2022 IRS Changes - selling old items with no receipt

[backhomeoutdoorz]

I sell mostly used clothes on ebay.  These are clothes that my family has worn and I sell at a loss.  The majority of these clothes I do not have receipts for.  How will this work moving forward when sales are reported?  Will the IRS accept my report that I made no money on these without proof?  I don't understand how this will work for the non-business people on here without getting screwed.  

[coastaltechsolution]

Cost of living will always increase 

we can talk about our grandparents or our parents, even how we have seen it increase in our adulthood 

[757debi]

I am not a seller just a mom selling my kids used clothes and shoes, Does the new rule of $600 cap is that for a month or year?  I knew of the 200 transaction or $20,000 but never an

issue since I didn't come close to either.

[nobody*s_perfect]

You are a seller, since you sell things. It's not exactly a "cap."

Anyway, eBay will issue you a 1099-K next year if they process more than $600 for the year, that includes the buyer's full payment including shipping as well as the item price.

You will need to find a reliable source of information regarding deducting your original cost of those items, so you have no net profit to report. These discussion boards don't seem to be the right place to do that.

[coastaltechsolution]

$600.00 is for the fiscal year no natter how many sales 

Yes that is $600.00 on GROSS sales no matter if you made a dollar 

I hope you were keeping track of everything sold/purchased/expenditures/losses 

If no then better start now (good as time as any) because there will be little hope in evading paying/reporting to the IRS now 2022   

[johnrj1226]

@chapeau-noir

He said  to me when I asked him about it and he said  what better person would you rather by from "Fast Talking Eddie" or a preacher?.    I grinned and said your right.  He was well know in his community as a good person - this was in Texas.  He was a used car sales man before he  became a Preacher and took up the tote the note business  after he retired from active preaching.  He still "pinch hit" when he was asked.

Ciao - Black Hat - had two years of French in HS  don't recall much but those words I do.  My main language is "Americanese"  'cause we don speak English like those  Blokes adn Blokettes or Birds do across the pond.

[anasazirose]

I like a total breakdown, if the buyer pays $9 for shipping, and I pay $7, I want that on my spreadsheet.  If a buyer pays $9 and I pay $12, I want that on my spreadsheet, if a buyer pays $0, and I pay $10, I want that in black and white, not just a total at the end. 

Also, I understand that the buyer's total payment is not reported as gross income, as sales taxes are paid as part of the buyer's total payment, yet not included in the 1099.

As for the reference to handling charges, yes, I stated that.  That would be profit. 

I've learned in dealing with those who have the power to allow or disallow adjustments to income in whole or in part, I want to be able to provide an amount for every question. 

If the amounts are not broken up in the chart, and your auditor asks, "How much of this $100 sale did you pay for shipping?", I want to be able to answer that.  If the question is "How much of this $7.42 the buyer paid for shipping actually went to ship the item?",  I can provide the answer.  Unlike a congressional hearing where the answser is always, "I'm sorry, I don't have the answer to that, but I'll be glad to get back to you".

The 1099 will be gross amounts handled by the seller, not all of which will be taxable, BUT charging retail shipping and paying commercial shipping may create a separate taxable event.  It's best to be prepared.

[anasazirose]

and I wonder how the IRS would view that. "

It doesn't matter what anyone else says about it except IRS. This isn't something that a peer group makes a decision on, ONLY IRS makes that determination.

By saying  'I wonder', I was not asking anyone a question.

You said, "As to your final question, I answered that before and the answer is yes." 

I haven't asked any questions in this thread, only offered my personal situation in response to posts.

I then responded to you seemingly not understanding that while I was referring to quantity of items sold, I was neither assuming nor implying that it made any difference at all to the IRS.  As I said before, it was in reply to someone stating that selling over 100 items a year meant that the seller couldn't be doing personal sales.

[chapeau-noir]

reply to someone stating that selling over 100 items a year meant that the seller couldn't be doing personal sales.

Whomever said that doesn't live in my house. 😣  And we're not even particularly acquisitive. 

[mjjb_56]

Since 2018 when the law changed you can not report your sales as a Hobby business.  That means you must report you sales as a Business. 

With no receipts that means you have to report all you income  from Ebay on your 1040.

The Hobby business tax form will return after 2025.

So you either stop selling at once you near 600 and wait and see.

You can write your Congressmen and Senator about this.   Ebay has a form as they are not pleases about the small sellers who sell things from their home having to pay taxes on it.

I got a answer from 2 Republican Congressman who are against this new law that Biden put in place and they want to change it to 200 sales and 10,000. 

I also got a letter from a Democrat Senator who is in favor of it because he feels everyone should pay taxes on any sale.   But he also stated that there is discussion about delaying this reporting requirement to give

Paymemt Apps the time to play catch up to the new requirements.

This law was put in the Build Back Better Bill that has stalled.  So any changes are in doubt.

This money was counted on by Biden to pay for Build back Better projects and the child tax credit payments.

