Locked
Discussion interactions are currently paused.
IRS $600 minimum threshold for 2024
As of right now, Ebay shows the minimum threshold for 2024 being only $600. I did see something from Ebay that came out in April 2024 saying the threshold would be $5000 for 2024 and 2025, then $600 after that. Does anyone know for sure what the thresholds are? This is still a ridiculous amount and will eventually force me to stop selling on Ebay, just so I won't have to mess with hiring a dang CPA to figure out how much I lost each year selling on Ebay ... after the monthly Ebay store fee, selling fees Ebay takes from the purchase price and shipping price. I'm also wondering if this "gross amount" that Ebay reports includes all the taxes that Ebay takes out automatically that our hands never touch? The taxes should not be in our "gross amount" but I bet it will be. I understand it's our job to make deductions for internet, storage unit fees, shipping, etc.. but I would think taxes charged the buyer should not be included in our "gross amount".
kh-stanley1
·1 year agoHi everyone,
Due to the age of this thread (and the intrusion of political dogma), it has been closed to further replies. Please feel free to start a new thread HERE if you wish to continue to discuss this topic.
Thank you for understanding.
pumpnmunch
·1 year agoIf the IRS actually changes this to $600 theshold the small seller will simply quit....
most of us small sellers...dont make any money anyhow....
big companies will love this....less sellers...higher prices...
the IRS does not care who the squeeze out of business...
dbfolks166mt
·1 year agoIf the IRS actually changes this to $600 theshold the small seller will simply quit.... There are a number of states that already have lower limits, I happen to live in one of them and I have NOT stopped selling.
most of us small sellers...dont make any money anyhow.... If you are not making any money then the 1099 is not going to make any difference
big companies will love this....less sellers...higher prices... Not really.
the IRS does not care who the squeeze out of business... You are correct about that. Just like the banks don't care about borrowers who default on their loan payments.
mam98031
·1 year agoIRS doesn't make any call outs specifically for "small sellers".
If you get a 1099k has nothing to do with if you are profitable or not. Why would there be "less sellers"? What does getting a 1099k or not have anything to do with that @pumpnmunch ?
No one is getting the "squeeze". Clearly you have some big misunderstandings about what a 1099k is even for. It is merely a form and nothing more than a form. It doesn't mean your income taxes will increase just because you got the form. With or without the form you are suppose to be reporting your income to the IRS. And with or without the form you still get to subtract your costs before arriving at a taxable income amount [if any]. It appears you are getting yourself worked up over something that is simply not true.
Myth: If taxpayers didn't receive a Form 1099-K, they don't have to report income.
Fact: According to federal law, all income is taxable unless it is specifically excluded by tax law. Taxpayers should report any profits from selling goods or services, regardless of if they receive a Form 1099-K.
https://www.irs.gov/newsroom/irs-never-mind-the-myths-know-the-facts-about-receiving-a-form-1099-k-i...
lux.ra_14
·1 year agoMeanwhile, one presidential candidate is floating the absurd notion that tariffs could allow us to get rid of income taxes altogether.
dbfolks166mt
·1 year agoMeanwhile, one presidential candidate is floating the absurd notion that tariffs could allow us to get rid of income taxes altogether.
While I would be fine with that there are always trade offs for every action. I cannot imagine what the tariffs would do to the price of imported products or any domestic product that is made with imported parts.
buyselljack2016
·1 year agoThen we apparently just don't understand how things work just as the economist that challenged the idea was told in an interview session 😂🤣
mam98031
·1 year agoThe cost of the products being sold would increase for sellers, which in turn results in higher costs against what the item was re-sold for. Highly likely that for some products [yet to be determined] would cost too much to be resold.
oddznends2007
·1 year agoRemember, its the democrats who are trying to micromanage income tax and squeeze pennies out of the low and middle class income people who already need to sell items in order to afford other ones.
mam98031
·1 year ago@oddznends2007
As has been said MANY times. Getting this form does not mean you suddenly owe income taxes on whatever you got paid on this site. It is after all ONLY a form. With or without the FORM you are suppose to report all income on your Federal Income Tax reports. So why does it matter what the threshold for this form is. It does NOT change your income taxes you owe, as you are suppose to report all income.
