Sellers/ selling electronic fees and taxes? PayPal, Venmo etc..

[seanc]

All,
question. My understanding is that under the new rules. Any sale over 600 will be taxed, withheld at a 24% rate and you will get a 1099 at the end of the year. Through at least PayPal and Venmo and Zelle.


I assume that if you are selling something. And do not have the orig receipt, there is no arguing. It is treated 100% as income. If you have the orig receipt maybe you can argue with your tax person you should only pay taxes on the difference, or claim as a loss.

not sure how doing something as “ friend and family” is flagged, not flagged. or if that is viable option. The little I have read is that doing these transactions flags for potential audits. ( hey 87,000 new irs people need something to do, right?)

but it seems this is likely to kill most remote private sales.

anybody know how this all works?

 

[namedpipes]

All,
question. My understanding is that under the new rules. Any sale over 600 will be taxed, withheld at a 24% rate and you will get a 1099 at the end of the year. Through at least PayPal and Venmo and Zelle.


I assume that if you are selling something. And do not have the orig receipt, there is no arguing. It is treated 100% as income. If you have the orig receipt maybe you can argue with your tax person you should only pay taxes on the difference, or claim as a loss.

not sure how doing something as “ friend and family” is flagged, not flagged. or if that is viable option. The little I have read is that doing these transactions flags for potential audits. ( hey 87,000 new irs people need something to do, right?)

but it seems this is likely to kill most remote private sales.

anybody know how this all works?

No idea, but it smells.

Say I loan my kid $1000 so he can cover a car repair, which he pays for, including any applicable sales/service tax. He then repays me when he has the money.

1. The actual transaction (paying for the repair) was taxed. The mechanic also (later) pays income taxes on what he earned.

2. My boy is taxed $240 on the personal loan to him.

3. I'm taxed $240 when he repays me.

Yet only the first line was a taxable transaction.

Sounds like it's time to dump services like paypal and use cash, to me.

 

[Spartan65]

Per my CPA Venmo needs to label you or the person that is paying you needs to mark you as a business before the transaction will be 1099’d.

 

[seanc]

Per my CPA Venmo needs to label you or the person that is paying you needs to mark you as a business before the transaction will be 1099’d.

I’d say that makes sense… but from my experience last year. I sold a guitar (that was destroyed by ups) money was refunded. PayPal. I got a 1099 last year showing both transactions, sale and refund. So, net was 0.

 

[seanc]

No idea, but it smells.

Say I loan my kid $1000 so he can cover a car repair, which he pays for, including any applicable sales/service tax. He then repays me when he has the money.

1. The actual transaction (paying for the repair) was taxed. The mechanic also (later) pays income taxes on what he earned.

2. My boy is taxed $240 on the personal loan to him.

3. I'm taxed $240 when he repays me.

Yet only the first line was a taxable transaction.

Sounds like it's time to dump services like paypal and use cash, to me.

In that instance.. my understanding…. you could legitimately claim family. And if an audit happened, you’d hav3 receipts.
but, my understanding, again potentially way off, is that it could flag for audits. Large or numerous transactions. And that may open a can of worms as far as income for your son or potentially, yearly gifting exemptions.

but again.. I am Not an accountant, not an irs person. So, I don’t know how this all works in real life.
just reading various articles. And as somebody that has sold things in the past, and bought stuff remotely in the past. Curious as to how this all works. I believe GOV is looking this as an unregulated untaxed economy and trying to crush it.

looking For knowledgable people that understand this stuff..

 

[CWulf]

All,
question. My understanding is that under the new rules. Any sale over 600 will be taxed, withheld at a 24% rate and you will get a 1099 at the end of the year. Through at least PayPal and Venmo and Zelle.


I assume that if you are selling something. And do not have the orig receipt, there is no arguing. It is treated 100% as income. If you have the orig receipt maybe you can argue with your tax person you should only pay taxes on the difference, or claim as a loss.

not sure how doing something as “ friend and family” is flagged, not flagged. or if that is viable option. The little I have read is that doing these transactions flags for potential audits. ( hey 87,000 new irs people need something to do, right?)

but it seems this is likely to kill most remote private sales.

anybody know how this all works?

