The IRS and PayPal
Comments
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Are you Kex or Keiko, or is this just sarcasm? -
How dare you!
Now, I'm really offended!!!
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She's why Klaus Schwab said to prepare for a more angrier world.Don't take experimental gene therapies from known eugenicists.
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Glad to see it is delayed but this whole thing is ridiculous. I stopped selling on eBay because of it. I only sold used stuff of mine that still had some value, probably under $1000 worth of stuff every year, all obviously at a loss. I would also sell one or two records a year on Discogs, sometimes at a small profit. But I question whether it’s worth dealing with the extra tax forms.
I understand the people who are cheating the system need to be dealt with, but this isn’t the way, just makes life difficult for your average Joe. -
I don't see how a 20k max per year side hustle is cheating the system. Most people, and by your own admission sell odds & ends you might have lying around just to earn some extra cash. And I'll bet'cha a dollar in donuts you paid taxes on those items when you first purchased them. I suppose it wasn't enough when they implemented their internet sales tax just a few years ago. But hey! No problemo when it comes to Insider Trading, shady Defense Contracts, Foreign Aid, etc. So who's really gaming the system?
100% agree, I don’t know what the previous limits/methods of tracking said limits were, I just know the $600 threshold is insane
I would guess at a $20k threshold it is worth people’s time to make multiple accounts and try to game the system that way (is this possible, I don’t know?), not so much when the limit is as low as $600. Not at all saying that the new threshold is a good solution, it sucks and I don’t support it, but maybe that was the thinking behind it?
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The $600 threshold sounds to me to be in line with winning lottery money. IIRC anything won $600 and up they take taxes from.
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20k AND 200 transactions
And I think that is where people game the system. You can do couple hundred grand thru PayPal and they won't send you a 1099 if you didn't have 200 transactions
I've always claimed whatever I bring in because I don't have the luck of others but it's pretty easy to see how the old setup was abused but the new 600 threshold is insane- Not Tom ::::::: Any system can play Diana Krall. Only the best can play Limp Bizkit. -
I'm a CPA, but have lived in the financial reporting side of things (preparing corporate financial statements) for the large bulk of my career. I haven't done hard-core tax prep for a couple of decades. But, I still remember enough, and understand the concepts, from those days.
The $600 threshold is rooted in the self-employed realm of 1099-Misc forms for contractors, consultants, free-lance workers...basically anyone who is self-employed (i.e., does NOT get a W-2). It's kind of a substitute W-2 to track those types of folks. Generally, the amount is a deduction for whoever pays the amount, and is income to whoever receives it. For the recipient, it is treated as sales/revenue/income, but expenses are also applied, creating a net profit (or loss). So, the full amount of the 1099 is not taxable...it's only the net profit that is taxable.
Most self-employed folks with non-incorporated 'businesses' file a Schedule C with their 1040 tax returns. If you get ding'd with a 1099, that would only be for the sales/revenue line on a Schedule C. You also put your expenses in as well, meaning the cost of the pieces sold, repairs, parts, supplies, packing/shipping costs, etc. So, in the end, the actual net profit (or perhaps more likely, loss) is what you actually get taxed on.
Consult your tax advisor for more details, but I just wanted to make those few points about this, and maybe alleviate some fears.
Addendum: a lot of this stems from taxpayers blurring the lines over the years between a 'business' and a 'hobby'. Some people would write-off expenses, claiming it was for their side-hustle 'business', but never show a profit...only deductions - never showing any sales revenue...or at least, not enough. The IRS caught-on to this and basically said, "If you don't show a profit within (I think) 3 years, then what you're doing is considered a hobby - not a business - so you can't write-off your expenses for this any longer." The 1099 reporting is trying to keep people honest from a sales/revenue perspective, but again, expenses can still be applied. Just make sure those expenses are legit
"This may not matter to you, but it does to me for various reasons, many of them illogical or irrational, but the vinyl hobby is not really logical or rational..." - member on Vinyl Engine
"Sometimes I do what I want to do. The rest of the time, I do what I have to." - Cicero, in Gladiator
Regarding collectibles: "It's not who gets it. It's who gets stuck with it." - Jimmy Fallon -
You can't write off losses for a hobby unless you turn the hobby into a business. These type of things don't use a schedule C you have to use a schedule D for capital gains.
