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Post by oregon on Jan 6, 2022 2:34:46 GMT -5
Just curious if anyone's who's selling online is thinking of changing prices, selling modes, quitting etc due to the new income reporting laws?
Basically, any 3rd party goods/services payments totaling over $600 for the year will generate a 1099 income form for you. That'll quickly make a lot of hobbies businesses... Ebay,Etsy, Facebook Marketplace, paypal, venmo etc.
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Post by Rockoonz on Jan 6, 2022 7:45:59 GMT -5
According to the person interviewed for the article it is taxable income anyway and "honest" people should have been reporting it. Problem is, someone who does less than a couple thousand in sales can't afford to pay an accountant to make sure they write off any expenses, so in reality they owe taxes on little or none of it if it is just selling off stuff they don't need anymore, or subsidizing an expensive hobby like many of us. Better start keeping reciepts again.
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Post by jasoninsd on Jan 6, 2022 7:58:45 GMT -5
So this is what doesn't make sense to me about it. If I take my paycheck...which I've paid income taxes on, and buy a $6000 pool cue (yes, they exist) and turn around a month later and sell that pool cue for $6000 on eBay, I'm going to be paying "income" tax twice on that $6k?
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Post by rockjunquie on Jan 6, 2022 8:00:25 GMT -5
So this is what doesn't make sense to me about it. If I take my paycheck...which I've paid income taxes on, and buy a $6000 pool cue (yes, they exist) and turn around a month later and sell that pool cue for $6000 on eBay, I'm going to be paying "income" tax twice on that $6k? Don't think about it too hard.....
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Post by jasoninsd on Jan 6, 2022 8:09:33 GMT -5
So this is what doesn't make sense to me about it. If I take my paycheck...which I've paid income taxes on, and buy a $6000 pool cue (yes, they exist) and turn around a month later and sell that pool cue for $6000 on eBay, I'm going to be paying "income" tax twice on that $6k? Don't think about it too hard..... I have to think about it a little. I've made some high dollar purchases over the years. I bought them with money I've already paid income tax on. If the sales of used items is taxable, then a person (me) is paying "income" tax twice. In my mind, the sale of a used item isn't "income"...it's recouping money already spent...
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Post by rockjunquie on Jan 6, 2022 8:22:12 GMT -5
Don't think about it too hard..... I have to think about it a little. I've made some high dollar purchases over the years. I bought them with money I've already paid income tax on. If the sales of used items is taxable, then a person (me) is paying "income" tax twice. In my mind, the sale of a used item isn't "income"...it's recouping money already spent... The IRS really doesn't give a shit what you think about it. Obey.
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Post by Drummond Island Rocks on Jan 6, 2022 8:34:00 GMT -5
After 12 years I just shut my Etsy down. The first 20 years of my career I worked 60+ hrs a week and paid through the nose in taxes. Now I only work 50 hours a week but still cant stomach the IRS coming after more money for the hobby I do after the full time job. If I wanted to do all the receipts and pay an accountant it might be a wash in the end but hobbies should not be such a hassle. The only reason I did sell on Etsy was to get rid of finished product and earn a little money to buy more rough stones and equipment.
The second option for selling pendants and polished stones is rock and gem shows but they got that covered now too by adding Paypal to the $600 rule.
How bad would it suck if your fulltime job had you at the cusp of a tax bracket and then your $4,000 in hobby sales pushed you over the edge into the next tax bracket.
I plan to open up last years turbo tax and enter in a 1099 for what I sold on etsy and at shows to see what it would have done to my final number. That way I can make a more informed decision and see if it is worth just raising all my prices to cover it.
So every pendant has the following fees. The question is what is the 1099 fee going to be per pendant for example?
Rough rock cost Silver cost Wear and tear on wheels and supplies listing fee selling fee paypal or credit card service fee shipping fee IRS 1099 fee
Chuck
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Post by rockjunquie on Jan 6, 2022 8:46:09 GMT -5
After 12 years I just shut my Etsy down. The first 20 years of my career I worked 60+ hrs a week and paid through the nose in taxes. Now I only work 50 hours a week but still cant stomach the IRS coming after more money for the hobby I do after the full time job. If I wanted to do all the receipts and pay an accountant it might be a wash in the end but hobbies should not be such a hassle. The only reason I did sell on Etsy was to get rid of finished product and earn a little money to buy more rough stones and equipment. Chuck I think Etsy is gonna take a massive hit.