Myth: If taxpayers didn't receive a Form 1099-K, they don't have to report income.
Fact: According to federal law, all income is taxable unless it is specifically excluded by tax law. Taxpayers should report any profits from selling goods or services, regardless of if they receive a Form 1099-K.
https://www.irs.gov/newsroom/irs-never-mind-the-myths-know-the-facts-about-receiving-a-form-1099-k-in-2024
oddznends2007
·1 year agoI didnt say dont pay taxes. I merely pointed out the fact that democrats will extort even the smallest of taxpayers for pennies.
Myth: Democrats are for the poor.
Fact: Democrats will tax your already taxed income to fund dei programs.
Fact: Donald Trump put an end to it.
tobaccocardyahoo
·1 year agoThe IRS did state that it was going to raise the threshold to $5k, last year.
Since then, the Supreme Court has ruled that government agencies and departments must follow the law as written in unrelated cases.
The IRS has been mum, perhaps because they do not have the right to change the requirement from $600.
mam98031
·1 year agoNo they didn't. They said they are PLANNING to raise the threshold to 5K for 2024. They can't do that without Congressional approval.
Last year they didn't announce the change until very late in the year, I suspect this year will be no different. Especially in an election year.
But it really doesn't matter. With or without the form, we are all responsible for reporting ALL our income. There is no threshold on that.
tobaccocardyahoo
·1 year agoLast year's change from $600 was not approved by Congress. They just did it. Given the SCOTUS decisions on other agencies - silence.
mam98031
·1 year agoSCOTUS had nothing to do with it.
Congress passed a Bill to allow for the Stimulus payments to Americans a couple years ago. It requires Congress to approve changes since currently the $600 is the rule.
I doubt that IRS just decided to "do it" and arbitrarily increase the threshold on the form for 2023.
This issue is currently moving through Congress.
https://www.atr.org/ways-and-means-passes-repeal-of-600-reporting-threshold-for-venmo-and-paypal-users/
https://www.irs.gov/newsroom/irs-announces-delay-in-form-1099-k-reporting-threshold-for-third-party-platform-payments-in-2023-plans-for-a-threshold-of-5000-for-2024-to-phase-in-implementation
tobaccocardyahoo
·1 year ago@mam98031
You have gotten your timing off.
$600 was the legal limit last year too.
IRS decided they could not handle the volume of 1099ks and changed it back to $20k.
Probably illegal then, more likely now.
I expect it to be $600 by February 15 when the 1099k forms must be mailed by.
stephenmorgan
·1 year agoI agree, congress did not approve the change in the law so what authority did the IRS have to change it on their own? Just think if it is decided IRS did not have the authority to change the law and they have to retroactively go back and enforce the law.
stephenmorgan
·1 year agoI believe the SCOTUS "Chevron decision" will have a lot to do with agencies acting within their authority going froward.
"“Chevron is overruled,†Chief Justice John Roberts wrote in the majority opinion. “Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority.â€"
The Courts could say IRS did not have authority to change the law. The law is written pretty straight forward and I don't see how it could be interpreted to mean something different. Maybe the IRS has other authority by law that allowed them not to enforce the current law as written?
reallynicestamps
·1 year agoWhatever the minimum the federal taxman wants, I understand that some state tax offices send out similar forms to help their taxpayers see their gross income and calculate their taxable net income after deductions.
And most of those states use $600 for the de minimus at which the form is sent.
mam98031
·1 year agoYou misunderstood something. Ebay didn't release any information like that. I see that the threshold on the FORM has been explained to you, so I won't do that again.
It really doesn't matter. With or without this form or any other form, we are all required by law to report all our income on our federal tax return. Don't confuse some form with setting some imaginary threshold for reporting your income.
There is like a dozen different types of 1099 forms. The 1099INT, for interest earned has a $10 minimum threshold. But that form doesn't set the minimum threshold for reporting income either. Nor does any other type of 1099 form.
