The limit of $20,000 to trigger a 1099 from them has been lowered to $600.
Happened last year for Illinois
I started tracking my buying, selling, PayPal fees, and shipping fees the last couple years so I can file it properly.
I track my purchases and sales but haven’t been tracking shipping or PayPal fees; I should start doing so. $600 is practically nothing… filing this year’s taxes is going to be interesting
ETA: effective starting for 2022 income, so won’t apply until doing taxes in 2023.
How are they looking at transactions? It says that sending money to a friend for Venmo is not taxable but how do they know the differences for the transactions ? Seems incredibly petty especially for this community which has a lot for sale on the BST.
Goods & Services transactions are subject to the reporting (but not necessarily taxation, that’s to be determined when you do the transaction), but Friends & Family transactions do not count towards the reporting amount. Venmo has business accounts, and those are subject to the reporting. So think of it like:
PayPal F&F : Venmo personal :: PayPal G&S : Venmo Business
So does this mean they’re going to automatically send me a 1099 if I’m over $600? Because if so, this is definitely a good thing for me because it means my taxes will be easier having the right forms This is my first year making enough from strings that I’m gonna have to file as a business instead of just a hobby.
Oi you made some money? Ye we’re gonna need to tax your income.
Oi you bought a product with your income? Ye we’re gonna need to tax that sale.
Oi you sold that product? Ye we’re going to need a slice of that pie too.
Oi you invested the profit you made from that sale? GUESS WHAT.
Good thing papa guberment does such an excellent job spending our tax dollars wisely
Sorry, just needed to rant.
Yikes! This will catch so many people off guard, I’d really be surprised if it doesn’t get reverted or dramatically modified before going into effect.
Certainly the many large reseller platforms like eBay are going to feel the pinch of this.
I’m also super curious if I’d get to legally claim a loss on my taxes since I’m much more likely to sell most stuff for less than I paid.
Interesting. Maybe if you sell on the BST you can consider it a business and write off your “losses” (i.e. yoyo purchases that you decide you just can’t sell).
One thing I can’t stand is ignorance of the tax system.
I am positive that ALL taxes collected from All sources are 100 percent used for very useful and necessary causes.
Every City tax, State tax, Federal tax, DMV tax, Luxury tax, Property tax, Spongebob Lunchbox tax, Thumb tacks, taxes on hot pizzas and BigMac attax are ALL perfectly justified.
I bought my house in 1989 for $460,000. I recently received an updated valuation that my property is now recognized at $1,200,000. Even though I have been here over 30 years. And I don’t intend to sell the property, the County keeps raising the perceived value so they can charge me more for property taxes. And I am sure they are ALL Super Honest and have the Best intentions and only want to SUCK money out of me for the Good of the people.
The Government calculated several years ago, that internet sales(and not reporting amounts for taxable purposes) was costing them over 23 billion dollars in potential revenue.
And they need that money to buy more paper plates and ‘the good peanut butter’, because sadly, our State Senators and Congressmen are only making $247,000 a year(with lifetime comprehensive Benefits packages/after serving only 1 term in office) and they have to justify their income by doing what they can to help the IRS squeeze every single penny they can get.
…Now, their fund seeking Vampires have decided to be Bold and suck the blood out of their new cash generating cows: Paypal and Venmo.
I trust they have nothing but good intentions and just need our spare change to help save the Universe from Bankruptcy.
PS…… I’m practicing for the International Lying Championships. The above text is just a rough draft. I need to polish a few lines before the Contest.
i was curious of something similar. could what i send via g&s on the same account get deducted as expenses. it’s all for the same purposes… but then we’d be operating as a business.
i’m sure like @yoyodoc said, in sum - it’s what’s best (lmfao), but hobbyists and collectors are being turned into businesses seemingly without recourse or regard for the ‘actual’ costs involved.
at least you can make tons of money making yoyos…. right? please tell me i’m right!
For most people I think this would be considered “hobby income”, which is reported as misc income on your tax return. Hobby expenses are only deductible to the extent of hobby income. Unfortunately, hobby expenses are an itemized deduction so if you take the standard deduction you basically loose the expenses. I would think PayPal only considers G&S transaction when calc the amount for your 1099.
I no longer like ebay, but used to. They asked for my social yesterday, I’ve sold so little, I’ll give them nothing.
So this actually started with last years taxes for some areas, where I’m at Illinois was one of them. Here is the real downside to this, the 1099 they send you is for a small business. Paypal will not send a 1099-MISC, they send you a 1099-K. Everything I’ve seen and have heard from tax people this is a giant mistake, because not everyone with a PayPal account is a small business. My wife had sold $1400 worth of our kids old items: toys, clothes, car seats, etc. A friend of mine, who passed away, I helped his widow sell his guitar collection, I got hit with a 1099-K as well. So with the 1099-K, you have to file as a small business This not only complicates things, but also makes you pay a higher price if you use a filing service. I’m hoping this, out of all of it, is what get’s changed.
Yes, you can deduct the losses, you must be able to show those losses though. WOuld need to keep every receipt, be able to reference every PayPal transaction where you originally bought it, and said transaction would need to notate that was the item that you are claiming. It it’s just a payment and says “Thanks!” It’s probably not going to get to be used, or if it’s generic “CLYW Chief YoYo” it also may not be able to be used, in the event you were audited.
I asked this as well, only if you are set up as a business.
My wife and I had a long discussion with PayPal and several tax people. Paypal doesn’t seem to understand, or admit, that for most ebay/facebook/forum sales it’s basically a garage sale where you’re taking a loss on most everything. The tax people are really frustrated as well in our discussions.
In the end we had to pay an additional $3200 in taxes and prep fees last year, we had to amend our taxes because Paypal sent the 1099 in late March, our taxes were finished in February. It was a giant headache.
thank you @AaronW it might be time to start looking at the business route in some of these instances, as i wonder if there are tax advantages as a business on the other end that would offset the expenses in the form of deductions, etc.
another concern i have, people may be more apt to use f&f in an unsafe situation…. whereas there was some (but not always i just learned) protections through g&s.
Guess all of my future BST purchases/sales will be via crypto now… The last thing I want to do is complicate my taxes for something so unimportant.
This will end up crippling the BST - I don’t want to have to file as self employed for selling a canvas and a hinemosu lol. Guess starting 1/1 it’s F&F or nothing for me sad but this change is an over reach
Interesting. That was all helpful information. After digging into the issue a bit, it seems that not much has changed…
So my understanding is that you’d now get a 1099-K from each entity you did business with (PayPal, eBay, Etsy, etc.) if you did more than $600 in transactions. The 1099-K is just an unitemized reporting of gross transaction amounts and is not considered tax liability in itself. It’s up the the individual to determine if there was “income” earned from those transactions and report on it.
When it comes to reselling stuff, typically you’re taking a loss, hence no income and you’d be completely fine doing nothing tax related in response.
But that’s the rub – if there was an audit it’s now your responsibility to prove there was in fact no income. Realistically, how many people are organized enough to keep valid receipts showing what they originally paid for stuff years ago?
The key takeaway is that we were always on the honor system, except now the threshold for official reporting to the IRS has been lowered from $20,000 to $600. And given almost no one keeps (or knows to keep) detailed records, this could be a very rude awakening.