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Post by Rockoonz on Jan 6, 2022 8:52:43 GMT -5
So this is what doesn't make sense to me about it. If I take my paycheck...which I've paid income taxes on, and buy a $6000 pool cue (yes, they exist) and turn around a month later and sell that pool cue for $6000 on eBay, I'm going to be paying "income" tax twice on that $6k? We operated as a business for 3 years, until the tax man said make it a hobby because we showed a loss every year, back then we were accumulating stuff. As a hobby you can still track purchases and keep a profit and loss spreadsheet, along with reciepts. I'm kind of a numbers geek so I do it anyway just to see how I'm doing. Mileage to rock shows and field trips, meals, saw blades, grinding wheels, and everything are expenses you can write off, but only against your hobby related sales, not the rest of your income. You can't go below zero but some expenses, like grinding wheels and saw blades, may be able to be carried over. Equipment is a writeoff, but has to be spread out over several years as depreciation, easy to look up on the interwebs to get details. If you do this though, keep track of sales taxes too, they are an expense, and in your own state you may need to file a return, many states will probably be watching with these new rules. If you do in person sales at events definitely get a sales tax ID for your state.
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Post by Drummond Island Rocks on Jan 6, 2022 8:55:49 GMT -5
After 12 years I just shut my Etsy down. The first 20 years of my career I worked 60+ hrs a week and paid through the nose in taxes. Now I only work 50 hours a week but still cant stomach the IRS coming after more money for the hobby I do after the full time job. If I wanted to do all the receipts and pay an accountant it might be a wash in the end but hobbies should not be such a hassle. The only reason I did sell on Etsy was to get rid of finished product and earn a little money to buy more rough stones and equipment. Chuck I think Etsy is gonna take a massive hit.
I added a bunch more to my post after you commented too. I would love to see some Etsy stats showing how many shops shut down. I just put mine in vacation mode and turned off all of the automatic re-listing options until I know a bit more. In my hay day the most I sold was $7,000 in year. Etsy has been on a decline anyway and last year I only sold $1,500 worth of goods. Hardly worth the hassles over bookkeeping and accountants but that money was enough to pay for grits and wheels. Chuck
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Post by knave on Jan 6, 2022 8:58:35 GMT -5
I mean yeah we all can expense a ton of stuff out but we will need an accountant
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Post by Drummond Island Rocks on Jan 6, 2022 9:05:38 GMT -5
I mean yeah we all can expense a ton of stuff out but we will need an accountant Actually that don't even work for me. I have probably spent over $15,000 on equipment of the last ten years so now I am not buying much. I finally have a well equipped shop so my expenses are just rough rock, new wheels and grits pretty much. I worked hard to get to this point where my expenses are minimal and now it turns out to be a bad thing. Cant win. Chuck
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Post by hummingbirdstones on Jan 6, 2022 9:08:25 GMT -5
Don't think about it too hard..... I have to think about it a little. I've made some high dollar purchases over the years. I bought them with money I've already paid income tax on. If the sales of used items is taxable, then a person (me) is paying "income" tax twice. In my mind, the sale of a used item isn't "income"...it's recouping money already spent... I'm not an accountant, but if you sold something for a profit after you bought it, the difference would be "profit" that you would need to pay taxes on. Of course, you need proof that you bought it for the amount you claim and a bill of sale proving you sold it for however much. If you don't have the proof of purchase and then sell it, I would bet you'd get nailed for taxes on the whole amount.
Keep all your receipts and meticulous records if you plan on selling stuff $600 and over.
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Post by jasoninsd on Jan 6, 2022 9:15:06 GMT -5
I have to think about it a little. I've made some high dollar purchases over the years. I bought them with money I've already paid income tax on. If the sales of used items is taxable, then a person (me) is paying "income" tax twice. In my mind, the sale of a used item isn't "income"...it's recouping money already spent... I'm not an accountant, but if you sold something for a profit after you bought it, the difference would be "profit" that you would need to pay taxes on. Of course, you need proof that you bought it for the amount you claim and a bill of sale proving you sold it for however much. If you don't have the proof of purchase and then sell it, I would bet you'd get nailed for taxes on the whole amount.
Keep all your receipts and meticulous records if you plan on selling stuff $600 and over.
