eBay

dugoldstuff · ‎06-13-2021

It's going to come as a great shock to a lot of sellers when they suddenly, many for the first time, get a 1099 sent to the IRS on their behalf when they have gross sales of over $600.

As I understand it, it was buried in the March 2020 Covid relief bill.

Also, as I understand it, it will begin applying for the 2022 year, with the 1099s being sent in 2023.

Before, the threshold for a 1099 being SENT, was $20,000 / 200 transactions. Now, it's $600 / no matter how many transactions.

From reading these boards now and over the years, it was clear to me that many sellers thought the threshold for PAYING taxes was the profit on the $20,000 figure, since that's when a 1099 was triggered. They did not realize that the threshold for paying was actually over $600 profit. It was always $600, but since 1099s weren't sent, people didn't know they had to pay taxes on over $600 of profit, or, maybe they did know but didn't pay, thinking they wouldn't get caught.

An article in Politico (whose html eBay won't let me cut and paste) entitled "Gig workers could end up losers in the Covid relief bill," spells out the fears that proprietors of online platforms had prior to the bill's passage, saying it would dissuade many people from selling when they found out about the SSN requirement.

However, I think the $600 threshold is going to cause greater damage to online platforms.

If, as I surmise, many were making tidy sales but not reporting, that they have to suddenly report is going to be colossal: keeping track of profit from the amount reported on the 1099, filing Schedule C, and perhaps filing schedule SE as well.

Of course, small, casual sellers, as the article indicates, probably won't even come anymore, like those cleaning out an attic or a garage.

And what about those that sell for others? I heard locally of someone in a retirement home who sells for people and takes a small cut. So now, all those sales will be on HIS SSN when the profits went to others? How's that going to work? I can't imagine there isn't a seller here who's sold for friends and coworkers, and now will, with the tiny $600 threshold, have the burden of those sales on their own 1099. I also know of antique malls that list items on eBay for people. What's their 1099 going to look like? Will they pay the taxes on a sale for a customer?

Those are just a few of the issues on the horizon regarding the 1099 on $600. I am sure there are many more I haven't thought of .

You have to wonder why the big tech monopolies, like eBay, didn't lobby their liberal buddies in Congress to soft pedal this, since it no doubt will have an adverse impact on their business model.

glasser · ‎06-13-2021

I am sure it will come as a shock to many. However, as you point out all along they should have been filing the income on their taxes.

The schedule C is not so bad since most eBay only sellers don't have a ton of expenses to track. easily done on a spreadsheet. Beyond fees, postage and subscriptions on eBay I have things like boxes, tape, packing materials, printer ink and paper.

As for people doing consignment not a huge issue. They will get a 1099 showing total sales. However, they will also deduct all payments to people who they sold for as well as other fees, etc.

Now maybe they didn't have to that in the past, so that's a new hassle.

Unfortunately, this will be one more obstacle to eBay attracting new sellers who start out selling their way through their garage and then go, "Wow, I could really make some money here." We will be left with big sellers who muscle out the small sellers.

dugoldstuff · ‎06-17-2021

Actually, Schedule C itself is not hard to fill out. However, they calculations for your net profits that you pay taxes on, while not difficult per se, is time consuming and requires lots of record keeping. Certainly, you don't pay tax on the gross that would be reported on the 1099.

Having to do that for hundreds of items means lots of bookkeeping. Obviously, you also need some kind of record for item costs.

I would venture that many who sell REGULARLY are on the hook for Schedule SE too. That requires another form and another set of calculations.

So you say co-ops won't be affected, but what if they say an item/items over $600 for a single person? Will the IRS look at their "deductions" as you call them, to determine this? Will the co-ops have to give a 1099 to the customers? I am hard pressed to see how the guy in the retirement home is going to keep track of

1. The profit he owes his customers

2. The slice he takes and pays taxes on

3. The profit he gave to the customers and "deducts"

2013grotz · ‎06-17-2021

Indeed. Casual sellers aren't going to track this stuff, nor will be equipped to do so. Especially at $600, virtually every online seller is going to get a 1099 listing more than that as a gross value. Most are just regular people living their lives and just find "tax time" as another annoyance they hope doesn't come to bite them in the ass - and in fact they usually look forward to it to claim the huge unwisely accrued tax refund. Joe Randomseller is in fact going to have this bite him in the ass, and his decision is simply going to stop with online activities. Yet another threat to ebay and other sites.