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So, basically, the government wants to get every single penny that they can (legally), period. Sometimes, not legally IMO, civil forfeiture. They can also take your land if they think it's in "another's" best interest. It's much easier to go after the little guy since they don't have the means to fight back. I fully believe that our government would take every single dime we work for if they could. As we all know it's easier to spend other people's money...Remember, when you're running from something, you're running to something...-me
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Well, that's the point: people would try and call their hobby a business so they could write things off, but never show an adequate amount of sales revenue. So, the 1099 form forces capturing the sales revenue part...if sold on eBay/PayPal. But, if the sales are not of a material amount, no reporting is required, but you'd better not try to write anything off, either.You can't write off losses for a hobby unless you turn the hobby into a business. These type of things don't use a schedule C you have to use a schedule D for capital gains.
Yes, Schedule D is for capital gains/losses, but I would not consider audio gear a capital asset. If someone is in the business of buying/selling audio gear, it's more like inventory than a capital asset.Post edited by jdjohn on"This may not matter to you, but it does to me for various reasons, many of them illogical or irrational, but the vinyl hobby is not really logical or rational..." - member on Vinyl Engine
"Sometimes I do what I want to do. The rest of the time, I do what I have to." - Cicero, in Gladiator
Regarding collectibles: "It's not who gets it. It's who gets stuck with it." - Jimmy Fallon -
Well, that's the point: people would try and call their hobby a business so they could write things off, but never show an adequate amount of sales revenue. So, the 1099 form forces capturing the sales revenue part...if sold on eBay/PayPal. But, if the sales are not of a material amount, no reporting is required, but you'd better not try to write anything off, either.You can't write off losses for a hobby unless you turn the hobby into a business. These type of things don't use a schedule C you have to use a schedule D for capital gains.
Yes, Schedule D is for capital gains/losses, but I would not consider audio gear a capital asset. If someone is in the business of buying/selling audio gear, it's more like inventory than a capital asset.
They consider it capital gains if it's a hobby. It's actually easier to use the schedule D because you just sum it out to zero. If you are actually making a profit off your audio sales every year then it is a business. Nothing has changed except now there is a paper trail, you have always had to pay taxes on this stuff. -
Like I said, it's been a while since I've done hard-core tax prep, but you're right, except for a few details I found here (https://www.irs.gov/businesses/what-to-do-with-form-1099-k) regarding what to do with a 1099-K.
Well, that's the point: people would try and call their hobby a business so they could write things off, but never show an adequate amount of sales revenue. So, the 1099 form forces capturing the sales revenue part...if sold on eBay/PayPal. But, if the sales are not of a material amount, no reporting is required, but you'd better not try to write anything off, either.You can't write off losses for a hobby unless you turn the hobby into a business. These type of things don't use a schedule C you have to use a schedule D for capital gains.
Yes, Schedule D is for capital gains/losses, but I would not consider audio gear a capital asset. If someone is in the business of buying/selling audio gear, it's more like inventory than a capital asset.
They consider it capital gains if it's a hobby. It's actually easier to use the schedule D because you just sum it out to zero. If you are actually making a profit off your audio sales every year then it is a business. Nothing has changed except now there is a paper trail, you have always had to pay taxes on this stuff.
If a personal item is sold at a loss, you can use either Schedule 1 on your 1040, or use Form 8949, which then carries to Schedule D. Losses, in this case, are not deductible, but reporting it does fulfill the requirement.
If sold at a gain, it looks like the only option is Form 8949, which again, flows to Schedule D. Then the question becomes: at what tax rate will the gain be taxed? It depends on the overall tax rate of the individual taxpayer. This is preferable to a Schedule C, since profits there are subject to self-employment tax, on TOP of straight income tax...yuck."This may not matter to you, but it does to me for various reasons, many of them illogical or irrational, but the vinyl hobby is not really logical or rational..." - member on Vinyl Engine
"Sometimes I do what I want to do. The rest of the time, I do what I have to." - Cicero, in Gladiator
Regarding collectibles: "It's not who gets it. It's who gets stuck with it." - Jimmy Fallon -
I’m never offended by anything that happens here, just surprised at how much energy some people will spend to stay angry at everything and anything. 🤷♂️
I’m also far more handsome and beguiling than Keiko, so no confusion could ever be possible as to who’s who.Alea jacta est! -
I’m never offended by anything that happens here, just surprised at how much energy some people will spend to stay angry at everything and anything. 🤷♂️
I’m also far more handsome and beguiling than Keiko, so no confusion could ever be possible as to who’s who.
Yes, we know conceit isn't an issue for you, but remember, pride cometh before the fall. -
Profits on a Sched C are only subject to self-employment tax if they are over $400. I work extremely hard to make sure I almost never go above that threshold. Also, if you do file a Sched C for any reason, stay away from line 30. It's sort of an unwritten rule (and it's also a PITA and it just isn't worth it).
The 3 year distinction between business and hobby is correct, though there are ways around that too.