Is the threshold an individual sale of $600 and up or the total of a number of transactions? My wife did a number of Poshmark sales (50+) when she cleaned out her closet. Total was about $1,400 and she got a 1099-K. She has no idea what the original price of the items were but she is sure that she was getting Pennie’s on the dollar.

 

[MGnoob]

They want to get rid of cash, but want the only digital currency/ transaction to be a form of .gov e-currency.. that’s my take of where this is going.

They say it’s prevent fraud, terrorism, tax cheats. It’s really just for our own good that they have total control everything.

 

[not new guy]

Is the threshold an individual sale of $600 and up or the total of a number of transactions? My wife did a number of Poshmark sales (50+) when she cleaned out her closet. Total was about $1,400 and she got a 1099-K. She has no idea what the original price of the items were but she is sure that she was getting Pennie’s on the dollar.

I believe it’s cumulative, not individual sales over 600.

I’ve heard elsewhere to ignore the 1099 that eBay sends you unless you’re actually running a business. Not sure I trust that advice. I’m sure I could prove what I paid for each item if I had to, but what a pita.

 

[seanc]

Is the threshold an individual sale of $600 and up or the total of a number of transactions? My wife did a number of Poshmark sales (50+) when she cleaned out her closet. Total was about $1,400 and she got a 1099-K. She has no idea what the original price of the items were but she is sure that she was getting Pennie’s on the dollar.

my understating is w/o orig receipts to reconcile as deduction. 100% of that $1400 is income. (Prove the irs wrong!)

the bass I sold was 1800… the only out I had (per my tax person) was that it was 100% refunded..

 

[CWulf]

I believe it’s cumulative, not individual sales over 600.

I’ve heard elsewhere to ignore the 1099 that eBay sends you unless you’re actually running a business. Not sure I trust that advice. I’m sure I could prove what I paid for each item if I had to, but what a pita.

Yeah, never a good idea to ignore something that was sent to the IRS . My wife told me her friends on Poshmark are freaking out over it. Right now we are probably going to have to put all $1400 in as income

 

[seanc]

I believe it’s cumulative, not individual sales over 600.

I’ve heard elsewhere to ignore the 1099 that eBay sends you unless you’re actually running a business. Not sure I trust that advice. I’m sure I could prove what I paid for each item if I had to, but what a pita.

In the posh mark instance, it was cumulative. $1400 multiple sales. And she did get a 1099-k.

in my instance, it was a single sale of 1800. I got a 1099.

I find it difficult to ignore a 1099. And @2000 could certainly push a person into a different tax bracket

 

[seanc]

Yeah, never a good idea to ignore something that was sent to the IRS . My wife told me her friends on Poshmark are freaking out over it. Right now we are probably going to have to put all $1400 in as income

Any tax guy that is insanely anal over “keep ALL your receipts” then turns around and says, “oh just ignore that 1099”.. I’d question.

 

[Broc]

Per my CPA Venmo needs to label you or the person that is paying you needs to mark you as a business before the transaction will be 1099’d.

That makes sense.

Imagine getting taxed because you paid for everyone's food at the NES meet and we all venmo you.

That would be .40 level g@y.

 

[not new guy]

Decoding 1099-K Reporting Limits: A Guide for eBay Sellers | TaxAct

The IRS has new reporting thresholds for online sellers. TaxAct and eBay have partnered to explain these tax changes and what they mean for your tax return.

www.taxact.com

December 2022 update: The IRS announced that it has pushed back the new 1099-K requirements one year to allow taxpayers more time to prepare for the change. This year, you will only receive Form 1099-K from eBay if you were subject to backup withholding, exceeded the $20,000 and 200 transactions threshold, or live in a state with a lower reporting threshold.

Yet ebay sent me a 1099k this year, on ~$1200 in sales.

Form 1099-K is an informational tax document detailing the gross payments for goods and services for all your third-party payment platform transactions. Before this announcement, third-party payment platforms (think eBay, Etsy, PayPal, or Venmo) were required to issue Form 1099-K to all users who had payments totaling $600 or more in a calendar year, with no transaction minimum.

Instead, this delay means that the previous reporting threshold of 200 separate transactions totaling at least $20,000 in a calendar year will remain in effect for the 2022 tax filing season.

Due to the timing of this announcement, it’s possible companies like eBay or Etsy could still choose to issue a 1099-K for 2022, but it would be up to each company’s discretion. If you had backup withholding withheld by a third-party payment platform, you should still expect to receive a Form 1099-K.