Why would you need a CPA. Just track your records. Keep all your expenses. A CPA is not required.
https://community.ebay.com/t5/Announcements/eBay-and-TaxAct-partner-to-help-you-navigate-new-Form-1099-K/ba-p/33141019
https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses
https://www.irs.gov/businesses/gig-economy-tax-center
https://pages.ebay.com/seller-center/service-and-payments/2022-changes-to-ebay-and-your-1099-k.html
https://www.irs.gov/pub/taxpros/fs-2022-41.pdf
buyselljack2016
·1 year agoNo need for a CPA.
Easy to do online, and just do it the same way you have for the previous years that you have been selling.
Take your deductions.
You must have another account. You have no store here, so no "store fees".
bonanza125
·1 year ago@midtownmafia
You make a profit correct? That is considered income. You are required by law to pay taxes on the income made after the deductions. You must do your book work and add up all the expenses. Ebay sends the 1099-K. You have the responsibility to do the book work. Don't like book work then stop selling. Again anybody who does not like book work, paying/spending time with an accountant or paying taxes shouldn't sell on Ebay. When selling on Ebay you are a business.
oddznends2007
·1 year agoI'll reply to this after the election.
jackpine-cll
·1 year agoI am a 77 year old man selling a few baseball card i collected before I was a teenager...no cost basis of course..how does that make me a business...I do not have an ebay store.
tobaccocardyahoo
·1 year agoYou do not have to be a business to have business income. Even not for profit organizations can have business income.
If you own it and you sell it for more than you paid for it, it is potential business income. If you wish to treat this income as a hobby, you will still have to report it but might lose the ability to deduct some business expenses.
Life is simpler when you earn a wage and receive a W-2 form from your employer.
mam98031
·1 year agoYou don't want the IRS to consider your income here as Hobby income on your tax return. That isn't a designation you should want. Hobby income can't deduct any costs.
Beginning in 2018, the IRS doesn't allow you to deduct hobby expenses from hobby income. you must claim all hobby income and are not permitted to reduce that income by any expenses. For tax years prior to 2018, you can deduct hobby expenses as an itemized deduction subject to 2% of your adjusted gross income.
https://turbotax.intuit.com/tax-tips/self-employment-taxes/4-tax-tips-for-money-making-hobbies/L89qz1GNj
sin-n-dex
·1 year agoI'm in Canada, so I don't know a lot about tax laws, but would like clarification on what you posted.
If you have a hobby income, and sell a $5 item with $3 shipping, and then pay $3 for shipping to mail it, is that meaning you cannot deduct the $3 you paid for shipping and have to pay tax on the entire $8 gross sale?
I remember also reading in previous threads something about how you need a certain number of "profitable years" in a given time period to continue declaring your business income with expenses, otherwise you get the hobby designation. (I do understand with a hobby income you can't deduct use of home, internet, meals and all those other types of expenses, I was just wondering about expenses relating directly to the shipping of your item, or FVF's, and stuff like that which reduces your net income on the sale). I'm presuming with hobby income you don't deduct the cost of the goods because it's a hobby, and the item was never intended to be purchased for reselling.
In Canada, a lot of what you're allowed to do is based on what's reasonable. While you're technically supposed to declare every dollar of your income, they don't expect you to be filing out a T-2125 (our version of Schedule C) if you are making $200 in sales of hobby items.
There's also no rule that says you need to keep being profitable or be profitable a certain number of years in a time period, however if you keep being not-profitable you may get audited. When I sold jewellery and purses (before I did coins and stamps) I was never profitable because of how much I spent on materials, market rent for my space to sell, etc. I was told by a tax agent in my genre of doing crafts, they expect most people to not turn a profit, but since I have a job and pay taxes on my T4 (our version of W2) income, they will not be auditing me for declaring a couple thousand dollars in losses every year. I was told if my business income was my only income and I was always declaring losses, I would be examined on my financial situation of how I pay for housing and food with no income.
In Canada they want people to pay taxes, but they don't set up rules to say your business has to be profitable, you just can't have a negative income all the time, you need to have some other source of funds if your business is always losing money.
