1099k for $599.95 with Free Shipping?
Hello,
If something is listed and sold for $599.95 with Free Shipping, will eBay send a 1099k to the seller and the IRS if that is the only item the seller sold during 2023?
Does a buyers sales tax from their state effect this?
19 comments
gloryglorygifts
·2 years agoI would say that since eBay is all programs and computer generated forms, that it may slip by and not generate a 1099. Believe it or not, I used to be a compliance officer for a bank and used to monitor the branches for the $10,000 and over deposits. We could report a smaller transaction if we saw a pattern or suspected something suspicious, but that is not the case here. I don't believe it will generate a 1099 unless it hits $600. Without the 1099, you would not include it on the year end taxes.
Sales tax is another animal though. You have to pay sales tax to your state, or local jurisdiction, if it meets the criteria for reporting and paying. eBay should be collecting that and paying it for you tho.
luckythewinner
·2 years agoeBay is required to send a 1099-K if the total of gross payments processed for accounts connected to your taxpayer ID number exceed $600 during the year, based on when they settle to eBay. This amount excludes sales tax, but it will include any payments that are later credited (ex. if you cancel a transaction or refund).
But in the big picture, remember the law is there to help the IRS identify potential income, not to help you avoid reporting income.
brian_burke@ebay
The current threshold where eBay is required to send the 1099-K is $600. If you are under that amount we are not required to send it, and currently do not plan to send it. If you are at or above that amount we are required to send it. In addition, we will collect information before the $600 threshold is met in order to accurately send to the IRS - in your example, if this was truly your first sale on eBay, we would hold some funds from the sale until we had the information we needed to send to the IRS since our expectation is you would continue to sell and quickly go above the $600 threshold.
The sales tax question was answered by others in this thread.
Thank you for selling on eBay.
Brian
nobody*s_perfect
·2 years agoYes, the sales tax question was answered, but some of the replies re inaccurate. So I'll just chime in to reiterate the policy which wastingtime quoted and linked to in post #6: sales tax is not included in the total for your 1099-K.
Also, some of the posters seem to have forgotten that if you had no net profit then there's no reason to report your $595 to the IRS anyway; it would just be extra paperwork for everybody.
dbfolks166mt
·2 years agoI don't have the Federal law in front of me but I cannot remember if there is also a transaction count associated with the law in an either a "or" or an "and" number. For the current Illinois law the threshold is
$1,000 and 3 transactions so you could sell $2,000 but only have 2 transactions and you would not receive a 1099.
This is a potential issue if the Fed delays the new law limit and more states begin to pass their own 1099 reporting thresholds there could potentially be 51 different laws regarding 1099 threshold reporting requirements.
nobody*s_perfect
·2 years agoIL is the only place that specifies a number of transaction ("more than 3"). The federal law and the other states all either have a threshold of one transaction, or don't refer to the number of transactions at all.
dbfolks166mt
·2 years agoIL is the only place that specifies a number of transaction ("more than 3"). The federal law and the other states all either have a threshold of one transaction, or don't refer to the number of transactions at all.
Thanks I didn't have the text of the Federal law and only had the state limits handy. Leave it to Illinois to have a twist to things.
evry1nositswindy
·2 years agoNo one here is going to tell you to break the law. You must declare ALL online sales as income. Period. Whether you receive a 1099 or not.
jitalo2022
OP2 years agoThat wasn't the question. The question was if eBay was going to send out a 1099k to the seller and the IRS.
wastingtime101
·2 years agoThat may not have been the question, but it's certainly not clear if the question is being asked for benign reasons or if it's being asked because the seller wants to avoid tax reporting. Because of that, it's smart to put the information out there. Even if you're already aware of the laws, someone else reading with a similar question may not be aware of the laws. And may not be aware that just because you're required to report the income, does not mean you will owe taxes on the income once you factor in expenses.
One of the benefits of this forum is you'll often get well-rounded advice, even if it's not what was directly asked.
albertabrightalberta
·2 years agoYou are certainly making it sound like you're trying to stay under the $600 threshhold so you don't have to claim your income.
But that's not correct. ALL payments should be claimed. Then you deduct your expenses and if any taxes are due, it's only on the profit.
I was mistaken. Sales tax isn't included on the 1099K.
lrdave35
·2 years agoWhy would you have to declare if no profit was made? That's not income.
duffy4444
·2 years ago@lrdave35:
You're confusing gross sales - which IS, and for decades HAS ALWAYS BEEN income in the eyes of the IRS whether reported or not - and net profit after expenses. It's the same as gross employment income as reported on a W2, and net take-home pay. What is taxed is the gross amount less deductions (in this case after expenses).
Try telling the IRS auditors that a seller on eBay listed a $599.95 item, with the intention of not making any profit on it. If the IRS had any sense of humor, they'd get a laugh out of it.
The whole purpose of the $600 threshold was to capture taxpayers who have been thumbing their noses at the laws of reporting ALL income from internet commerce, taking generous expense deductions, and paying their fair share of taxes on the net after expenses. The smart sellers here for years have been reporting and paying taxes on ALL their income in that manner. It's finally time for everyone to live on a more level playing field. For one, I welcome it.
Cheers, Duffy
wastingtime101
·2 years agoSales tax is not included on the 1099-K.
https://www.ebay.com/help/selling/fees-credits-invoices/ebay-form-1099k?id=4794#section3
>>Additionally, Form 1099-K does not include the sales tax when it is automatically collected and remitted by eBay.
Regardless of what the threshold is for eBay to submit 1099 to IRS, you still need to declare your eBay earnings on your taxes.
jitalo2022
OP2 years agoThat wasn't the question. The question was if eBay was going to send out a 1099k to the seller and the IRS.
albertabrightalberta
·2 years agoIt's more than likely that a 1099K will be triggered because if the buyer is from a state with a sales tax, the tax will be part of the payment made by the buyer and that would bring you above the $600 threshhold.
jitalo2022
OP2 years agoBut the seller does not receive any of the proceeds from the tax.
eBay collects it and sends it to the state.
klhmdg
·2 years agoyes Tax affects this...