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Post by aDave on Jan 7, 2022 21:24:12 GMT -5
The new law as it currently stands will generate a 1099k for any account with CUMULATIVE totals of $600 or more in a year. Is that only for the selling sites? What about banking transactions (deposits)? Do you know? I'm not challenging at all, just asking. I'm in the middle of a bunch of different things right now. Can you share a link? Thanks.
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Post by knave on Jan 7, 2022 21:27:38 GMT -5
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Post by knave on Jan 7, 2022 21:28:36 GMT -5
For awhile there was a $600 rule for banking as well but that got overturned.
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quartzilla
Cave Dweller
Member since April 2020
Posts: 1,215
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Post by quartzilla on Jan 7, 2022 22:44:22 GMT -5
I think you all need to start rockhound non profits😉.
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fencejumper
Cave Dweller
Member since May 2021
Posts: 382
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Post by fencejumper on Jan 8, 2022 22:22:19 GMT -5
Over the years, I have had people buy my stuff for resale. I have never gotten a 1099 for doing that. Last year, I claimed all my rock purchases. I don't think anyone had to account for that. Paul fencejumper - did you get hit with taxes on my big purchase from the auction? No Ma'am, rocks are a hobby...the IRS can go to h***..they already take me to the cleaners at my day job
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fencejumper
Cave Dweller
Member since May 2021
Posts: 382
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Post by fencejumper on Jan 9, 2022 11:58:30 GMT -5
My passion for creating with rocks is improved by creating with a sale in mind. It may not always stay that way. I’m gonna ride the friends and family thing out. No way they can keep track of all the 1099s. Also a rumor that it may be increased to 10000 Dudmilitia™️ Tell your friends. Take no prisoners. # Staytruetothedud
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Post by stardiamond on Jan 23, 2022 17:42:56 GMT -5
Things are getting a little weird. I found a nice slab of amethyst sage on ebay. I went into checkout and paypal wasn't there using chrome. I went into edge and was able to use paypal. I avoid using credit cards for ebay purchases. 6.6x3.5 inches
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Post by stardiamond on Nov 22, 2022 19:51:13 GMT -5
My tax situation has changed so I decided to track expenses. I didn't look at equipment depreciation or energy costs, just purchases of equipment and supplies. I downloaded the first 10 months of paypal, went through my credit card statements and Amazon purchases. Most of it was paypal and I converted the files to spreadsheets and typed in the rest. It came to about $3.000 and I expect another $1,000 for the rest of the year. My marginal tax bracket was about 10% but it may be 25% because of some financial planning. I've never filed as a small business before but with taxes it's mainly documentation.
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khara
fully equipped rock polisher
Member since September 2022
Posts: 1,714
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Post by khara on Nov 23, 2022 2:31:11 GMT -5
As some other people have already mentioned, this isn’t going to hurt people who are already running a business as they are already tracking expenses and income and reporting all of it starting at the first dollar of sales. This will hurt the most, and in a quite egregious way, the very small-time hobbyists and people just trying to make ends meet by selling pre-owned items from their homes. What makes it even worse is that the selling platforms include shipping and seller fees (and maybe taxes, not sure) in their reporting! So our $600 threshold is nowhere near $600. It could easily be half that! If you are selling a $10 item that also costs $10 to ship, you are only going to be able to sell $300 worth of items before the platform says you’ve hit $600 and kicks out the 1099. So now this person who is very casually selling their hobby goods has to add the administrative hassle and time of basically operating as though they are a business just to protect this little bit of “income”. With the $300 example they then have seller fees that were taken out, so their $300, which was 1099 reported as $600, is actually closer to $255 as a payout from the platform and this is before any actual supply and materials expenses are considered for profit accounting. Just think about all the wasted time and energy that will need to go into proving that there was no profit for these small time sellers! Now take that example and, instead of the small time hobbyist who is actually at least buying supplies to create a sellable item, think about the person trying to make ends meet or simply declutter by selling something they bought years ago. These people likely don’t have any receipts because they aren’t selling for a hobby or business, they are selling pre-owned, and previously taxed, items like clothing and household goods. They too now suddenly have to operate like a business. But worse yet, they now have to do a bunch of research and look up current fair market value of their items (and then hope that is accepted in case of an audit). So they sell a few things for a few hundred bucks and can pay a bill. Great! They did the right thing to make ends meet. But now they’ve got a tax hassle on their hands, and apparently additional “income”. This hits the lowest income people the hardest. I’ve seen a number of people (on other platforms) say emphatically that if you are running a legitimate business and paying your taxes legally then you shouldn’t care about this change. But it isn’t the businesses this is targeted towards. It’s the people outlined above. And as already pointed out by a few people, how is this not basically triple taxation? Get a paycheck, pay taxes, buy stuff with what’s left, pay sales tax, sell some of that stuff, and now pay income tax again? This law should not end up discouraging people from selling for fun or especially selling to make ends meet. Trying to not go into cave territory but this is a problem that really should be solved by those of us affected. I’d really like to see a clean and simple record keeping method and set of instructions that super small time sellers could easily implement that will help them to manage this at tax time. I will have to deal with this this year and really don’t know what to expect as far as an impact on my taxes. I’m not knowledgeable or savvy enough to be able to foresee this. I do expect to waste a bunch of time trying to get my records in order and prove I didn’t make a profit and maybe that process will give me some insight as to how it all can be streamlined for next year.
