Birdsofprey
All Birds that Fly.
Yes last years 2021’s numbers were 20K in translations and over 200 transactions. So your right the threshold was lowered.
3 a’s?What do Canada, Havana and the Sahara Desert all have in common?
According to them, if you don’t provide the full tax entity information, they withhold payment of your proceeds. Using the $600 threshold indicates, to me at least, that they are considering the proceeds of your sale as business income. This is corroborated by the statement on the 1099-K from the IRS site:Rick it only states that you will get a 1099K if you sell over 600.00 nothing about reporting. From the research I’ve done it doesn’t mean it has to be reported. Purely tracking money ugh I know. So I believe there is/was a limit of 20K selling personal items. More than that you would have to report that as income. I’m no lawyer so please do your own research but did remember the Bay doing this years ago and that was what got me to search the IRS website about the 1099K form. A little grey in there explanation. This is a good thread and I’m certainly looking for other responses. Ken
It has to be $600 profit.According to them, if you don’t provide the full tax entity information, they withhold payment of your proceeds. Using the $600 threshold indicates, to me at least, that they are considering the proceeds of your sale as business income. This is corroborated by the statement on the 1099-K from the IRS site:
“Business income is generally referred to as gross receipts on income tax returns. Therefore, you should consider the amounts shown on Form 1099-K, along with all other amounts received, when calculating gross receipts for your income tax return.”
I agree that you can offset the income by showing your expense in purchasing and calculating net income, but the point is that you can’t sell a PRS guitar anymore without becoming a business based on documentation submitted to the IRS. While I’ve always claimed and paid taxes on my gigging income, I’ve never considered buying and selling personal items a business.
I guess my frustration is in wondering where this stops. What if you sell your TV for $750 bucks? A fridge? Your laptop? Your iPhone? It’s just getting to a point of ridiculousness, especially at that low of a break over point. $600 dollars and you’re a business?
It just frustrates me. I’m sure there are workarounds, but damn.
3 a’s?
Or is that eh’s.
That’s true. But I don’t often lose money. And that puts it on me (and you) to prove it wasn’t profit because, as a business, the only info the IRS will have is that I received money.It has to be $600 profit.
95% of what I’ve sold has been at a loss. I’m not worried.
That’s true. But I don’t often lose money. And that puts it on me (and you) to prove it wasn’t profit because, as a business, the only info the IRS will have is that I received money.
Like I said, it just shows you had business income. What you do with it is up to you, but you’re inviting an audit and penalties if you ignore it or can’t provide documentation. You’ll need a receipt proving you lost that money, every time. This is the new normal for online selling. EBay too.
It has to be $600 profit.
95% of what I’ve sold has been at a loss. I’m not worried.
This is a PRS forum, where are so the accountants?!?
Wait, what was it you said you did for a living?Accountants are nerds. Probably buy Gibson as a midlife crisis. We here, are lawyers and dentists. We buy the good stuff, AND, we play blues lawyer music on it, just like God and Paul intended!
Wait, what was it you said you did for a living?
1. The tax was always there, but most did not report or pay it.
2. Starting in 2022, a 1099-K is generated once $600 in sales in a year is reached. Previously, it was $20k and 200 transactions in a year. The IRS only knew about your sales at the higher thresholds, but now it knows at $600.
3. The tax is on any profit gained from the sale and not the sales amount.
4. If you bought at $3000 and sold at $2000, the net is a loss and no tax is owed.
5. If you bought at $2000 and sold at $3000, the net is a gain and tax is owed on the $1000.
6. For the year, it is the sum of the gains and losses that determines whether you owe tax (using #3 and 4 as an example, the sum is zero thus no tax owed).
7. Having your purchase receipt makes it easier to calculate any gain or loss. You can make a good faith estimate of the purchase cost if you do not have any documentation. Current market value is an option especially for items that depreciate (e.g., electronics).
8. Your purchase cost includes any shipping, sales tax and other fees paid. You can deduct any cost of sales for each sale (e.g., selling fees, payment fees, shipping, etc.).
9. The biggest PITA is having to keep good records and having to report any income on your tax form. Fortunately, I keep all of my purchase receipts for insurance and proof of ownership purposes.
BTW, going to person to person sales is not a perfect work around. You would have to use cash or a non-reporting payment method. PayPal, Square and other payment processors also have to generate a 1099-K once $600 is reached. Several states already had lower thresholds so some have already been dealing with this for a number of years.
A large number of on-line sellers, re-sellers and gig workers were not reporting their income if it was below $20k and 200 transactions. In an attempt to get these people to pay income tax, others got caught in the net. It sucks.
Trust me, it isn't much better/different here. We're still a Crown "Colony" and as Alnus mentioned, we get taxed on tax. We can't spit sideways without the Feds dreaming up a new punitive taxation method to bind us further with economic chains. Without getting off on a political tangent, we are living in dangerous times indeed.About time to move to Canada.
1. The tax was always there, but most did not report or pay it.
2. Starting in 2022, a 1099-K is generated once $600 in sales in a year is reached. Previously, it was $20k and 200 transactions in a year. The IRS only knew about your sales at the higher thresholds, but now it knows at $600.
3. The tax is on any profit gained from the sale and not the sales amount.
4. If you bought at $3000 and sold at $2000, the net is a loss and no tax is owed.
5. If you bought at $2000 and sold at $3000, the net is a gain and tax is owed on the $1000.
6. For the year, it is the sum of the gains and losses that determines whether you owe tax (using #3 and 4 as an example, the sum is zero thus no tax owed).
7. Having your purchase receipt makes it easier to calculate any gain or loss. You can make a good faith estimate of the purchase cost if you do not have any documentation. Current market value is an option especially for items that depreciate (e.g., electronics).
8. Your purchase cost includes any shipping, sales tax and other fees paid. You can deduct any cost of sales for each sale (e.g., selling fees, payment fees, shipping, etc.).
9. The biggest PITA is having to keep good records and having to report any income on your tax form. Fortunately, I keep all of my purchase receipts for insurance and proof of ownership purposes.
BTW, going to person to person sales is not a perfect work around. You would have to use cash or a non-reporting payment method. PayPal, Square and other payment processors also have to generate a 1099-K once $600 is reached. Several states already had lower thresholds so some have already been dealing with this for a number of years.
A large number of on-line sellers, re-sellers and gig workers were not reporting their income if it was below $20k and 200 transactions. In an attempt to get these people to pay income tax, others got caught in the net. It sucks.
Wait, what was it you said you did for a living?
Pics, or she's a Hello Kitty model.Look at the bright side...the future Queen is a total smoke show!