Advice selling with the 1099K changes - I'm not a business

[tanooki-suit]

Last year with the rotten steep change in value before the 1099K coming that's in place now I had moved to offload a lot of my old collection in my spare time.  Not a job, didn't have the time to go nuts and get it near finished.

I'm not going to engage in or debate so called tax fraud over non reporting.

I'm asking, since I'm being forced to behave as a business if I decide to start selling again on ebay, how do I protect myself and in particular my refund?  We are not rich, anything but, so this change is a two faced kick in the teeth as we rely on the refund for my kids schooling and summer camp funds entirely.

I want to off load more of my old stuff, obviously and this is what disgusts me, I have noNO receipts and no proof I've had X items for 30 years or 30minutes so I can write it off which I should be able to as a loss on the whole.  What do I do?

I don't want my refund decimated or at worst owing?!  Is there an online one stop shop click or whatever I can do to funnel some percentage of money to the IRS so they leave my refund alone?  Ebay seemed fine collecting state tax and all that in pre-processing both either as a seller or buyer.  So what do I do now?  If I need to sent the IRS like 15% or something, is there a way I can send funds to their account much like running a card or doing a paypal transfer?  Thanks.

[fab_finds4u]

It isn't  for businesses only.  Whether you sell casually or with a business license it doesn't  matter. If you are receiving income it's reportable.  You may not owe any tax on your eBay income after your itemized  deductions but people automatically assume they'll owe.

[richard454]

"In a garage sale, you generally sell household items you purchased over the years and used personally. If you paid more for the items than you sell them for, the sales are not reportable," the IRS says. So your neighbor is wrong. You don't need to claim your garage sale proceeds on your tax return.

The IRS is behind a couple of years- they are trying to get a bunch of new hires- but can't even train them as most of the ones approaching retirement are leaving- as the pension for them is a great deal.

AND the IRS is going after the low hanging fruit- as most will pay the few hundred or thousand - as that's what an attorney will cost you an hour- and be done with it. Unfortunately a 1099-k mismatch doesn't require a human being- the IRS  computer will generate letter- and then you'll have to deal with it. Those who "work" the system will continue to do so- and those they try to follow the rules- only get more.

It's going to be a mess- as the requirements for saving a documents is usually not going to be over 10 years.

I'd go ahead and sell- you are on the right side of the law....

IRS Garage sale  

"Income resulting from auctions akin to an occasional garage or yard sale is generally
not required to be reported. However, there may be exceptions. If an online garage sale
turns into a business with recurring sales and purchasing of items for resale, it may be
considered an online auction business"

[maxine*j]

No one here can give you the advice you need.  No two people have exactly the same tax situation.   Reported income will have a different effect on each taxpayer, who may owe nothing on the income, a few dollars, or a substantial amount.

You need to spend the money, just once, to get help from a tax professional.  After that, you can figure out how to handle things yourself, if you continue to sell.  The record keeping is not hard, and the eBay 1099 and reports actually make it easier than it was.

Do not rely on advice from anyone here, or from anything you Google.  It's not that anything you're told here or that ou find with Google is necessarily wrong, it's that it does not necessarily apply to you.

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[tanooki-suit]

I can agree with that, each has their own unique take.

I was looking more in a direction of who to talk to, what site on the IRS page may allow me to pay them and a general idea of how much, maybe setup auto pay.  That kind of stuff.

i'm offloading stuff I've had as far back a a few years to childhood as I'd rather let someone enjoy it than load up a land fill.  I don't have receipts for a single item.  For instance I have sold 30+ year old video games that would have been probably $20-50 back in the era, but now they maybe worth $5 or $200.  Ebay will just report I made say $2000 over the year.  I see no way I can ever report accurately to government satisfaction that I ate a loss or didn't.  That's my worry.  If anything I'd rather over pay like 15-20% of what ebay reports, then have them send me more back on a refund than lose that refund on large.

[monica-sells]

All helpful advice.....but remember (as mentioned) One size does not fit all....

(so take a moment to get advice from a Pro...it is worth what you might save)

This is an "accepted" method I saw and was told it is accurate.....

You may have to rely on your memory about how much you paid for the item. In that case, record the cost but keep some type of written memo to the file, such as "Purchased at Danbury antiques fair, March 1966, for $10." You can also look at old auction catalogues and ads in antique toy collectors' magazines to see what specific toys were selling for at roughly the time you bought them. The IRS usually will accept that type of information. I have also been advised that claiming you "spent $50.00 on a screwdriver is not going to fly"...in other words, unless you can actually present receipts, estimate on the low side to reduce your initial cost basis

[coolections]

My guess is the majority of the stuff you are planning to sell will be written off. You can estimate the approximate value of each item. You have to report all income (1099) they send you. From there use schedule C. You can deduct all original purchase cost plus the cost for shipping and fees. If you are just small time and offloading possessions, the tax you owe will probably not be much when all said and done.