C.
nobody*s_perfect
·1 year agoLast November, the IRS issued specific instructions aimed at hobby sellers, showing how they can zero out their eBay income:
If you sold personal items at a loss, you have 2 options to report the loss:
Report on Schedule 1 (Form 1040)
You can report and then zero out the Form 1099-K gross payment amount on Schedule 1 (Form 1040), Additional Income and Adjustments to Income PDF.
Example: You receive a Form 1099-K that includes the sale of your car online for $21,000, which is less than you paid for it.
On Schedule 1 (Form 1040):
These 2 entries result in a $0 net effect on your adjusted gross income (AGI)....
https://www.irs.gov/newsroom/irs-announces-2023-form-1099-k-reporting-threshold-delay-for-third-party-platform-payments-plans-for-a-5000-threshold-in-2024-to-phase-in-implementation
mam98031
·1 year ago@nobody*s_perfect
I don't see where that has anything to do with a seller that defines themselves as a Hobby seller. I think I understand what you posted above, just not that it has to do with a Hobby seller. Nor do I see anything on the two links you gave specifically about Hobby Sellers.
I'm just trying to understand. I'm very willing to learn.
nobody*s_perfect
·1 year agoIsn't "selling personal items at a loss" pretty much the definition of a hobby seller?
https://www.irs.gov/newsroom/hobby-or-business-heres-what-to-know-about-that-side-hustle
stephenmorgan
·1 year agoYou don't have to be a business.
Since the cards are your personal property you would be selling Capital Assets. Depending on your entire financial picture for the year, you may or may not owe Income Tax on any gains you made by selling the Capital Assets. Selling a Capital Asset there are very few things that can contribute to reducing the Cost Basis. You are not a Business so you do not get all the business deductions. You would not however owe Self Employment Tax from the sale of Capital Assets because it is not Earned Income.
mam98031
·1 year ago@jackpine-cll
For some reason lots of people feel as you do. You, as others are, are hung up on the word "business".
IRS could care less what you don't want to call yourself a business or if you do want to call yourself a business. It is NOT a qualifier for having to claim your income on your tax returns. So to resolve it for you, simply don't consider yourself a business as that is simply not important.
https://community.ebay.com/t5/Announcements/eBay-and-TaxAct-partner-to-help-you-navigate-new-Form-1099-K/ba-p/33141019
https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses
https://www.irs.gov/businesses/gig-economy-tax-center
https://pages.ebay.com/seller-center/service-and-payments/2022-changes-to-ebay-and-your-1099-k.html
https://www.irs.gov/pub/taxpros/fs-2022-41.pdf
ragal1364
·1 year agoIf you to have a receipt for a card purchase. Sell for $500 say at a yard sale and buy back at a later date for say $599 maybe a year later. You can use your receipt as a cost basis for the ebay sale
lamewing
·1 year agoAnd there’s the magic word, profit. If a person is selling stuff that they purchased years ago and no longer want, they most likely are not making a profit on junk they’re getting rid of. The problem then is they have to prove somehow rather that the old stereo from seven years ago has not appreciated in value. This is why the threshold should exist. So that people are that are just getting rid of old junk aren’t paying the IRS, the federal government, for things that they’re not making a profit on. There is the letter of the law and there is the spirit of the law. If I buy a camera brand new for $500 and even a year later sell it for $350, I should not have to pay a penny in taxes. I might even have the receipt to show that after one year. But say I decide to sell my canon AE one that I purchased in the 1980s. I’m not gonna have that receipt. So this puts a ton of work on just the average who is trying to get rid of old stuff.
sin-n-dex
·1 year agoI have a Canon AE that I've been wanting to list for parts (and it has collected dust since it was last used in 2007, hence parts).
Sorry, I digress, it's just been a long time since I ran across anyone who even knew what a Canon AE was... I got my first digital camera in 2001 (3.1 MP).
C.
an-57470
·1 year agoMost people do jot make a profit they sell way under what bought for so doing taxes is a waist of our time and will stop many from selling on evay
mam98031
·1 year agoI'm not sure you have the data to prove that for the 6-7million US sellers. I am sure you are correct for some. But there are lots of sellers that make a profit.
