PayPal and income taxes

[Tommasini]

I think the $600 threshold is for calendar year 2022. From looking at the Paypal site , the threshold for 2021 is $20,000 and 200 transactions for every state except MA, VT, MD, VA where $600 is the threshold and IL where $1000 is the threshold

[roycestearns]

Now it's getting funny!

Look at the classifieds and see how many are only taking check / bank check / M.O.

Initially the "2021 American rescue plan" was going to track bank accounts for these types of transactions, and I'll bet it does in the 2022 version. This doesn't change the requirement to volunteer this information on your taxes.

As a buyer I won't deal without paypal. A CC transaction has insurance built in, both for a bad transaction and fraud. If a paper check disappears into the wind you had better close your account and set up a new one. A check provides no insurance if a product doesn't ship. I'll bet M.O.s and especially US postal M.O.'s like other payment product platforms will be tracked as well.

[joaniebo]

I just did a couple searches and what I found confusing is that PayPal, eBay, Venmo, Etsy all will send you a 1099K for what you sold. So, if you sell something on eBay for say $700 and get paid by PayPal or Vendmo, you'll get wo 1099s totalling $1,400 even though you only got $700 for the sale. To make matters worse, what happens if you paid $1,000 for the item, sold it for $700 and now you get $1,400 of 1099s to report.

From the TurboTax website:

"Whenever you sell a capital asset held for personal use at a gain, you need to calculate how much money you gained and report it on a Schedule D. Depending on your situation, you may also need to use Form 8949. Capital assets held for personal use that are sold at a loss generally do not need to be reported on your taxes. The loss is generally not deductible, as well."

Notice the last sentence : "The loss is generally not deductible, as well."

PS - also from TurboTax:

"Capital assets include all personal property, including your:

home
car
artwork
collectibles
stocks and bonds
cryptocurrency"

[roycestearns]

I just did a couple searches and what I found confusing is that PayPal, eBay, Venmo, Etsy all will send you a 1099K for what you sold. So, if you sell something on eBay for say $700 and get paid by PayPal or Vendmo, you'll get wo 1099s totalling $1,400 even though you only got $700 for the sale. To make matters worse, what happens if you paid $1,000 for the item, sold it for $700 and now you get $1,400 of 1099s to report.

It's only the payment processor so you're not going to be getting two 1099-k for the same item. The 1099-k only identifies that you had transactions totalling "x", you just need to report your net profit on your taxes and have good documentation if you're audited. This is not tax advice

However the capital asset (different from capital gain) information is very enlightening and confusing. Admittedly they don't have a good definition of a "collectible". The IRS has a list of "collectible" items but that doesn't mean if your collectible is not on the list it isn't a collectible. It's only taxed at %28 !!! Thank you IRS, it couldn't be more clear!

[Short Tip]

I've always done what my accountant said to do - be a small business and do a schedule C. Keep good records. All expenses, including tackle you buy, comes off the top line. It's usually pretty easy to offset gains with these expenses. Make a small amount and pay a small amount of tax. If you are making a large amount selling tackle, you're a dealer and should be paying them anyway.

As was pointed out above, there's a sudden trend on the classifieds towards "check or MO only". For you one post wonders, good luck with that!

[tiptop]

With respect, this issue is of concern to more than the "one post wonders". Many of us here, myself included, have many (too many) rods and reels that we bought years ago and no longer have the receipts proving what we paid. And why should we? It was just fishing gear after all. At some point in the not too distant future, this gear is going to be sold by me or my wife or friends and will total a substantial amount of money. And it just burns me that I may be forced to pay federal, state, and city income tax (which could easily be 1/3 of the total) on non-profit sales. If I buy any more gear going forward I'll definitely be saving the receipts.

[Short Tip]

With respect, this issue is of concern to more than the "one post wonders".

I certainly get that. That's why I phrased it the way I did.

[GRASSNGLASS]

I have over 4,000 fishing and hunting books that I would like to move on to others. No receipts. Do I get to show the over $12,000 I have spent in keeping them in climate controlled storage in MD after I moved to Florida?

Now you sale one rod and your supposed to hire an accountant?

I've bought and sold bunch of stuff and can guarantee you I can't see light at the top of the hole I've dug myself in to.

Drive from Florida to Pa to attend a show and I don't see how you can sale enough even pay for gas. Most of us do this just for the fun and meeting others who share a love of the equipment.

[Tommasini]

As they say "elections have consequences"

[JoeBolt]

As they say "elections have consequences"

Yes, they do. Many times they are quite good. All is well.

