $450 in expenses to collect $250 in tax" simply doesn't look pretty. And the IRS tracks *every* audit they do in this fashion, or at least they used to--I haven't checked in on it for a few years. I would consider it more likely that they would mass subpoena records from such places as Ebay and Etsy of larger sellers (clearly doing more than housecleaning) but they never did so to my knowledge. I should add that I have no problem addressing federal taxes but am totally unequipped to address state taxes and have no idea how states that track their payment to themselves based on the federal tax return (such as Virginia) will do this. Based on very limited experience (Virginia) they might make an inquiry if the amounts are sufficient. BTW, I agree with your assessment that the IRS might not be happy with $30,000 all listed as household items, but I seriously doubt that $30,000 IS household items. This large of an amount would be better set out in several lines, such as used clothing, old appliances, pottery collection, etc. $30,000 is probably not a "hobby business," and I would hope that sellers that large for the most part have their record-keeping set up. The "record keeping nightmare" here is the cost of materials bought long ago--from this point forward it should be fairly easy--it's the backtracking that is difficult. As for the person who buys, for example, one rock and cuts one slab and one cab from that slab is sold, there are several options: (1) a logical guesstimate of what percentage of that rock is used for expenses; or (2) claim the entire rock on the first sale, but the next sales will have no "rock basis." With equipment, each seller will have to determine whether it is better for their bottom line to write it off all at once or depreciate--that's an individual choice based upon the nature of the business, amount of equipment, etc. Electricity, water, etc. may be a problem--the IRS provides little guidance in this area, but their restrictions on "home offices" doesn't bode well. I again suggest that concerned folks review the materials on the IRS website and proceed from there. Even if they don't get it "correctly" they have a reason to point to why they did what they did in the unlikely event that they are audited. The IRS has backtracked on its actions many times when it deems their printed materials to be less than ideal.
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gunsil
spending too much on rocks
Member since January 2023
Posts: 325
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Post by gunsil on Oct 31, 2023 20:36:34 GMT -5
Well spoken Khara! Here in NY state we can have all the yard/garage sales we like and can sell anything we wish to, all without the tax man getting involved. I think most states are like that so why should we have to pay a federal tax for interstate or online sales of the same stuff? Now with a 1099 stating you made income the states will want their share. I don't sell on ebay or etsy, but I was considering selling some of the junk I have collected all my life on ebay, but I can't handle the paperwork business, it just feels immoral. I have sold some cabs and some jewelry over the years but I have a super well equipped shop and have never made what all the tools and machinery cost so technically I don't owe anything on those sales but I'll be damned if I'll do all the paperwork. Just government run wild and taxing the low income folks more percentage wise than the rich. E-mail your congressmen and senators!! I doubt you can actually get a message to the head honcho, Joe, but it may be worth a shot. This is also untrue. This is unreported income. Just because you choose to not report it, it doesn't mean you don't owe taxes on it. Nobody reports it of course, but it's still technically owed. It's not government run wild - it's always been this way. Now there's just someone watching. It is you sir, and others who are mistaken. The old rule of $20,000 dollars or 200 sales before they sent you a 1099 means the government did not count that as income or they would have sent 1099s. Now the greedy bass turds just lowered it to any amount of sales amounting to $600 so they still are not counting the $599 as income. If all you folks are OK with this do nothing, if you dislike it write or e-mail your senators and congressmen. EBay has sent forms to members with petitions to senators and congressmen of whichever state you live in, I sent mine in, if you got one please fill it out and submit it to end this insanity. This is a tax on the little guy, they could get the same amount of money by merely raising the income tax of the richest 1% by .1%. Fight it or practice baaa, baaaa.
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khara
fully equipped rock polisher
Member since September 2022
Posts: 1,726
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Post by khara on Oct 31, 2023 21:11:12 GMT -5
gunsil This isn’t necessarily true. Most people holding garage sales are selling used household items for far less than they paid originally for them. This is not income. They are selling at a loss. If they are thrift shopping and then re-selling the items for a profit, or it’s a collectible and they are able to sell for more than they originally paid, then that’s income. But just garage sale transactions in general are not automatically “income”.
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Post by stardiamond on Oct 31, 2023 22:34:58 GMT -5
gunsil This isn’t necessarily true. Most people holding garage sales are selling used household items for far less than they paid originally for them. This is not income. They are selling at a loss. If they are thrift shopping and then re-selling the items for a profit, or it’s a collectible and they are able to sell for more than they originally paid, then that’s income. But just garage sale transactions in general are not automatically “income”. The confusion is that a 1099-k is not a statement of income, it is money received. If a friend borrows $500 from you and you send it by paypal and when the friend repays you sending by paypal. You will both get a 1099-k for $500. The problem is that since 1099-k are reported, the person who receives one needs to prove that none or only some of the amount is income. No one receiving a 1099-k around $20,000 is going to have their tax return audited; small potatoes. The difference now is that supporting paperwork on the return needs to be included. Regarding sales tax, no one on facebook collects it on sales. The states are not going to bother; once again small potatoes. The tax on cigarettes in California is 87 cents a pack and the state is very aggressive in collecting it. I smoke cigars and the California tax is almost 30%. Tobacco shops in California charge it. Internet sellers collect it on a state by state basis. They currently don't collect for California or report sales to California, so the customer is suppose to self report and pay. The amount of California cigar smokers who report internet cigar purchases is probably close to none. This has nothing to do with politics. Trump simplified the 1040 requirements for many tax payers by increasing the standard deduction. Before, I had to keep track of medical expenses along with property tax, interest and other taxes. In my situation, the standard deduction was close enough to actual deductions so that I could take it and save a lot of paperwork. My actual tax went up slightly and I am not anything close to wealthy. They are the people who got the tax break. This horse shit 1099-k change creates a lot of work for the taxpayers and the IRS. Just plain stupid.