Selling your used clothes at a loss is not fair to have to report as income but that is what it has come to now.

[anasazirose]

That is incorrect information.

Especially where you advise to stop selling at $600.  If it's taxable income, it doesn't matter whether you get a 1099 for it or not.  You report it, and pay taxes.

For personal items sold for less than the item cost, if the amount is reported to the seller on 1099, it is required to be reported, but that amount would not be taxed.

For personal items sold for more than the item cost, whether or not the amount is reported to the seller on a 1099, the amount needs to be reported, and the profit is taxed.

The advice to get involved politically is spot on.

[chapeau-noir]

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@mjjb_56 wrote:

Since 2018 when the law changed you can not report your sales as a Hobby business.  That means you must report you sales as a Business. 

With no receipts that means you have to report all you income  from Ebay on your 1040.

The Hobby business tax form will return after 2025.

So you either stop selling at once you near 600 and wait and see.

You can write your Congressmen and Senator about this.   Ebay has a form as they are not pleases about the small sellers who sell things from their home having to pay taxes on it.

I got a answer from 2 Republican Congressman who are against this new law that Biden put in place and they want to change it to 200 sales and 10,000. 

I also got a letter from a Democrat Senator who is in favor of it because he feels everyone should pay taxes on any sale.   But he also stated that there is discussion about delaying this reporting requirement to give

Paymemt Apps the time to play catch up to the new requirements.

This law was put in the Build Back Better Bill that has stalled.  So any changes are in doubt.

This money was counted on by Biden to pay for Build back Better projects and the child tax credit payments.

Selling your used clothes at a loss is not fair to have to report as income but that is what it has come to now.

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Every time someone tries to politicise this, they have the facts of simple tax reporting wrong.  Every.  Time. 

And I even AGREE with the congress critters who want a higher di minimis.

[mam98031]

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@anasazirose wrote:

As the cost of living has increased, $10 20 years ago could buy more than $100 can today.  Bread, a pair of shoes, wool blankets or socks, silver, cars, gasoline, adjusted for inflation, the $90 profit isn't really a profit at all. 

I am not referring to collectibles that people buy, like a $10K baseball card, pyrex etc.

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Yes and on many things that people sell from their closet of garage, they used the items off and on while they had them.  

IRS goes by fair market value.  You are free to argue that point with them if you'd like.

It does not matter if you sell collectibles that you have owned for awhile and decided to get rid of for whatever reason you may have or if you are selling last winter's coat because you no longer want it.  They are treated the same by IRS.  These would be items that are likely not taxable.  If you had the one sale that was profitable and 20 others that weren't, it isn't likely you have any additional income to claim, but if you go over $600 in sales you will have to report all of it on your Federal Income tax Return for 2022.

Now for those that go out and purchase collectibles to sell on the internet, that is a business and subject to paying income tax on all profits.

[mam98031]

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@anasazirose wrote:

I'm not hung up on anything.  I referenced how easily I could come up with a large quantity of personal sales in reference to a thread within this thread where one commenter suggested that someone with over 100 sales must be flipping for profit as it seemed inconceivable to them that anyone could have that much unused, unwanted, and unneeded STUFF.  (note the 'reply to' in my comment, and if you click on it, it'll take you to that comment.)

I don't sell anyone's stuff, nor do I have a 'need' to.  Heck, not even mine is moving.  But thanks for your advice about following IRS rules....not sure I'd have thought of that.... 😉

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But as I've repeatedly said, quantity doesn't matter nor does it determine if you are just selling your personal stuff or running a business where you buy things to resale.  Whether you sell 1 item or 1000 items, it does not matter in regards to a 1099K.  What matters is if you have sales of $600 or more.

I just went by what you posted before, nothing more.  You mentioned your mom's stuff and potentially selling the stuff or something.  So that is why I commented on selling other peoples stuff.

[mam98031]

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@757debi wrote:

I am not a seller just a mom selling my kids used clothes and shoes, Does the new rule of $600 cap is that for a month or year?  I knew of the 200 transaction or $20,000 but never an

issue since I didn't come close to either.

---

You absolutely ARE a Seller.  Everyone is once they sell a single transaction on the internet.  I'm a mom too and I sell stuff on Ebay for quite a few years now, I'm a seller just as you are.

The $600 1099k rule is NOT a "cap".  If you sell $600 or more on Ebay, you will received a 1099K from Ebay in early 2023 for your sales here.  This threshold changed from what you knew it to be as of 1/1/22.

However, we are talking about thresholds here for a FORM, specifically the 1099K.  That has NEVER been the minimum threshold for reporting income to IRS on your federal tax reports.

You have some listings that are of New items.  Are you saying your kids got those lego sets and then never even opened them?

@757debi 

[liawrig.nq8rdwqa3]

IMO -- Our tax system is screwy and confused. With each new administration there are changes and it gets more complicated.  But, if you're going to sell old clothing "at a loss" then you should be selling at a flea market. Or consign your clothing.  That way you don't have to deal with 1099s.