[tanooki-suit]

You may be right, last year was an anomaly as I saw the writing on the wall.  I've been slowly chipping away at my game, toy, etc collections for years now which is why I have the star rating I do.  Usually it has been a few K (5 tops, at best) but given how exploitative and nasty things are now with said items it takes little to break 600 or even a 1000 after just a few items.  I wish calling the IRS themselves wasn't a job and a long wait, maybe a local national company rep might have some advice at the counter to clarify things.

[rfmtm]

While you should report whether you get a 1099 or not, if you do get a 1099, the IRS will be looking for that income to be shown somewhere on your return or you will be receiving a letter from them about it.

Currently the IRS is allowing a simplified way to do this when just selling personal or garage sale items not for profit or as a business or hobby. You report the total amount as Misc/Other Income. You then can post an Adjustment up to that total amount to offset that income. This results in a wash (zero profit), you will owe no taxes, and the IRS will be happy.

Any accountant or tax software can guide you through this.

[luckythewinner]

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@tanooki-suit wrote:

I'm asking, since I'm being forced to behave as a business if I decide to start selling again on ebay, how do I protect myself and in particular my refund?  We are not rich, anything but, so this change is a two faced kick in the teeth as we rely on the refund for my kids schooling and summer camp funds entirely.

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Your refund is your money that you accidentally overpaid because your withholdings are not accurate. If you rely on your refund as a savings account because you lack the discipline to save for known expenses on your own, then you may need to adjust your withholding amount so that you continue to voluntarily pay too much money into the system. 

When it comes to taxes, you seem to focused on preserving your refund rather than minimizing your tax liability. The two can be related, but they are not the same thing. 

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@tanooki-suit wrote:

Is there an online one stop shop click or whatever I can do to funnel some percentage of money to the IRS so they leave my refund alone?  

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You would need to make quarterly tax payments, of if you have a job outside eBay you can amend your W-4 and specify an additional withholding.  But it would need to be a set dollar amount. 

[buyselljack2016]

This year is no different than last year.

If you can not determine a way to pre pay,  (google may be your friend) you just put money aside from your sales with the expectation that you may owe more than withheld.  If you put away more than you owe it becomes your refund.

Only drawback to that method is that it is possible to fall into the "did not pre-pay enough during the year" penalty arena.

[katzrul15]

Your title says you are not a business.

Unfortunately, the IRS is likely to disagree.  You do not want to be classified as a Hobby.

You and many others considered this to be a side-hustle to earn extra dollars.  Unfortunately, that income was always to be reported, regardless.

You state you wish to start aelling again

  Then you need to EMBRACE that this is not a NEW change.  Nothing new - the income was/is potentially taxable.

Meet with a tax professional.  Get everything set up correctly.  Your account shows a lot of buying - if those are for re-sale, you are a business and easily traceable.

[dnasilver]

Although I disagree about not relying on any advice from people on here......such as those who state it is best to consult with a CPA or Tax Lawyer......since that is the best advice anyone on here can give! (even if it is advice you should not take from anyone on here) ......confusing yes - Hire someone to tell you the best way to handle your  distinct financial situation.

[dnasilver]

eBay does not report what you made. It reports the dollar amounts of transactions that you have. A CPA or Tax Lawyer can tell you exactly how to handle your specific financial situation. It really is not a big deal and there is no need to worry about it. To have a loss from selling a personal item there is something you need to think about. Items have a life value (business term depreciation). You buy a boat for 100 dollars and get thousands of dollars of value from personal enjoyment (the cost of renting said boat over 30 years) does not mean you have a loss if you sell it for 50 dollars. Best to consult a CPA or Tax Lawyer to help you understand the nuances of accounting terms.

[maxine*j]

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@dnasilver wrote:

Although I disagree about not relying on any advice from people on here......such as those who state it is best to consult with a CPA or Tax Lawyer......since that is the best advice anyone on here can give! (even if it is advice you should not take from anyone on here) ......confusing yes - Hire someone to tell you the best way to handle your  distinct financial situation.

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Well, you got me there!    OP should not any advice here, except the advice to not take any of the advice here, which advice... 

I see is people akways advising others on how to appear to not be a business.  But if one is operating a business, one has expenses and costs to lower the net.   Those who insist they are not businesses, that they're selling off a collection, say, or the stuff Mom left them, may end up paying higher taxes, even hefty capital gains taxes.

So my advice is to take no one's advice except mine, which is to consult a tax pro.  😁

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