1099

[mylissa]

Hello, just started selling on eBay this February 2022, heard about the n ew tax and stopped. I am very frustrated by others on this site accusing people on not claiming income. I have no problem paying taxes on the thought if I don't have to pay taxes I made no money. Everything I have sold on Ebay has been at a loss. I am classified "a hobbiest", whatever that means, and can not deduct packaging, shipping supplies, listing fees, or anything else (as far as I am understanding). I know its shocking, but I do not have the receipt for a magazines I bought 20 years ago,  the pryex I bought 10 or 15 years ago,( hell I don't remember when I bought it, but I know I paid more than $7.00) , or the McDonald playset purchased at a store that even exist anymore. I go then to a eBay chat and I feel like everyone is calling names , writing that I avoid paying taxes, because I question the legality of being taxed twice. 

[dnasilver]

Can you show the IRS regulation that says that? Many hobbyists are actually investors. Yes, that would be different than selling your used underwear. Curious to see the statue that says you would owe tax on your underwear. The IRS does not know if it was ever worn, worn for 1 second or worn to the point of holes, yet you are saying it is taxed 100% as income if you sell it. Is that correct?

[monica-sells]

We can agree to disagree 

But, let me leave you with this thought to present to your 'advisor'

You bought a nice 50" flat screen for $700.00....two months later you decided you want the 60" instead...

You sell the 50" for 500.00....how's that "fair use" ?

You are correct, without filing a Schedule C personal items/sale do not qualify for 'deductions'

but cost basis is not a deduction...

[b86fiero]

Another thought:  eBay collects and disperses sales tax on your behalf.  If you receive a 1099K the IRS also receives that data. Your online financial data is available to taxing authorities.

Since sales tax is collected and dispersed on your behalf at some point in the future either the IRS or you State of residence might wonder why you have not claimed that income.

[monica-sells]

@b86fiero 

Yours/Our position/identification is of no interest to the state tax authorities....

We are all a "subsidiary" (a "collective") of the mothership (in this case ebay, in other cases, paypal, etsy, mercari, amz, etc......)

THEY are the collector of record...not you or I....the taxing authority only cares about the Grand Total of sales to their respective state for that period (day/week/month) It is all thrown into one number....

Sales Tax is NOT recorded on the 1099 (Gross)

[maxine*j]

There is no new tax.  There is a new reporting requirement, which eBay and other payment processors are obliged by federal law to meet, to send a form 1099K to anyone whose sales exceed $600 a year.   You were always supposed to report the income from your eBay sales and then pay any taxes due in it, if any.

Whether you claim "hobby" seller status and cannot deduct the costs and expenses of selling from the gross, or you claim "business" seller and can deduct those costs and expenses, or some other tax status, is your choice.

As to "name-calling," it is true that tax evaders don't get much sympathy here.  That's because people who sold on eBay for years and never filed their taxes accordingly (reporting income from sales and paying any taxes due) had a substantial and unfair advantage over sellers who did, who operated straight.

I don't understand the reference to "being taxed twice," unless you are confusing the sales tax you paid on the items when you bought them with income tax, but those are quite different.

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[iart]

Many of the people complaining about this have been selling on eBay for decades, have feedback in the thousands and have several hundred items listed. They have avoided taxes and been able to undercut honest sellers' prices by up to 20%. AND avoid mountains of paperwork.

So, if the shoe fits, wear it. if not, move on.

[maxine*j]

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@iart wrote:

Many of the people complaining about this have been selling on eBay for decades, have feedback in the thousands and have several hundred items listed. They have avoided taxes and been able to undercut honest sellers' prices by up to 20%. AND avoid mountains of paperwork.

So, if the shoe fits, wear it. if not, move on.

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And they usually claim they are "just downsizing" or "just getting rid of my own household stuff."   If so, they live in homes the size of a Walmart distribution center.   If so, they have odd buying habits since they have often multiples of the same item for sale, frequently brand new and manufactured within the past 12 months.   😄

.

[b86fiero]

Excuse me for pointing this out:  I never stated sales tax is recorded on a 1099.

I worked for years for the Treasurer Of State and do know how sales tax and income tax correlate. 

[glasser]

"Maybe you need to get rid of junk, or maybe you’re doing a true-blue Dave Ramsey cleanse—whatever your motivation, sorting through personal belongings and slating some for your online store can bring in a pretty penny for your efforts.

When you sell personal used belongings for an amount that’s less than you originally paid, you’re in luck: You won’t owe taxes on the money you make. If you use Poshmark to sell a pair of $50 running shoes for $15, you don’t have to pay taxes because the amount you received was less than the original price.