This is a reporting change; it is not a change in one's margin nor liability - which is entirely subjective and personal. It closes a loophole that many states (some with really good trout waters) had already implemented. To be sure, it will be a PITA difficult change for individuals with no receipts on pre-owned merch. This is actually in one's favor if there are circumstances which should trigger an audit. There is no other way around that. Facts in one's favor rule - until it's proven otherwise during any audit; making non-dealers pretty small fingerlings in this case, and the risk perhaps too easily hyperventilated.

I do not believe it triggers a new need for a CPA, lawyer, or accountant de facto. No one except the seller knows if there is a liability arc that changes between $600 and $20k... That is the very same personal and subjective part to it. I am not a seller. I think these changes will be ok for anyone who's already been complying in their chosen "gig". The granularity is on cheats elsewhere in the economy, to the tune of some $8.4B.

I mean no offense. It's frustrating, i know that. If the ban hammer comes for me, that is fine. Exceptional kindness and knowledge exists here. I am sorry to single-out anything in reply as if I know any better, but...

Passive-aggressive political points should be called out, and that is my sole intent here, regardless of how tongue-in-cheek other posts may or may not be.
Forums have consequences... but all is well.
Peace and soft hackles. I'll hit submit now.
Bob ~ JoeBolt

"Little pitchers have big ears..."
~ John Prine

[jim royston]

This will be a nightmare. 1099's have consequences. They have to be acknowledged by the tax payer and will have to be offset by expenses, cost of goods, (good luck with the old stuff you're trying to get rid of), etc. etc. in order to be tax neutral. Hopefully, Ebay's attempts to increase this ludicrous $600 low limit will have some success

[Srock]

I agree with Jim. A nightmare that could be avoided with better policy

[roycestearns]

Moving the threshold back to $20k or even $12k would be better for everyone. There's a return point somewhere for the US government and 600 is not it.

There is a grassroots attempt with a number of congress persons already signed up.

https://www.ebaymainstreet.com/campaign ... 9-campaign

[GRASSNGLASS]

Royce,

Thanks for the link.

[LeoCreek]

No offense to anyone, but so much for being a "collector" and now unloading your stash. Hope you kept all the "receipts" for when you purchased these items!

Maybe money orders or cashier's checks are the only way to go...Cash them instead of depositing them, and keep the cash in your mattress gun safe.

But seriously...it's some crazy times! As your attorney, I advise you to not lose your sense of humor...

[Brooks]

Cash is king!

[Webfly]

Hey Guys that are worried about a sale here and there, just write checks like the old days on here and be done with it. For those that sell many items looking for a profit, pay your taxes on your "profits". If you sell something that is less than what you paid for, no taxes owed. Maybe even a loss and a tax break if you play the game that they want us to play.

One thing to remember, more sales are being done online and less at retail shops. They are migrating the tax structure right along with it and unfortunately the hobbyist is being dragged down with it. Another fact, more and more people are becoming re-sellers. Trust me, I see people making livings at it...

[BigTJ]

Hey Guys that are worried about a sale here and there, just write checks like the old days on here and be done with it. For those that sell many items looking for a profit, pay your taxes on your "profits". If you sell something that is less than what you paid for, no taxes owed. Maybe even a loss and a tax break if you play the game that they want us to play.

One thing to remember, more sales are being done online and less at retail shops. They are migrating the tax structure right along with it and unfortunately the hobbyist is being dragged down with it. Another fact, more and more people are becoming re-sellers. Trust me, I see people making livings at it...

That’s it in a nutshell. PayPal was nice but for selling a few rods and reels a year money orders are fine.

John

[joaniebo]

I keep readding about small businesses and their profit / losses and that they should file a Small Business Schedule C to show gains, losses, expenses,etc.

But what about the guy who doesn't have a Small Business and thus never has had to file a Schedule C ? Or the guy who bought something years ago for $1,500 and no longer has use for the item and sells it for $750? What's he supposed to do and how can he prove what he paid for the item?

What about a married couple who bought some furniture 10+ years ago for $10,000 and they're now downsizing and sell it for a couple thousand dollars. What do they do?

This whole thing is a mess, in my not-so-humble opinion.

[LeoCreek]

Money order or Cashier's (Bank) check that you can cash instead of deposit?...or otherwise sell "locally" for cold hard cash (or gold bullion). Bring lawyers, guns and money (with my apologies to the late Warren Zevon)...

Maybe Crypto currency will save us?