mam98031 • Volunteer Community Member • Buyer/Seller since 1999
It is by Tax ID. So if you use the same tax ID on multiple accounts and you are in MP they will bring the sales of those account together to determine if you meet the minimum thresholds.
There does seem to be some BIG misunderstandings on this thread though. I would guess that everyone's concerns are reporting your income to the IRS.
With or WITHOUT a 1099K, sellers are responsible for reporting their income from sales on this site and any other sites they sell on. So if you are of the opinion that if you don't qualify for a 1099K then you don't have to report your income to the IRS you would be WRONG!!!
The original reason why IRS started the 1099K is because they couldn't get a handle on so many online sellers and their income. There were so many sellers practicing tax evasion and they couldn't keep up with it. So the 1099K was born at the current minimum thresholds.
Because we still have so many online sellers still not reporting their income as they are LEGALLY REQUIRED to, there may be a new minimum threshold in 2022. Lots of time between now and then and lots of things can change. And one of those things changing is that states are starting to require 1099Ks because they too are getting tired of sellers not reporting their income to the states. So a few states have adopted their own laws and some of them it is a $1000 minimum threshold and others it is a $600 threshold with ONE sale being enough.
So keep records of your expenses. ALL of them. And if you haven't been reporting your income. You should start right away.
https://community.ebay.com/t5/Payments/Form-1099-K-Detailed-Report/m-p/31575590#M106915
@dnasilver wrote:1099 K is a federal form. To discuss each individual states taxes is is way beyond a 1099 K. Sales tax alone is a nightmare let alone what one state compared to another allows for deductions. Let's just stick to the form which is a Federal Income Tax form, not a states.
1099 K with or without. Actually the IRS says to report all income. Garage sales, sell a used car, mow a neighbors lawn, and so on.......way more than selling just on sites.
Just because you get a 1099K does not mean income. Inherited items are sold often on "sites" and as long as you follow the rules on inheritance, odds are not income. Any personally owned/used household item you sell most likely is not income. Odds of selling for greater than what you purchased it for, is slim to none.
Bottom line: if you do not have knowledge of proper accepted accounting principals spend a few bucks and consult a tax accountant and lawyer before just declaring a 1099 K as income.
Funny how the Feds and States worry about 600 bucks and yet those making seven digits or more pay virtually nil in taxes and that seems to not matter to the States and Feds. Wonder why......hmmmmmm
Yes I agree, the 1099K is a federal form. That is the exact same thing I said when I first heard of some states adopting these newer policies. But they are able to do it as the information and link I provided you in my post above shows you.
The 1099K has NOTHING to do with Sales Tax.
You may not agree, but it isn't going to matter. The result is states are doing this and it is NOT just for sales within their state. It is a 1099K for ALL sales. Which we are suppose to be reporting to our states anyway. Many of us are likely not to owe anything due to Small Business Credits. I know I've never paid a dime to the state for my sales in or out of state as a business tax.
So I am sticking to the form and for those people in the states that have passed the laws need to be aware of that even if you don't agree with it.
Yes, you are correct. IRS wants all income reported. The Schedule C allows for all the appropriate deductions one can take. For many casual and micro sellers it is likely they will end up not owing a penny more in taxes, but the numbers still need to be reported.
A 1099K has NEVER claim to be stating "income". It is Gross Receipts and that does NOT equal sales or income. It is the GROSS money that passed through your money processor for goods or services. Any cancellations, refunds or other adjustments to that number need to be taken in the form of DEDUCTIONS on the Schedule C to arrive at what your Income figure is.
You are correct, a seller that only sells used things from around there home may not have to pay any kind of additional taxes on it. That doesn't mean they don't need to track these sales and keep records of expenses on these sales, nor does it mean they don't have to report these numbers to IRS. There are some rules in place that each seller should become familiar with and learn what their best approach is.
But sellers that sell used items that are NOT just stuff from around their house, or buy stuff at yard sales to sell on the internet, or from a store that sells used stuff, etc., these sellers are liable for potentially needing to pay additional taxes. Again looking at the rules, learning and educating yourself is best so you know what the federal government expects of you, whether or not you agree with it does not matter.
https://www.irs.gov/newsroom/five-things-to-remember-about-hobby-income-and-expenses
https://www.findlaw.com/tax/federal-taxes/do-you-need-to-report-your-online-sales-to-the-irs.html
https://www.1040.com/blog/2019/7/12/selling-stuff-online-taxes-for-etsy-ebay-letgo-and-more/
https://www.antiquetrader.com/collecting-101/behind-gavel-hobby-become-business
@twiggs55 wrote:yep, I'm one of those part-time sellers, and I will stop selling at the end of the year because of this new rule.
I think eBay and all other on-line websites will be losing lots of sellers, not worth it anymore
Just so you know, this is NOT a new rule. It is just some people didn't realize this before. Sellers have ALWAYS been responsible for reporting their income from internet sales as income to the IRS.
The rules for claiming your income is not restricted to what you sell here on Ebay either. Any site you go to and sell the same IRS rules apply. Whether or not you meet the thresholds for a 1099K has no bearing on this. You need to be claiming your income.
Track everything and keep all your expense records. You may see that you don't have a tax impact to you that is harmful to your pocketbook, but you need to be claiming your income so you stay out of trouble with IRS.
Taxes for 2020 are due mid next month. So make sure you claim your income on your 2020 taxes.
@dnasilver wrote:We have a tax account and a tax lawyer, so we don't worry about it. I was trying to make it clear that just because you get a 1099K is not the end of the world nor does it mean income. Also, 1099K is a Federal Form and not a state form. Sales Tax is a tax just like income tax, excise tax, gas tax, and so on. Since eBay is charging a percentage (fee) against sales tax odds are they will show it on your 1099K which is highly questionable. Let your tax account handle it. Should to be interesting to see how many errors occur on 1099 since the 600 mark is so low. eBay will be hiring to handle all those fun issues.
YES as did PP. As I explained before, money transmitters report ALL incoming moneys from customers purchasing products or services from members. They may NO deduction for ANY reason on that money when reporting it to IRS. They don't reduce it by cancellations, refunds, reversals, shipping charges, etc. That is why a 1099K does NOT REPORT GROSS INCOME.
And while you may believe that a state can not require Marketplaces [all of them, not just Ebay] to generate 1099Ks for a lower threshold than what the federal law requires, clearly they CAN. For those in states that require this as I posted the details in my earlier post. Those people need to get involved in their states to push to get this reversed. Until then I'm confident Ebay will continue to follow the LAWS as set forth by these states.
@dnasilver wrote:and don't forget in 2021 to give Tommy the kid down the street his 1099 for cutting your lawn and shoveling your drive......that is if your lucky enough to live where it snows
I'm unsure WHY you think it does any good to try and get snarky with me. If you don't like what is required to be done by the laws set forth my states and IRS, then do something about it. Work to get them changed. Pushing back on me will do you no good. What I've stated before is true an accurate and I provided you with links so you can do your own research or others can if they find it of interest.
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