That was my take on it...whether it was sold at a profit. The profit is income. But if it's sold at a loss, then none of it should be taxable. The crappy part is now trying to sell anything acquired years ago and having no paperwork any longer... *My question didn't really have anything to do with selling as a "hobby"...so thanks for letting me interject a somewhat related question/point to the thread. Okay...now back to your regularly scheduled program! LOL I am curious as to where this discussion goes. I was reaching a point I wanted to start listing my wraps for sale...and was likely going to be Etsy.
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Post by HankRocks on Jan 6, 2022 9:20:50 GMT -5
This is going to get messy as most of us small time folks are going to have consider how they keep track of everything including expenses. I am pretty sure that my costs of all my supplies and equipment, electricity would offset any earnings I have but to do the accounting on all of that is going to be a real headache.
The government believes that there are un-collected billions and billions of taxes they are owed by all the un-reported transactions. What the reality will be is that the IRS is going to spend time and money chasing this revenue and those being chased will end up spending time and money to prove that there was no real income. At the end of the day there will not be as much revenue generated as the IRS hopes but they will have spent billions chasing it. And the poor smucks being chased will also have spent time and resources. At least the Government has grown their bureaucracy which seems to be the real goal here.
It goes back to my favorite rule of government;
1) No matter what they are talking about, they are really talking about money.
2) No matter whose money they say they are talking about, they are talking about your money.
3) No matter how much of your money they say they will need, they will need more.
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Post by hummingbirdstones on Jan 6, 2022 9:29:56 GMT -5
I mean yeah we all can expense a ton of stuff out but we will need an accountant Actually that don't even work for me. I have probably spent over $15,000 on equipment of the last ten years so now I am not buying much. I finally have a well equipped shop so my expenses are just rough rock, new wheels and grits pretty much. I worked hard to get to this point where my expenses are minimal and now it turns out to be a bad thing. Cant win. Chuck I'm not sure how paying yourself for your time would work and it's definitely something you need to talk to an accountant about, but if you have to operate your hobby like a business then you also need to pay yourself. That's an expense to the business, but I'm not sure if you have to 1099 yourself. It's an f'ing mess.
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Tommy
Administrator
Member since January 2013
Posts: 12,665
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Post by Tommy on Jan 6, 2022 9:42:56 GMT -5
We operated TLO on Etsy as a business for a number of years and kept meticulous records and receipts and wrote off all of it - rock and equipment purchases, rock collecting trips, trips to Quartzsite for purchasing rocks and related expenses, etc. We (and by "we" I mean my wife) input that information constantly in Quicken (I think), and aside from my annoying habit of failing to ask for receipts from vendors at rock shows, it massively simplified things at tax time. My point is we are already used to doing this as we've been doing it for years even when sales were below the $20k Etsy reporting threshold. The question now is, is it worth it to continue it for someone who is probably not going to generate a whole lot above maybe a thousand or two in sales during the year? They are not leaving us much of a choice I guess - I don't want to reach this point next year and suddenly receive a 1099 for a bicycle I sold on Facebook. I would imagine that with these draconian tax collecting measures now being implemented by the current administration, "friends and family" exchanges are about to soar in popularity. For now going forward I'm going to finish shutting down my TLO Etsy page and watch my actions like a hawk trying not to generate a 1099. If I continue my de-stash of the rock pile, I will have to contain everything to local sales in cash or here on the forum among my "friends and family"
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NDK
Cave Dweller
Member since January 2009
Posts: 9,440
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Post by NDK on Jan 6, 2022 10:54:13 GMT -5
Here's a question I just thought of. Let's say Ali and I get busy with our rock shop business. Now we bought the starry night jasper from Tommy. If we were to report that as a business expense are we now screwing him because they'll want to see him report that as income?
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Post by Drummond Island Rocks on Jan 6, 2022 10:57:06 GMT -5
Here's a question I just thought of. Let's say Ali and I get busy with our rock shop business. Now we bought the starry night jasper from Tommy. If we were to report that as a business expense are we now screwing him because they'll want to see him report that as income? If you pay for it using paypal friends and family then Tommy wont be affected but at the same time you probably could not use it as an expense. If you pay for it using paypal goods and services then Tommy pays 1099 on it and you get to use it as an expense. That's how I see it anyway. Chuck
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Post by MsAli on Jan 6, 2022 11:09:12 GMT -5
All of this started to happen back in 2018/2019. When the IRS posted the new laws there wasn't much attention given to it. I believe this also covers consignment as well. It's a lot of reading but it's all available on the IRS page
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