FYI whether you are profitable or not is NOT a requirement for reporting your income. It is all to be reported, you may end up taking enough costs away that you end up with zero net taxable income, but you still have to report it in most cases. There are some exceptions.
https://community.ebay.com/t5/Announcements/eBay-and-TaxAct-partner-to-help-you-navigate-new-Form-1099-K/ba-p/33141019
https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses
https://www.irs.gov/businesses/gig-economy-tax-center
https://pages.ebay.com/seller-center/service-and-payments/2022-changes-to-ebay-and-your-1099-k.html
https://www.irs.gov/pub/taxpros/fs-2022-41.pdf
bonanza125
·1 year ago@inhawaii
That's because folks who think that just because they are under the threshold they aren't subject to pay income tax. Then they come to be surprised that eventually they will get charged with tax evasion.
oddznends2007
·1 year agoPenalty abatement.
inhawaii
·1 year agoWhy do so many people get so caught up in what the "threshold" is?
The threshold is one dollar.
Make a dollar or more and you have to report your income.
dbfolks166mt
·1 year agoThis is about the 5th or 6th post on this subject in the last couple of weeks. As @nobody*s_perfect noted at present NOBODY knows for sure what will be done at the Federal level for the 2023 tax year. Also a number of states already have lower 1099-K issuance thresholds.
The sales tax eBay collects and remits to the individual states is NOT part of the gross that is shown on the 1099-K.
ewsupply
·1 year ago@dbfolks166mt
"The sales tax eBay collects and remits to the individual states is NOT part of the gross that is shown on the 1099-K."
What is part of the gross amt is Commissions & Shipping. Don't forget those can be deducted on your taxes.
dbfolks166mt
·1 year ago"The sales tax eBay collects and remits to the individual states is NOT part of the gross that is shown on the 1099-K."
What is part of the gross amt is Commissions & Shipping. Don't forget those can be deducted on your taxes.
Of course along with a multitude of other expenses including but not limited to refunds, returns, COGS, supplies, POV........................... For reference attached is the Schedule C instructions.
https://www.irs.gov/pub/irs-pdf/i1040sc.pdf
yuzuha
·1 year agoThe 1099-K is irrelevant-- you are supposed to report ALL income to the IRS. The $600 number is only the threshold that triggers you receiving a form. It does not mean you do not have to report any income earned under that.
lakefor94
·1 year agoWe need to bring Rosemary in on this one for clarification.
dbfolks166mt
·1 year agoWe need to bring Rosemary in on this one for clarification.
johnrj1226
·1 year agoOne more thing if one lives in a state that has a state income tax they may have a threshold of $600. That 1099K is good for both the IRS and state income taxes - one receives 3 parts one for the seller records, one for the IRS and one for the state income tax. Sellers need to check into that too.
dbfolks166mt
·1 year agoOne more thing if one lives in a state that has a state income tax they may have a threshold of $600. That 1099K is good for both the IRS and state income taxes - one receives 3 parts one for the seller records, one for the IRS and one for the state income tax. Sellers need to check into that too.
The 1099-K has nothing to do with state sales tax it relates to income tax. EBay handles the sales tax which the seller never sees. EBay collects it from the buyer and remits it to the individual states as required.
mam98031
·1 year agoHe did not say "sales tax". He is talking about Income Taxes. Some states do require a 1099K at a certain Threshold.
johnrj1226
·1 year agoDude there are some states that have a state Income tax - like Georgia where I live. For certain they want to get a piece of that revenue stream - aka income tax money. Agree with you on your comment about the state sales tax that the buyers pay.
In an election year the Feds MAY make a more definite time table to enact the 1099K issuance some time after November 5. depending on the FINAL out come. Just MYHO, The wheels of the Gov moves in mysterious way as I have observed since I started paying attention to it some time after college in '67 and started a family - never voted until then. See I had to take a physical at the direction of my Selective Service Draft Board, past the test with fly colors - made 2+2 = 4 two times in arow, past the color blind test, turn your head and cough and drop your draws and bend over.
