Erroneous 1099-K ?

[hellodear]

  I live in Maryland.  in 2021 I sold 35 items that resulted in $7,213.90 in sales.  (My profit isn't even 20% of this amount.  )  Yet, I just received a 1099-K from eBay.  What is going on? I have called eBay; I was promised a response.  It has been more than 5 hours and I have heard nothing.

  For 2021 the lowest level for  1099-K reporting is supposed to be $20,000  and/or 200 sold items (not sure about item number) as it has been in the past. In 2022 the dollar amount changes to $600.00 (again, mot sure about the item number.) So I am at a loss as to why I received this.  I am extremely upset and worried as to why this happened and how it will be corrected.  FURTHERMORE, if eBay is aware of this, why wasn't an email sent to those affected or to those sellers potentially affected?  

[glasser]

It's possible that MD has a lower threshold for reporting. Have seen some other related threads on this.

[stainlessenginecovers]

Maryland requires all 3rd Party Processors to issue a 1099k to all recipients that exceeded payments of $600; this new law was passed and started as of Jan 1, 2021.

You will NEVER get a call back; because A.) they are swamped B.) your 1099 is correct. 

[mr_lincoln]

Hi @hellodear ,

Please google your own state's 1099 K requirements ... here's a excerpt to one post on this subject for Maryland:

What is the 1099-K threshold for 2021?

The American Rescue Plan Act of 2021 (the Act) significantly modifies the reporting threshold associated with Form 1099-K, Payment Card and Third Party Network Transactions, from $20,000 in aggregate payments and 200 transactions to solely a threshold of $600 in aggregate payments (with no minimum transaction ...

If the state worked it out with eBay to conform to the state guidelines then that is your answer ...

Regardless of whether or not you got the 1099 K was the amount they showed accurate?  This assumes you would have reported that amount for income tax purposes regardless of whether or not eBay issued a 1099-K ...

Regards,

Mr. L

[nobody*s_perfect]

Maryland is one of several states that already require eBay to submit 1099-K's for lower thresholds, mostly $600. Here's eBay's memo about it, from February 2021:

https://community.ebay.com/t5/Payments/Form-1099-K-Detailed-Report/m-p/31575590#M106915

[johnrj1226]

eBay can't figure out what percent profit you made (e.g. what  was the cost of the item you sold icluding any shipping  cost you paid, sales taxes - stat, count, city, etc.) - receipts are very helpful).  Your state an/or the IRS is the one you have to  prove that to as  your net profit before taxes will be your taxable income.

[kensgiftshop]

@hellodear 

What difference does it make if you receive a 1099-K?

Report your income like you've always done, or supposed to be doing.

[janet9988]

---

@hellodear wrote:

  I live in Maryland.  in 2021 I sold 35 items that resulted in $7,213.90 in sales.  (My profit isn't even 20% of this amount.  )  Yet, I just received a 1099-K from eBay.  What is going on? I have called eBay; I was promised a response.  It has been more than 5 hours and I have heard nothing.

  For 2021 the lowest level for  1099-K reporting is supposed to be $20,000  and/or 200 sold items (not sure about item number) as it has been in the past. In 2022 the dollar amount changes to $600.00 (again, mot sure about the item number.) So I am at a loss as to why I received this.  I am extremely upset and worried as to why this happened and how it will be corrected.  FURTHERMORE, if eBay is aware of this, why wasn't an email sent to those affected or to those sellers potentially affected?  

---

Where did you read that info? Did your tax accountant tell you that?

[mr_lincoln]

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@kensgiftshop wrote:

@hellodear 

What difference does it make if you receive a 1099-K?

Report your income like you've always done, or supposed to be doing.

---

@kensgiftshop   For some it winds up being a shock to suddenly have to report their sales ...

[scrane2006]

1099-K just another Tax form, like other said keep all your receipts, shipping, gas, meals, supplies, inventory expenses, anything related to eBay that you can be deducted, the government wants your hard earned money so its up to you to make these deductions to keep as much as you can.... Happy Tax Time  

[yuzuha]

It's not erroneous; Maryland, Virginia and DC all require 1099-Ks to be sent for any transactions totaling over $600.

[travelnurse74]

Hi all, 

I too did not know Maryland was one of a handful of 6 states that started $600 minimum in 2021 instead of 2022.  Anyway, I went back to selling this year and just sold a bunch of my own stuff that I have had in my basement.  Old kid toys, some used and some new.  All that I have purchased myself or received as gifts over the years.  How do you show the IRS a profit or not, when some of the things are over 10-15 years old?   I should have just sold everything on CL or Facebook Market.  This is so confusing.  

[stainlessenginecovers]

What $ amount are we talking (total sales?)

You should contact your tax person, but if the amount is just a couple grand or so, I would:

Write each item; put an 'approx' cost and 'approx' date and use that amount as a 'cost' basis. I would use schedule C and write off Shipping and Ebay Fees as well (at least). If there is a profit (doubtful) you would have to pay Self Employment Tax of 15.3% (Social Security). 

[chapeau-noir]

As @stainlessenginecovers  says it's doubtful that there's a profit.  As a matter of fact, you can write off your fees and mileage to the post office, etc., supplies and the like, too.  The schedule C is pretty straightforward and there are lots of guides online as to how to do it.  Basic step by step.

[johnrj1226]