Also, Form 5695 can be very beneficial to homeowners looking to pare down their taxable income. In today's "go green" climate (haha), it is almost easy to take advantage. See Sched 3, Line 5.So, are you willing to put forth a little effort or are you happy sitting in your skeptical poo pile?
http://audiomilitia.proboards.com/ -
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Profits on a Sched C are only subject to self-employment tax if they are over $400. I work extremely hard to make sure I almost never go above that threshold. Also, if you do file a Sched C for any reason, stay away from line 30. It's sort of an unwritten rule (and it's also a PITA and it just isn't worth it).
The 3 year distinction between business and hobby is correct, though there are ways around that too.
Also, Form 5695 can be very beneficial to homeowners looking to pare down their taxable income. In today's "go green" climate (haha), it is almost easy to take advantage. See Sched 3, Line 5.
So many tax laws,so little money.See my profile for list of gear. -
Why it's so important to keep whatever you can, however you have to do it.So, are you willing to put forth a little effort or are you happy sitting in your skeptical poo pile?
http://audiomilitia.proboards.com/ -
All this discussion points to two conclusions.
#1....Many Americans have exited the traditional taxpayer employment scheme.
#2.....The US Govt. is broke and desperate for #1's replacement.Don't take experimental gene therapies from known eugenicists. -
The US Govt. is broke and desperate for #1's replacement.
The US Govt. is broke because they refuse to live within their means. I do not magically get a cash infusion in my check book when I spend all my money. We spend 20x more to prop up other countries than we do our own.
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I'm tripping out watching that without the Lima Sierra Delta!
Gustard X26 Pro DAC
Belles 21A Pre modded with Mundorf Supreme caps
B&K M200 Sonata monoblocks refreshed and upgraded
Polk SDA 1C's modded / 1000Va Dreadnaught
Wireworld Silver Eclipse IC's and speaker cables
Harman Kardon T65C w/Grado Gold. (Don't laugh. It sounds great!)
There is about a 5% genetic difference between apes and men …but that difference is the difference between throwing your own poo when you are annoyed …and Einstein, Shakespeare and Miss January. by Dr. Sardonicus -
The US Govt. is broke because it's broken. There are no "means" in play when you can conjure up money out of thin air. When Congress has the power to vote themselves pay raises, something is wrong. And debt? That's a problem for future generations.
So, are you willing to put forth a little effort or are you happy sitting in your skeptical poo pile?
http://audiomilitia.proboards.com/ -
When Congress has the power to vote themselves pay raises
They absolutely should not have the ability to do this! They need to let the voters vote on their pay raises. Do any of us have the ability to just vote ourselves pay raises? NO ! It's bad enough most come into politics with a few dollars in their pockets and leave politics with tens of millions if not hundreds of millions of dollars. Most also use insider trading to game the system and enrich themselves handily. -
When Congress has the power to vote themselves pay raises
They absolutely should not have the ability to do this! They need to let the voters vote on their pay raises. Do any of us have the ability to just vote ourselves pay raises? NO ! It's bad enough most come into politics with a few dollars in their pockets and leave politics with tens of millions if not hundreds of millions of dollars. Most also use insider trading to game the system and enrich themselves handily.
Not only should they not be allowed to vote on their own raises,or insider trading. They should also be subject to the same healthcare we have. They should also have all their taxes audited every year by the same standards we live by. When’s the last time an employer paid their employees more than themselves???
Ok, rant over. For now.See my profile for list of gear. -
When Congress has the power to vote themselves pay raises
They absolutely should not have the ability to do this! They need to let the voters vote on their pay raises. Do any of us have the ability to just vote ourselves pay raises? NO ! It's bad enough most come into politics with a few dollars in their pockets and leave politics with tens of millions if not hundreds of millions of dollars. Most also use insider trading to game the system and enrich themselves handily.
Not only should they not be allowed to vote on their own raises,or insider trading. They should also be subject to the same healthcare we have. They should also have all their taxes audited every year by the same standards we live by. When’s the last time an employer paid their employees more than themselves???
Ok, rant over. For now.
ABSOLUTELY, AND pay into Social security. They should not have their own retirement plan. Maybe they wouldn't steal as much from SS if they had to depend on it instead of their own little piggy back. -
It’s so infuriating. All this government theft, and I have to worry about selling a piece of audio gear that’s 10 years old.See my profile for list of gear.
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Everyone is just catching on now, you were supposed to pay taxes on that stuff all along if you made a profit.
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Same old, same old. We have to be responsible for our money (and taxes)..., meanwhile there is still no accountability, or responsibility, for spending "our" money in Washington...Remember, when you're running from something, you're running to something...-me
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Thanks to some current events, look for taxes to go up bigly on hookers & blow.
https://www.youtube.com/watch?v=VEFz2J56n7M