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Post by parfive on Nov 23, 2022 3:19:42 GMT -5
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vance71975
freely admits to licking rocks
Member since September 2022
Posts: 760
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Post by vance71975 on Nov 23, 2022 3:21:15 GMT -5
Well, there is a way around it if your not selling on a site like etsy or ebay. Simply have everyone pay you through paypal and have them send the money as "friends and family" not as a sale. At least if your not doing thousands and thousands in transactions.
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Post by rmf on Nov 23, 2022 4:10:14 GMT -5
Now you know the real reason the IRS needs those 87,000 new employees. They said it was to keep track of the rich tax cheaters. Bet you did not know you were rich, did you.
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khara
fully equipped rock polisher
Member since September 2022
Posts: 1,714
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Post by khara on Nov 23, 2022 11:54:38 GMT -5
Well, there is a way around it if your not selling on a site like etsy or ebay. Simply have everyone pay you through paypal and have them send the money as "friends and family" not as a sale. At least if your not doing thousands and thousands in transactions. I didn’t even know about the “friends and family” thing until I read this thread yesterday. So… apparently PayPal isn’t making it easy to see it and choose it. Basically gotta know it exists first. Now I know but probably it’s going to be tracked as well.
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Post by susand24224 on Nov 27, 2022 4:16:48 GMT -5
I've watched this thread for a while and decided maybe I could provide some information that will be helpful. 1. Link to IRS explanation of the 1099-K: www.irs.gov/newsroom/reminder-service-providers-others-may-receive-1099-ks-for-sales-over-600-in-early-20232. This does NOT apply to people selling used stuff from their homes. Regardless of whether you receive a 1099-K you are not required to report sales of used items unless you sell the item for more than you originally paid. Correspondingly, you are not permitted to take a loss if you sell it for less. The exception is if you are buying used items to resell to make a profit. This is often referred to as "the yard sale exception, but it applies regardless of where you are selling. NOTE: If you have depreciated equipment, etc., the new "cost" is the original cost minus the depreciation.3. The IRS rules have not changed insofar as taxpayers. The reporting requirements of third-party transactors have changed. 4. The key here is record keeping. Stardiamond has done a great job of this. You do not need to hire an accountant on a regular basis. What you *may* want to do is pay one, once, to set up a proper ledger sheet for you. With a good tax program, even that is not necessary. Even cheaper (free), review the IRS business forms for examples of deductible expenses and put these in your ledger sheet. You can also simplify by making all "rock-related" purchases on the same credit card, so you have a running tally. 5. If you have income it is reported on Schedule 1 unless you engage in the business with regularity. If you go to a few shows a year and sell stuff, it is not "engaging with regularity." This requires no documentation unless you get audited. If you have an Etsy shop, it may depend upon your sales--I'd have to look at the Revenue Rulings on this one more carefully to be comfortable explaining it. 6. In general, you have to have receipts for expenses, but this can be satisfied with the entries on your charge card, Paypal account, etc. 7. A lot of equipment can be completely written off at present if the depreciation time is less than twenty years. See Section 179 for more detail--there are limitations on the dollar amount, etc. Stardiamond, I *think* (did not double check) that once you have elected to depreciate you are stuck with it. I hope this is helpful--I'm now taking my legal hat off and putting my rock hat back on! Wait a minute, first the disclaimer: This applies to 2021, I am not sure what changes 2023 will bring as of yet, so double-check everything I'm saying to see if there are changes. I did glance at the 2022 forms and didn't see any changes, though.
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