Sure, you won’t be raking in the dough because you’re not selling at a profit, but that amount somewhere between couch money and birthday cash is yours to keep."

source: Selling Stuff Online? Taxes for Etsy, eBay, LetGo, and More (1040.com)

[duffy4444]

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@klhmdg wrote:

You are not being taxed twice.

When you 1st bought the item it was a "sales tax"

Now that you sell it it is an "income tax"

Depending on your state you may or may not need a business license. 

You can choose to be a hobbiest or a business. IF you choose to be a business you can write off a lot of expenses.

It is best to look at the IRS classifications of a business seller or a hobbiest.

There is nothing illegal about being charged when you buy an item and when you sell it. 2 different taxes.

---

   This is the correct way of understanding the issue.

   No one is saying that the OP is a tax cheat. There are a lot of online sellers who are tax cheats, but most small sellers here, who are "cleaning out their houses", are unaware of the tax ramifications of selling online.

   It is not a sales tax matter. Selling online is now considered an income tax matter. If you wish to continue selling online, you need to get with the program and keep in mind that anything you sell online is now considered income and needs to be treated as such. Talk to a reliable tax person or CPA.

Cheers, Duffy

[farmalljr]

Because taxing authorities are not stupid.  If I have a yard sale, I have to report the sales, and PAY the taxes owed. If you are not a business or an investor, you get bupkiss for deductions. Your blender is not an investment. You may "collect" baseball cards. It's not an investment when it's held in your hands. 

Gold in an investment WHEN it's put into an IRA that holds the physical gold. Not when it's in your hands. You can buy gold and hold it. You can say you are investing money in gold. The IRS doesn't see it as an investment when you hold it. But they do want any capitol gains if you sell it. 

You all are free to disagree with me all you want. I'm not the IRS and I could care less if anyone agree with me. 

We don't pay taxes based upon our "feels". Your blender, no matter what, is not an investment. And the hamburger you ate, is not "deductible" in the fertilizer expense. 

[mega-ma-roo]

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@farmalljr wrote:

When you buy something for personal use, and later want to sell it, the IRS looks at it like this:

You bought the item for personal use. All money paid for it was spent for the "thing". When you decide later to sell it, it's ALL profit since you paid for the use of the item. Now you are making a "profit" because there is life or value left in the used thing you are selling. Most people that buy a blender, throw it away when they are done with it or it breaks. 

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This is not correct. Please see what the IRS actually says about cost basis: 

Publication 551 (12/2018), Basis of Assets | Internal Revenue Service (irs.gov)

"The basis of property you buy is usually its cost. The cost is the amount you pay in cash, debt obligations, other property, or services."

Items purchased for personal use are not depreciated and the cost basis remains the amount paid for the item.

[stainlessenginecovers]

All a 'hobbiest' means is that you cannot show a LOSS from selling things against your regular (job W2) income tax.

For example; you make $50,000 yr at work.

You sell $5000 worth of stuff on ebay that you had in your garage over the years. 

You originally paid $50,000 for all that stuff. You also paid $500 for shipping and paid ebay $700 in fees.

You CANNOT write off the $46,200 against the $50,000 Work (W2) and then file 'taxable income' at $3800 for the year. 

What you CAN do is write off the $5000 income with those same 3 things (Cost of goods, Shipping & Ebay fees) and anything BELOW the $5000 is NOT TAX Deductible. 

You can only write off the $5000 to $0. 

You still owe taxes on the $50,000 you made at work (of course, you would have deductions from that).

Talk to a Tax Pro; they will walk you through how to report selling 'items from around the house'. 

[mega-ma-roo]

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@farmalljr wrote:

"Hobby sellers" don't get deductions. Only businesses get them now. Like the OP said, she can't deduct shipping and supplies. What makes you think they are going to let you deduct the 29.99 you paid for the blender 10 years ago? When you aren't a business, it's all "profit" in the eyes of the IRS. It's considered "other income". 

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Cost of Goods Sold is not a deduction and all income from sales can be adjusted to account for the cost basis of the items sold. This applies to all classes of sellers and sales.  

[mega-ma-roo]

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@stainlessenginecovers wrote:

All a 'hobbiest' means is that you cannot show a LOSS from selling things against your regular (job W2) income tax.

What you CAN do is write off the $5000 income with those same 3 things (Cost of goods, Shipping & Ebay fees) and anything BELOW the $5000 is NOT TAX Deductible. 

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Just to clarify: As a non-business seller you cannot deduct shipping and eBay fees from your gross income (those can be deducted only on Schedule C which is for those operating as a business).  Non-business sellers can adjust their gross income by subtracting the cost of goods sold up to the total amount of gross income.