Remember, this delay only changes when companies are required to issue Form 1099-K. Even if you don’t receive a 1099-K for 2022, you still need to report any taxable income on your tax return.

So is the delay for filers, or for eBay on sending out 1099ks (but the taxes are still reportable)?

The actual IRS announcement: IRS announces delay for implementation of $600 reporting threshold for third-party payment platforms’ Forms 1099-K | Internal Revenue Service

For taxpayers who may have already received a 1099-K as a result of the statutory changes, the IRS is working rapidly to provide instructions and clarity so that taxpayers understand what to do.

The IRS also noted that the existing 1099-K reporting threshold of $20,000 in payments from over 200 transactions will remain in effect.

Translation: We're making it up as we go along?

 

[chris_1001]

That makes sense.

Imagine getting taxed because you paid for everyone's food at the NES meet and we all venmo you.

That would be .40 level g@y.

Cash is king at my meet’s.

Honestly forgot who, but one attendee asked if they could Venmo a few $$ towards the bill.

This whole $600 threshold shit is too much (too low).

That’s nothing these days, and if overall and not per transaction, it’s worse.

 

[seanc]

Decoding 1099-K Reporting Limits: A Guide for eBay Sellers | TaxAct

The IRS has new reporting thresholds for online sellers. TaxAct and eBay have partnered to explain these tax changes and what they mean for your tax return.

www.taxact.com

Yet ebay sent me a 1099k this year, on ~$1200 in sales.



So is the delay for filers, or for eBay on sending out 1099ks (but the taxes are still reportable)?

The actual IRS announcement: IRS announces delay for implementation of $600 reporting threshold for third-party payment platforms’ Forms 1099-K | Internal Revenue Service



Translation: We're making it up as we go along?

If you get a 1099….. then it has been reported. eBay, or whoever, has officially told you and the irs.


(Maybe I am way off and don’t understand this. As mentioned… I don’t get it and am trying to understand) .

 

[Broc]

Cash is king at my meet’s.

Honestly forgot who, but one attendee asked if they could Venmo a few $$ towards the bill.

This whole $600 threshold shit is too much (too low).

That’s nothing these days, and if overall and not per transaction, it’s worse.

I didn't bring cash one day, so I asked if I could Venmo someone. Everyone said NO, so I donated my part to COMM2A.

I was used to the other meets where they split a check.

 

[seanc]

Cash is king at my meet’s.

Honestly forgot who, but one attendee asked if they could Venmo a few $$ towards the bill.

This whole $600 threshold shit is too much (too low).

That’s nothing these days, and if overall and not per transaction, it’s worse.

As far as I can tell… it is per vendor, eBay, PayPal, etc..

I didn't bring cash one day, so I asked if I could Venmo someone. Everyone said NO, so I donated my part to COMM2A.

I was used to the other meets where they split a check.

the lesson, I guess.. don’t be THAT dufus that does not bring cash..
and don’t be that idiot that picks up the check…

 

[chris_1001]

I didn't bring cash one day, so I asked if I could Venmo someone. Everyone said NO, so I donated my part to COMM2A.

I was used to the other meets where they split a check.

I would have thought I’d remember if it was you! But beer.

Yup. Just remembered now that you mentioned comm 2A.

 

[chris_1001]

As far as I can tell… it is per vendor, eBay, PayPal, etc..


the lesson, I guess.. don’t be THAT dufus that does not bring cash..
and don’t be that idiot that picks up the check…

It’s all worked out well.

 

[TrackDayRdr]

Here is how it works so you can all stop speculating and assuming some cosmic crisis:

ALL of the funds transaction clearing houses (Paypal, Venmo, Square, etc) are required to REPORT on a 1099-K when total transactions for the year exceed $600. That doesn't mean these will be taxed. There are no withholdings at the source. If you are routinely selling items for profit then you have a business. If you have a business the difference between net sales and your item cost is subject to income and self-employment taxes. However, if you do NOT have a business and have card transactions greater than $600 you report the income on your return and a corresponding credit for "casual transactions not for profit". No tax. Case closed.

