mam98031 • Volunteer Community Member • Buyer/Seller since 1999
ShipScript has been an eBay Community volunteer since 2003, specializing in HTML, CSS, Scripts, Photos, Active Content, Technical Solutions, and online Seller Tools.
There was a wonderful Podcast earlier today on the subject of 1099Ks. I would encourage sellers to take the time to go and listen to it or read the transcript, whichever is best for you. It is worth the time. Even if you think that you have a handle on the subject, it might just clarify something for you.
There was just a few things I'd like to clarify that come up in the Podcast.
There was discussion of what a SSN, TIN and EIN are. EIN is for Corporations and/or LLC. SSN & TIN is for individuals and sole proprietorships. A TIN is NOT exactly like an SSN. It is another number you can apply for from the IRS in order for you to help protect giving out your SSN. You can apply for the use of a TIN.
Throughout the Podcast Manish refers to Sales as to what the dollar figure reported on the 1099Ks and it is NOT sales. As many of us know, if we have a sale, sometimes the buyer simply doesn't ever pay. These non paid sales do NOT ever appear on a 1099K. 1099K's are reporting TOTAL MONEY received.
The $$ represented on a 1099K by Ebay or any other money processor is for how much MONEY was received into your account BEFORE any type of deduction to include refunds. 1099K represent your GROSS RECEIPTS before refunds of any kind for any reasons.
So in the Podcast, keep that in mind. Your 1099K is NOT reporting your Sales nor is it totally about your sales. It is all about the MONEY you received and was processed by the Money Processor, in this case Ebay.
This statement was made in the Podcast, while not wrong, I just thought a little more clarity was needed. "So you won't owe any taxes on something you sell for less than what you paid for it." This is specifically regarding those that sell only there personal stuff. I know for some that may have been crystal clear but others it may not have been and this is such an important point for MANY Casual Sellers.
"I'll add one final note on this subject of $600 threshold. It is calculated based on the date on which your item sold and not the date on which you received money in your account which may sometimes be different." First I don't think anyone is getting their money the same day a buyer pays, not in MP anyway. Second, the amount that appears as your Net Receipts on your Ebay 1099K is NOT based on your sale date / transaction date. That is incorrect. It is based on the Payout / Settlement date. The date MP releases your Payout to you. That is the date Ebay uses to calculate the Gross Receipts for each seller.
So this means if you are a seller that gets a Weekly Payout. In 2021 your last Payout was 12/28/21. So the remaining sales you had in 2021 will appear on your 2022 1099K.
In the Podcast they refer to the Ebay FAQs on the 1099K, here is the link.
https://pages.ebay.com/seller-center/service-and-payments/2022-changes-to-ebay-and-your-1099-k.html
In your case, eBay need only send the 1099-K to the IRS and they will share that data with California.
The IRS has a sharing program called "Combined Federal/State Filing (CFSF)".
For states participating in this sharing program, anything sent to the Feds will be shared with the states.
As a California business, I have not had to submit any 1099 or W2 forms to the state in perhaps 20 years.
https://www.efile4biz.com/resource-center/combined-federal-state-filing-program/
These states are in the sharing program:
AL, AR, AZ, CA, CO, CT, DE, GA, HI, ID, IN, KS, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NJ, NM, NC, ND, OH, OK, SC, WI.
These non-participating states requiring direct filing: IA, IL, KY, NY, OR, PA, RI, UT, VA, WV, VT, DC.
Then there are states with no income tax, so only the feds would get the 1099: AK, FL, NV, NH, SD, TN, TX, WA, WY.
However, some states in the data-sharing program would still require eBay to send forms directly to the state as shown on the chart on this page:
https://blog.tax1099.com/form-1099-k-state-filing-requirements/
@coolections wrote:
@mam98031 wrote:I think there is a misunderstanding as @chapeau-noir is far more experienced in this and offers great advice. So I think there is some miscommunication here.
If you are buyer stuff to sell on Ebay or in any other place. Your income is taxable and you CAN deduct your legit expenses using the Schedule C of your Federal tax return.
You do NOT have to have a Business account on Ebay to be able to deduct your expenses from your sales on your Federal Tax Report.
That is where I am confused. I posted the same info and 3x now @chapeau-noir came back to let me know to stop posting misinformation which is exactly what you posted.
IDK what you are referring to. You would have to show me the posts.
@tealt wrote:
@mam98031 wrote:
You may disagree with that being the reason that Ebay released 1099Ks to California sellers at a $600 threshold, but whatever reason there was they did it. Ebay has verified this and are looking into it. I don't know how important it is to find out why they did it.
But even though they did, it really should not be a big deal. Even money made on Ebay less than $600 is suppose to be reported on our Federal income tax reports.
1) I don't disagree with the reason eBay issued those CA 1099K's because I don't know what the reason is. EBay has made no announcement, explanation, no sorry-for-the-inconvenience. No nothing.
2) It is a big deal because when TurboTax asks about 1099's received for 2021 I must give an accurate answer and I don't know whether eBay has sent that 1099K to the IRS, the Franchise Tax Board, or both.
3) I have paid taxes on my business income (B&M and online) for the last 40 years.
1. An announcement would NOT be the responsibility of Ebay to do. It is your state that passed a new law, it should be your state that is communicating with you. Ebay made no announcement for the dozen or so other states that have a 1099K requirement.
2. Oh they sent it to IRS. They were required to release them by 1/31/22. Part of that process is sending them off to IRS. I was unaware that Ebay had any requirement to send 1099Ks to a "Franchise board". Is that specific for your state?
3. Then it doesn't matter whether or not you got this 1099K. You would have reported all your income appropriately, so the 1099K will make no difference. Just make sure you reconcile it and keep your worksheets to prove it. You'll be fine.
Why? Why would your 2021 tax return be inaccurate? If you reported all your income, then you were accurate. The 1099K is just supporting documentation. As I said in my previous post, just make sure you reconcile it and keep your worksheets to prove you reported your income properly.
OK, then say Yes in TT and move forward.
Your last statement was answered in my previous post.
@shellistoys wrote:"Keep in mind you have MORE expenses to deduct that just your shipping charges and fees."
Yes, of course - I was just referring to the expenses that would be included in the amount the buyer pays. I think that's what's confusing sellers - eBay is serving multiple roles 1) payment processing company 2) shipping company and 3) sales platform, so it's difficult for someone who hasn't itemized business expenses before to sort it all out.
To find out which expenses related to selling goods on eBay are deductible, read the instructions for IRS Schedule C. https://www.irs.gov/pub/irs-pdf/i1040sc.pdf If you use tax reporting software like Turbo Tax, the business version of the software will walk you through expenses and deductions also.
Maybe some but most sellers should not be confused. It is unlikely this is the first year they have had to claim Ebay or internet income on their Federal Tax Report. Most sellers are not new to this process, so they should be well aware of what is an expense and what is income.
Granted getting a 1099K may be new for some but reporting their income on their Federal tax returns should not be.
Yes it is, you are correct. States still share their information with IRS.
@glasser wrote:The podcast was helpful. I think one thing could have been clearer. When they say all eBay sales, I am assuming that includes amounts collected for postage as well. So, the cost of postage is then deducted from income as fees would be. Unless of course the postage was less than collected and that becomes income.
IMHO the easiest way to look at this is the Gross Receipts shown on your 1099K is the total MONEY that entered your MP account for the period. It does not take into considerations any kind of refund for any reason nor does it take into account any expenses. It is simply the TOTAL amount of money that entered your MP account.
