1099k

[daddyfish58]

I see posts all the time saying that the 1099k shouldn’t change anything because we are to be paying taxes on the sales we make. However like I’m guessing thousands of other resellers I do this part time  for a hobby. I’m retired and travel to different states to go thrifting, auctions and flea markets and I’m fairly certain the amount of money I take in from sales doesn’t come near paying for expenses like meals mileage ext. . By the time I figure internet , phone , storage, utilities I’m sure I’m not. My return from 2020 still hasn’t been processed by the I RS and they want to add all this extra work for minimal gain?  Makes sense to me

[nobody*s_perfect]

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@coolections wrote:

@evry1nositswindy 

I am not retired and work for the man so just curious, how do you pay your SS payments to be eligible to receive the SS income?

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That's part of the income tax return: Schedule SE, which is a follow-on to Schedule C.  

[gracieallen01]

Unfortunately, what you consider a 'hobby' - for your convenience, for entertainment, a little extra cash, something to do in 'retirement' - the government considers a source of income.  The government says that taxes are owed on income, though they give you a way to only pay taxes on what you profit from that 'hobby'.

Nothing has changed over the centuries - people still want something for nothing.

[dbfolks166mt]

      There is actually a HUGE advantage for the true hobbyist as a result of the new 1099 reporting requirements and there is still room in this arena for those sellers. For the true hobby seller that operates at a loss assuming they have not been reporting income on their taxes prior to receiving the 1099's they can classify their hobby as a business and if they are operating at a loss take the loss against any other income they may have. While they can only do this for 3 years, potentially, before the IRS classifies them as a true hobbyist it affords them the opportunity to take the expenses and loss for a short period and possibly longer. 

     What may potentially turn out to be a major loophole is the IRS specifies that you must, as a business, show a profit in at least 2 out of 5 years to still be considered to be a business. What it does not specify is that the profit has to exceed or offset any losses in previous years. 

[wildpitchsports]

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@dbfolks166mt wrote:

      There is actually a HUGE advantage for the true hobbyist as a result of the new 1099 reporting requirements and there is still room in this arena for those sellers. For the true hobby seller that operates at a loss assuming they have not been reporting income on their taxes prior to receiving the 1099's they can classify their hobby as a business and if they are operating at a loss take the loss against any other income they may have. While they can only do this for 3 years, potentially, before the IRS classifies them as a true hobbyist it affords them the opportunity to take the expenses and loss for a short period and possibly longer. 

     What may potentially turn out to be a major loophole is the IRS specifies that you must, as a business, show a profit in at least 2 out of 5 years to still be considered to be a business. What it does not specify is that the profit has to exceed or offset any losses in previous years. 

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So let me ask this: 1. Buyer purchases a Joe Burrow RC PSA 10 for say, idk $15,000. Grossly overpaid. 2. Realizes this and then resells it for $5,000, thus losing $10,000. Are you saying he can deduct that $10,000 loss from other income if he meets business criteria? That doesn't make sense for some reason. That seems to me like it would create a massive money laundering loophole.

Genuine question.

[genv]

" Retired " ?

What is that ?

[genv]

A lot of people buy & flip to OFFSET the cost of the "fun" in their travel.

[monica-sells]

there is not 1 simple answer to that scenario (as best as I can recall)

most likely you would use Capital Gains/Loss (Schedule D) for a "one-off' sale like you mentioned...

yes, the loss can offset (reduce) taxable income, but there are limitations (but, there are carry-forwards too)

it gets complicated.....if you add it in with "other" sales and use schedule C it becomes even more convoluted in order to take losses to offset income...so, as I understand it, your scenario will dictate which method(s) you would use. 

Of Note (I add this because LLC in the past could file losses and simply add them to your personal return):

If the only member of the LLC is an individual, he must report the loss from the LLC on Form 1040, either using Schedule C, E, or F. The IRS treats the one-member LLC as a proprietorship, meaning he must file Schedule C to report the loss....

[fuzzface50]

 "Just curious why you would be willing to drive 180 miles to make $40-50?"

I see it differently.  I see it as someone that likes to get out on his bike and enjoy the freedom of the road and stop at a few places, enjoy themselves and picks up a few things to help offset his gas.

Just like us, some days we say "bleep" the world and jump in one of the convertibles/roadsters and enjoy ourselves in other towns and enjoy different sights and we might pick up a few things to flip to pay our gas bill that day if we see the right item.  

[dbfolks166mt]

Exactly. Of course you are not going to recover the entire $10K only the amount of tax you would have paid if not for the offset. As you stated therein lies one of the loopholes. It's not cheating on your taxes per se but tax avoidance. It does not really create a money laundering loophole since you do not actually recover the $10K loss in its entirety. 

[pburn]

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@wildpitchsports wrote:

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That seems to me like it would create a massive money laundering loophole.

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Only to one who doesn't understand the point of money laundering or how it works.

[papercollectit]

A 1099K reports your total sales.  In most cases I would think what you sold you purchased at one time, or made at a cost.  I would also think most people sell on Ebay to make a little money.  Schedule C is not terribly difficult.  Report on Schedule C what you sold in $$, what the item cost you in $$, and your selling expenses.   It's a lot better than declaring your total sales as income.