For the poshmark, eBay, Etsy and other people who are regularly buying and selling items for a profit, that is a business. For the thrift store kings reselling Savers items for profit: that's also a taxable business. If you have an occasional yard sale and sell more than $600 worth of junk, those are casual sales - no tax. If you're splitting the Sox tickets and have a 1099-K from that? Casual transactions.

 

[hunt4riches]

No idea, but it smells.

Say I loan my kid $1000 so he can cover a car repair, which he pays for, including any applicable sales/service tax. He then repays me when he has the money.

1. The actual transaction (paying for the repair) was taxed. The mechanic also (later) pays income taxes on what he earned.

2. My boy is taxed $240 on the personal loan to him.

3. I'm taxed $240 when he repays me.

Yet only the first line was a taxable transaction.

Sounds like it's time to dump services like paypal and use cash, to meI

If Paypal, do 'friends-and-family' and it's tax exempt.

 

[Len-2A Training]

I’m sure I could prove what I paid for each item if I had to, but what a pita.

Not specific to this issue, but something to think about.

I was in a IRS audit many years ago for my business and at one point the auditor gave me an option . . . supply her with all the receipts and invoices plus all the bank deposit slips or she would do some "magic" that would cost me only ~$200 in taxes. Thinking about how much time it would take me to put all that stuff together and make sure that I had every bank deposit slip, I opted to pay the extra ~$200!

I never took any e-payment or credit cards, every invoice was cash or check (and yes, I declared every one of them).

 

[MGnoob]

It’s just a coincidence they’re hiring more IRS agents

 

[The Anchor]

Flea bay sent me my 1099 for $1500 change on some crap i sold last year.

Quickly looking at the items selling price, the 1099 has total sale price. Not deducted were all the fees and shipping that they collected. Works out to about $400 and change. Seems to me these 1099 will lessen their tax burden erroneously.

 

[Dennis in MA]

I believe it’s cumulative, not individual sales over 600.

I’ve heard elsewhere to ignore the 1099 that eBay sends you unless you’re actually running a business. Not sure I trust that advice. I’m sure I could prove what I paid for each item if I had to, but what a pita.

What prove??? What form are you stapling all of your receipts to? The only time you "prove" to the IRS with receipts is if they audit you. Sheesh. You guys are paranoid. I knew of a guy in the early 80's that used to claim his dog as dependent. LOL

In the posh mark instance, it was cumulative. $1400 multiple sales. And she did get a 1099-k.

in my instance, it was a single sale of 1800. I got a 1099.

I find it difficult to ignore a 1099. And @2000 could certainly push a person into a different tax bracket

2,000 puts you in a different bracket???? Are you a trust? Teh difference in the first 3 brackets are $22K, $67K, $100K. The odds of you bumping into another bracket due to a $2,000 sale is negligible.


The IRS isn't doing this to raise a s-ton of cash OR to track your life. They're doing it for the exact reason people are posting on this thread - paranoia, Self Destroya! They use fear and a little bit of enforcement to keep the masses in line. They hope by doing this the guy that clears $70K/yr in Ebay will pay taxes on his true business. Other than that, they just don't care. The amount of threats they make and the minimal amount of data they track is just shocking. Shocking.

 

[not new guy]

If they audit me is exactly what I was referring to.

 

[Mark from MA]

My kids send my wife in her Venmo 600 a month for loan payments they owe me for school that we put on our HELOC. I take the money bank it, and repay the HELOC with it.

I ve never gotten any 1099's.

 

[TayNinh_66]

Just submit a schedule C to IRS. Income as reported on 1099. Then add cost of goods sold, might be 90% of income, shipping costs, might be 30% of income, you have an offset against regular income. I believe you have to show profit in 2 years out of 5? IRS is not going to audit you unless you claim outrageous home office expenses.

 

[not new guy]

The IRS isn't doing this to raise a s-ton of cash OR to track your life. They're doing it for the exact reason people are posting on this thread - paranoia, Self Destroya! They use fear and a little bit of enforcement to keep the masses in line. They hope by doing this the guy that clears $70K/yr in Ebay will pay taxes on his true business. Other than that, they just don't care. The amount of threats they make and the minimal amount of data they track is just shocking. Shocking.

What's the practical advice on how to handle these 1099s though when going through TurboTax (for example)? Do you add the 1099 and pay the taxes? Ignore it? Sorry - I'm a moron when it comes to taxes, and plenty of other stuff now that I'm thinking about it.