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khara
fully equipped rock polisher
Member since September 2022
Posts: 1,726
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Post by khara on Oct 31, 2023 23:16:44 GMT -5
Double thumbs-up stardiamond I agree completely, though I know nothing about your middle paragraph. Sorry your thread got so contentious, it's a hot topic, but probably you're not surprised. Now... back to the fun part of the hobby and some other thread! ;-)
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Post by Rockoonz on Nov 1, 2023 1:24:52 GMT -5
stardiamond I may be wrong, but I think money sent through paypal using the friends and family option without fees or buyer protection will not get a 1099k. Speaking of wrong, when I commented earlier on out of state sales and sales tax I mis-spoke for sure. I was thinking of Amazon and eBay where their payment systems add the purchasers sales tax, paypal does not do that. I guess technically I may get billed for a buck twenty five by some random state from a civil servant who used $50 worth of his time to compute it.
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iamchris
has rocks in the head
Member since June 2023
Posts: 670
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Post by iamchris on Nov 1, 2023 11:16:59 GMT -5
It is you sir, and others who are mistaken. The old rule of $20,000 dollars or 200 sales before they sent you a 1099 means the government did not count that as income or they would have sent 1099s. Now the greedy bass turds just lowered it to any amount of sales amounting to $600 so they still are not counting the $599 as income. If all you folks are OK with this do nothing, if you dislike it write or e-mail your senators and congressmen. EBay has sent forms to members with petitions to senators and congressmen of whichever state you live in, I sent mine in, if you got one please fill it out and submit it to end this insanity. This is a tax on the little guy, they could get the same amount of money by merely raising the income tax of the richest 1% by .1%. Fight it or practice baaa, baaaa. Flat-out wrong. You'd be better served by typing simple questions into Google rather than spending that time calling others names. Having worse Google-fu than a sheep is not a positive trait. turbotax.intuit.com/tax-tips/self-employment-taxes/how-to-file-taxes-with-irs-form-1099-misc/L3UAsiVBq#https://turbotax.intuit.com/tax-tips/self-employment-taxes/how-to-file-taxes-with-irs-form-1099-misc/L3UAsiVBqThe IRS planned to implement changes to the 1099-K reporting requirement for the 2022 tax year. However, the IRS recently delayed the implementation of the new $600 reporting threshold for goods and service transactions from third party processors like Venmo and Paypal to 2023, reverting tax year 2022 back to the previously higher 1099-K reporting threshold (over $20,000 in payments and more than 200 transactions). If you don’t receive a 1099-K, the IRS still expects you will report all your income, regardless of the amount.Research comes before forming an opinion, not after.
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Post by susand24224 on Nov 2, 2023 23:27:08 GMT -5
Definition of income from the U.S. Code:
26 U.S. Code § 61 - Gross income defined U.S. Code Notes prev | next (a)General definition Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items: (1)Compensation for services, including fees, commissions, fringe benefits, and similar items; (2)Gross income derived from business; (3)Gains derived from dealings in property; (4)Interest; (5)Rents; (6)Royalties; (7)Dividends; (8)Annuities; (9)Income from life insurance and endowment contracts; (10)Pensions; (11)Income from discharge of indebtedness; (12)Distributive share of partnership gross income; (13)Income in respect of a decedent; and (14)Income from an interest in an estate or trust. (b)Cross references For items specifically included in gross income, see part II (sec. 71 and following). For items specifically excluded from gross income, see part III (sec. 101 and following).
(Aug. 16, 1954, ch. 736, 68A Stat. 17; Pub. L. 98–369, div. A, title V, § 531(c), July 18, 1984, 98 Stat. 884; Pub. L. 115–97, title I, § 11051(b)(1)(A), Dec. 22, 2017, 131 Stat. 2089. -------------------
Note that there are no exceptions for under $ (fill in the blank). Not in the main definitional section nor in the "otherwise provided" sections, although it would be too boring to write that in. I'm not writing this to address what Congress *should* have done, although I don't necessarily disagree with Gunsil. I am writing it to clarify that taxes have always been due on the amount earned (minus appropriate deductions) regardless of whether a 1099K form is sent or not. When it comes right down to it, it doesn't matter what any of us thinks is a taxable amount, what matters is what the U.S.C.A. says, so here it is.
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Post by stardiamond on Nov 22, 2023 12:00:12 GMT -5
The IRS said Tuesday that the old threshold will remain in place — this January companies will be required to send the tax form, known as a 1099-K, only to people who made more than $20,000 and 200 transactions on the platforms.
The IRS said Tuesday that it will require companies to send 1099-K forms to anyone with more than $5,000 in transactions on their platforms starting in 2025. The agency says it will implement the $600 rule the following year, giving Congress more time to change the law first.
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Post by Rockoonz on Nov 22, 2023 17:55:10 GMT -5
That's a can that Congress won't open, imagine getting re-elected after that...
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