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09-28-2021, 12:16 PM #1
FYI: Tax Changes Coming to PayPal Goods and Service Payments
FYI on here, it looks like starting Jan 1, 2022 if you take in more than $600 total in goods and service payments then you will be liable to report the income via a 1099-K to the IRS. It used to be 200 transactions and $20,000. It's unclear what the exact tax implication is for casual sellers like us. This goes for more than just Paypal, but Paypal is probably the biggest one. Unfortunately another reason to take F&F payments even though it is less secure.
https://www.cnbc.com/2021/03/26/its-...ine-sales.html
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09-28-2021, 12:26 PM #2
Oh yay I feel so rescued thank you thank you sweet benevolent government
((. The joy I get from skiing...
.))
((. That's worth living for.
.))
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09-28-2021, 12:47 PM #3
nah.
swing your fucking sword.
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09-28-2021, 01:00 PM #4
Ebay becoming worse and worse for sellers
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09-28-2021, 01:04 PM #5
This seems to be the crux of it:
"If your sales are akin to having a garage sale — i.e., you unload belongings for less than what you originally paid — there typically is no reason to report what you pulled in, said Weston at the American Institute of CPAs. Essentially, there is no “income” to report."
That article makes this sound like a huge clusterfuck in the making, though.
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09-28-2021, 02:20 PM #6
Thanks for the reminder. Sweet benevolent government overloads to the rescue, once again.
Here is the implication as I understand it based on my reading:
Transactions via Zelle, Venmo, or PayPal "Friends and Family" are transferring funds between individuals not in exchange for goods. Accordingly, those transactions *should* be exempt from 1099 reporting and the operators of those platforms will not submit 1099 information to IRS.
Transactions for goods or services, however, may trigger a 1099 to be sent to the IRS. If a single person transacts for a cumulative amount in excess of $600 over the course of a year via a single payment processor (e.g. PayPal Goods & Services), that payment processor is required to submit a 1099 to the IRS. You as the seller will also receive a 1099 for reporting (and paying taxes) on your 1040.
In theory, this leads to triple taxation for those of us selling used gear to a buyer that wants the protection of paying via PayPal Goods & Services (i.e. we pay income taxes on our earnings to purchase new gear, then pay sales tax at the register in most states, then this American Rescue Plan tax when we sell it used).
Here is another article on the topic: https://www.twrblog.com/2021/03/amer...mis-threshold/
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09-28-2021, 04:12 PM #7
I've always used PP F&F and never had a mag fuck me over. I generally buy from well-established mags or peeps that are in my general area. Not worried....
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09-28-2021, 06:16 PM #8Registered User
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As Dan said this seems like a big nothing burger. It taxes people who are making income as resellers, and it doesn't tax people who are selling personal gear they don't need anymore. A real accountant should chime in here though. The issue is sending everyone 1099s instead of just resellers, that's confusing as hell.
Sounds like a tax loophole is being closed and no triple taxation should be happening. Freelancers/contractors/etc have had to report income over $600 for a long time, now resellers do too, so.....good?
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09-28-2021, 08:02 PM #9Hucked to flat once
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I guess if I have to report the income on used gear I sell, I will also start depreciating the assets I don't sell as tax deductions. Isn't that how it works?
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09-28-2021, 10:25 PM #10
Also coming soon: your bank will report your total annual inflow and outflow to the IRS if you account balance ever exceeds $600.
All these screws being put to the average taxpayer, yet the "carried interest loophole" intentionally remains untouched, which is the primary income of many who make the largest campaign donations to the folks currently crafting all these new regulations.
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09-28-2021, 10:31 PM #11
guess it's time to start dabbling in crypto.
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09-28-2021, 10:36 PM #12
^ Won't help, the IRS is tracking that too. It's a public ledger, so they don't even need anyone's bank records or a subpoena to see anyone's transactions.
* If your wallet is part of a transaction chain that ever touches a US exchange where you've provided KYC details. Boom, in a flash your entire txn history is revealed. And there are wallet explorer honeypots that provide IP addresses to the government, so they might be able to still find you even if your attempts to stay anon are 99.99% perfect.
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09-28-2021, 10:41 PM #13
then blowjobs. no way they're tracking blowjobs.
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09-28-2021, 10:43 PM #14
^ Microchips?
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09-28-2021, 10:44 PM #15
oh shit. the vaccine....
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09-29-2021, 05:53 AM #16
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09-29-2021, 10:23 AM #17
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09-29-2021, 02:06 PM #18
Until you get an IRS demand letter that says the burden of proof is now on you. They will kindly tell you to pay tax on the entire sales price because as the government they assume you got it for free, so all proceeds are taxable. (To be fair it's the government and they like giving people free money in this day in age, well that is as long as you aren't in the 40% of taxpaying American's).
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09-29-2021, 02:45 PM #19
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09-29-2021, 02:50 PM #20Registered User
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- Oct 2010
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- 1,958
FYI: Tax Changes Coming to PayPal Goods and Service Payments
Actually the 2017 tax law changed how “hobby income” is taxed and this PayPal change really screws people.
It used to be you could sell $2000 in used skis, but if you paid $2000 and wanted to be fully above board, you’d report $0 income and not pay extra tax.
Even if you bought the skis for $1800 and sold them for $2000 you would only have to pay hobby income tax on the $200 hobby “profit”.
The 2017 law changed it to this:
You sell $2000 in skis, you must report that $2000 as income and pay tax on all of it regardless of how much you paid for them. If you want to deduct your expenses, you must do your taxes as if you’re a full-fledged business.
Just another way the 2017 tax law screwed Average Joe. Before this PayPal change you could just skate and hope you didn’t get audited. Now there’s a mandatory form the IRS will receive that can be directly cross referenced to your return which may easily trigger an auto-flag for audit.
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09-29-2021, 03:02 PM #21
Falcon3 gets it.
will geartrade, Patagonia, archeryx etc have to give you 1099s for used gear?
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09-29-2021, 03:20 PM #22
I've had to file as self-employed a few times when my wife was employed by a 1099-abusing assclown. It's not that bad, really. Not that I'm defending this change (there is a loophole here that needs to be addressed but this is a ridiculous way to go about it) or the 2017 tax law in general. It will be interesting to see how many people stop accepting anything but F&F payments.
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02-18-2022, 02:15 AM #23
Just found out Venmo is rolling out KYC to existing users...
No more receiving Venmo payments from friends, and then using that balance to send money to other friends without the IRS tracking your every move. Now you either have to KYC, or transfer those funds to your bank (where the Feds can track it).
Not a fan of this ever-increasing financial surveillance, especially when the biggest crooks on the planet are the ones creating these new laws for the serfs.
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02-18-2022, 05:28 AM #24I drink it up
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02-18-2022, 08:50 AM #25
Not quite true. The one thing you are allowed to deduct against the gross sales price is Cost of Goods Sold to the limit of gross sales. All other deductions are disallowed currently.
How the average taxpayer inputs this on their tax return so the IRS can tie the 1099 amount to your return, I don’t know yet. The Hobby income(“activity not engaged in for profit”) line is simply one line where the taxpayer reports the net of gross sales price and cost of goods sold.
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