1099-K

[ridgep]

I'm just learning about the new 1099-K  form of course after just setting up bank account. I was excited about getting started selling small items but if the threshold is not raised significantly, I will pretty much remain a buyer if all the good deals don't in fact dry up also. Big dissappointment to be taxed again on something I already owned. Time to look for other income sources.

[maxine*j]

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@hachumi wrote:

So you'ed turn in Grandma to the IRS for going to the thrift store a few times a month and making a little profit off of Ebay, so she doesn't have to eat just cat food right?   Or would you just do that on the forums because she's  scoffing at the law?    

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I she is in that position, she would not even need to file a return, much less pay any income tax.  Do try to keep it real.

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[johnrj1226]

Should any one be audited by the IRS, they (the IRS)  can secure sales activity from eBay/PayPal etc to see if they had any income/revenue in  past years for what ever amount the seller received.  In the past the 1099K was issued at  a revenue level of 10K or more.  Some states already  had  the threshold for a 1099K at $600 or more.  Now everyone is playing ball at the  same level.

[johnrj1226]

Because the IRS says the threshold is now $600 - ask the IRS why - they  may respond  with a "The Devil Made Me Do It).   All governments luv new sources of income/revenue/taxes - feds, states, cities, counties, etc.  But if you  find Utopia all will be good again.

[this*old*attic]

I don’t think an accountant is necessary. For just a few thou $$$ in earnings it’s as simple as:  Collected $ - costs (purchase price, shipping cost/supplies, Ebay fees, mileage - I never bothered with this one - etc.) = Oh, look, my profit is so small I don’t owe taxes, stamp, mail.

[nocoolnamejane]

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@hachumi wrote:

The system we live in now,  is where everything that comes to you as a gain, then you are ment to give the government some, and if it wasn't a gain it's up to you to prove it. 

You just described income tax, which is nothing new.

But this is only for people that can not afford to pay somebody to find them the loopholes.

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If someone is selling online, they have access to the internet where they can educate themselves about income tax and fiscal laws (not loopholes) for free.

[dnasilver]

If your grandma is eating cat food, maybe try helping her out so she does not have to eat cat food. 

[theteamsetguy]

I'm not turning anyone in nor have I said I would or should. Like others have said on here just because you get a 1099K does not mean you have to owe any taxes. Under current tax laws assuming grandma Hachumi has no other income she can sell up to $12,950.00 in 2022 before any deduction for expenses like COGS, shipping, and ebay fees and not owe 1 cent in taxes.

Again, I ask why should grandma Hachumi not have to pay any taxes when law abiding Joe lunch bucket eBay seller has to? If grandma Hachumi  doesn't know how to complete her taxes and can't afford to go to H and R block there are plenty of volunteers that can help her. All she has do is call her local board of accountancy and she will be directed to who can help her.  By the way I am not saying you are a grandma just using her as a example because you have.

[theteamsetguy]

Why is the threshold for a w2 for $600.00? Why is the threshold for a 1099 INT $10.00? Since according to IRS 57.1% of Americans didn't legally owe income taxes in 2020. I'm sure many of those got a W2 or 1099 for thousands of dollars. In other words depending on one's situation grandma could get a 1099K from eBay for $5,000.00 and not any taxes. Grandma just has to declare the income.  

[theteamsetguy]

Bonjourami,

LOL. Grandma Bonjourami, I haven't laughed this hard in awhile!!!

[bonjourami]

Thats great..we all need a laugh with some of the ridiculous assumptions in this thread!LOL...

[stephenmorgan]

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@theteamsetguy wrote:

Under current tax laws assuming grandma Hachumi has no other income she can sell up to $12,950.00 in 2022 before any deduction for expenses like COGS, shipping, and ebay fees and not owe 1 cent in taxes.

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If Grandmas only income was $12,950 in profit after all expenses and deductions she would not owe any Federal Income Tax.

But would Grandma would owe FICA and Social Security Taxes of 15.3% on the $12,950 profit?

[this*old*attic]

I think so. I seem to recall deducting away all my earnings (my accountant told me that’s fine for a few years on a new business), and then being SHOCKED at FICA, Social Security, etc. the first year. But, I’m trying to remember back almost 20 years so I wouldn't swear to it.

[stephenmorgan]

I looked it up.  It is called Self Employment Tax.  Not really a deductible but pretty much all profit would be subject to the FICA once you made $400.

https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-an...

[wildpitchsports]

Yeah that's what's been running this board for years now apparently. I left just for that reason. 

[wildpitchsports]

Lucky you found out now, imagine the shocked faced of millions of Americans when they are spending their refund only to get hit with a 1099K in Feb for thousands of dollars in income...

Eh, they'll more than likely just take it.