Ciao and Pura Vida
dbfolks166mt
·1 year agoIn an election year the Feds MAY make a more definite time table to enact the 1099K issuance some time after November 5. depending on the FINAL out come. Just MYHO, The wheels of the Gov moves in mysterious way as I have observed since I started paying attention to it some time after college in '67 and started a family - never voted until then. See I had to take a physical at the direction of my Selective Service Draft Board, past the test with fly colors - made 2+2 = 4 two times in arow, past the color blind test, turn your head and cough and drop your draws and bend over.
Ciao and Pura Vida
Remember the law is already in place as part of the American Rescue Plan Act of 2021 but has been delayed by the IRS for the last 3 years. Also remember that regardless of the election outcome the current members of Congress and the current President remain in office until January.
rugman19691027
·1 year agoIts not really income if you bought it then sold it. Its really just like getting a refund at a store. You dont report your refund as income, so you shouldn't report your personal item that you bought and paid taxes on as income since all you did was get some of your money back.
mam98031
·1 year agoNOPE, two completely different things. Don't keep trying to fight it. While you may convince yourself you don't have to claim it on your Income tax returns, you likely won't convince the IRS.
Myth: If taxpayers didn't receive a Form 1099-K, they don't have to report income.
Fact: According to federal law, all income is taxable unless it is specifically excluded by tax law. Taxpayers should report any profits from selling goods or services, regardless of if they receive a Form 1099-K.
https://www.irs.gov/newsroom/irs-never-mind-the-myths-know-the-facts-about-receiving-a-form-1099-k-in-2024
fern*wood
·1 year agoYou are free to try that argument if you are audited. I'm not sure what my friend used, but whatever she said didn't work out since she was charged back taxes & penalties after an audit. Funny thing was, she didn't get a 1099k, because ebay wasn't required to send them out for any amount back then. We all thought our sales were supposed to be reported, but many just didn't bother. Seeing what she went through cleared up the law for many in our circle. Oh and she was just a lowly crafts seller like me of mostly clothing patterns.
jaymond1
·1 year agoThe issue for me is I am a recent retiree who wanted to use eBay to dispose of used items to clear out my house. Stuff I purchased new, so it would be sold at a loss. I don't have receipts for things I bought years ago. I'm not a business. Most years I sell less than $600 on eBay but my house clearing project would likely be well above that. I don't want eBay sending the IRS a form with "income" when I'm not making a profit. I realize it's not eBay's fault, but I'm going to try FB Marketplace instead.
lacemaker3
·1 year agoIf you get a 1099-K when you were selling personal items at a loss, it's very easy to deal with. You could potentially end up owing less tax depending on how you report them. Here are instructions from the IRS:
https://www.irs.gov/businesses/what-to-do-with-form-1099-k
If you sold personal items at a gain (for more than you paid or had invested in them) you have to report the gain as income. That's the amount you received less certain expenses. If you sold personal items at a loss, you can't deduct the loss, except ...
If you sold some items at a loss and some at a gain, you can deduct the losses (using form 8949 and Schedule D) up to the amount of the gain, so the losses could cancel out your gain or profit on the other sales. And you don't have to itemize deductions to do this.
In some cases, you can deduct losses up to the amount of the gain plus more: $1,500 more if you file single, $3,000 more if you file married (these numbers are for 2024 taxes). So losses on personal sales can even offset some of your other income. (This may be limited if you owned the personal items for less than a year).
See the instructions for form 8949 and Schedule D from the IRS link above for more info.
nobody*s_perfect
·1 year agoNobody knows for sure, yet. Last November, the IRS issued a memo which stated that the threshold for 2023 would be $20K and said that they planned for a threshold of $5K for 2024. But there has been no official announcement yet about the threshold for 2024. Here's the memo:
https://www.irs.gov/newsroom/irs-announces-delay-in-form-1099-k-reporting-threshold-for-third-party-platform-payments-in-2023-plans-for-a-threshold-of-5000-for-2024-to-phase-in-implementation
The amount on the 1099-K includes the amounts that the buyer paid to you for the item and for shipping and handling, but does not include the sales tax that they paid. More details on the 1099-K here:
https://www.ebay.com/help/selling/fees-credits-invoices/ebay-form-1099k?id=4794