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. 

[bearswatching]

I am amazed at the number of American adults who do do not understand the difference between sales tax and income tax. Really kind of mind-boggling.

[readabouthorses]

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@bearswatching wrote:

I am amazed at the number of American adults who do do not understand the difference between sales tax and income tax. Really kind of mind-boggling.

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It is scary how many don't understand the difference. My daughter and I were just talking about it the other day.

[luckythewinner]

Hello, just started selling on eBay this February 2022, heard about the n ew tax and stopped.

It is a not a "new tax".  

 I am very frustrated by others on this site accusing people on not claiming income.

So don't tell them you have not been claiming income. 

 I don't have to pay taxes I made no money

Paying taxes and reporting income are not the same thing. If you are selling at a loss, you can report the income and not pay much in tax. 

 I am classified "a hobbiest", whatever that means

Who classified you that way? If you don't know what it means, how do you know that is how you "are classified"? 

I know its shocking, but I do not have the receipt 

If you are losing money on every sale, you do not need a receipt for everything. You only need enough documentation to offset the income. 

and can not deduct packaging, shipping supplies, listing fees, or anything else (as far as I am understanding

If you behave in a businesslike manner and report a small profit, you are a business and can safely deduct all of those things. Note that I said report a small profit, not make a small profit. As far a I know, it not against the law to forget to claim some of your cost of goods sold. 

[mega-ma-roo]

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@luckythewinner wrote:

 I don't have to pay taxes I made no money

If you are selling at a loss, you can report the income and not pay much in tax. 

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If you are selling at a loss there would be no additional tax from your selling activities.

and can not deduct packaging, shipping supplies, listing fees, or anything else (as far as I am understanding

If you behave in a businesslike manner and report a small profit, you are a business and can safely deduct all of those things. Note that I said report a small profit, not make a small profit. As far a I know, it not against the law to forget to claim some of your cost of goods sold. 

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You do not need to report a profit to be classified as a business. See:

Business Activities | Internal Revenue Service (irs.gov)

"You do not need to make a profit to be operating a trade or business but you do need to have a profit motive." 

[brian_burke@ebay]

All, 

Here are a few other resources that you may find helpful for this topic. In addition to consulting your tax professional. 

https://pages.ebay.com/seller-center/service-and-payments/2022-changes-to-ebay-and-your-1099-k.html

IRS - regarding "hobby" classification:

https://www.irs.gov/newsroom/heres-what-taxpayers-need-to-know-about-paying-taxes-on-their-hobby-act... 

https://www.irs.gov/newsroom/tips-for-taxpayers-who-make-money-from-a-hobby

Brian

[warbar.com]

Simplification: The key word is 'Sales' Tax - you are being taxed on the amount of the sale, not the item being sold. If you are involved in a cash Sale, that is what the Gov is taxing - the exchange of money.

Exceptions do exist; if an item is non-taxable/tax-exempt such as food or clothing in some states, then theoretically depending on law, tax is not due, unless the item sold is now classified as a collectable for instance. There are thousands of 'If's' in tax laws.

[southern*sweet*tea]

People are always confusing reportable income with taxable income.

Every. single. penny you are paid, no matter the amount and no matter the source, is reportable.  It's been that way for 100 years or more.

Just because it's reportable does NOT mean it's taxable.  If you take the appropriate deductions, you lower your taxable income. 

If you sell an item found in the bottom of your closet that you bought 20 years ago, that total amount you got paid is reportable income.  It doesn't matter how much you bought the item for or how much you sold it for.  You may or may not owe taxes on it.  If you are in the 10% or 12% tax bracket you probably won't owe any tax when all is said and done.

It's up to you to take the appropriate deductions (or not) to determine the taxable amount.

[vicsfloridagarage]

What documentation qualifies?  I bought a large collection of items with the sole purpose of selling (most) at a profit or at least break even.  There are no individual receipts for each item.  Do I divide the total amount of the purchase between the items?  Other than the total purchase price, what proof do I have. Most of this stuff is vintage electronics.  Also, if I pick up an item free from the dumpster, fix it and sell it, is it 100% profit?  Also, the only beef I have with ebay is that I don't imagine they should include the shipping as part of the gross income.  The buyer paid me and I in turn purchased the label at the same price.   If I don't file as a sole proprietor I will be paying tax on monies that aren't really incoI'me.  The IRS doesn't require an EIN number for an individual like me.  How do I know?  I read the IRS site thanks to other posters on this board.  It's just a major pain in the butt.  I'm not making piles of money here.  Some profit, some loss...

[varebelrose]

" I don't imagine they should include the shipping as part of the gross income"

Its part of the gross income, so yes it needs to be reported. The good thing is that every cent of the shipping costs, the eBay fees, the mileage on your car to get to the post office, the square footage of your storage area, can all be deducted from that gross income. Easy peasy when you file a sched C, you do not have to be a 'formal business".

[bigdadsb]

I will also stop selling. I am not interested in any additional paperwork added to my regular full time jobs income tax filing for the small amount I sell.....my situation is unique as I sell to add volume to a retail store and turn very little, almost no profit from the actual sale of the items.  For the past years I have avg. about $2800 in gross sales per year.....this year I will stop selling at $599 in gross sales.... 

[deltilogical]

Its a free country!

[deltilogical]

They're both forms of theft!  They may be applied differently but its still theft.  You are still having your wealth forcibly taken from you.   

[kh-belma]

Hi everyone,

Due to the age of this thread, 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.