IRS $600 minimum threshold for 2024

[midtownmafia]

As of right now, Ebay shows the minimum threshold for 2024 being only $600. I did see something from Ebay that came out in April 2024 saying the threshold would be $5000 for 2024 and 2025, then $600 after that. Does anyone know for sure what the thresholds are? This is still a ridiculous amount and will eventually force me to stop selling on Ebay, just so I won't have to mess with hiring a dang CPA to figure out how much I lost each year selling on Ebay ... after the monthly Ebay store fee, selling fees Ebay takes from the purchase price and shipping price. I'm also wondering if this "gross amount" that Ebay reports includes all the taxes that Ebay takes out automatically that our hands never touch? The taxes should not be in our "gross amount" but I bet it will be. I understand it's our job to make deductions for internet, storage unit fees, shipping, etc.. but I would think taxes charged the buyer should not be included in our "gross amount". 

[lux.ra_14]

Meanwhile, one presidential candidate is floating the absurd notion that tariffs could allow us to get rid of income taxes altogether.

[jackpine-cll]

I am a 77 year old man selling a few baseball card i collected before I was a teenager...no cost basis of course..how does that make me a business...I do not have an ebay store.

[dbfolks166mt]

Meanwhile, one presidential candidate is floating the absurd notion that tariffs could allow us to get rid of income taxes altogether.

     While I would be fine with that there are always trade offs for every action. I cannot imagine what the tariffs would do to the price of imported products or any domestic product that is made with imported parts. 

[buyselljack2016]

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@dbfolks166mt wrote:

Meanwhile, one presidential candidate is floating the absurd notion that tariffs could allow us to get rid of income taxes altogether.

     While I would be fine with that there are always trade offs for every action. I cannot imagine what the tariffs would do to the price of imported products or any domestic product that is made with imported parts. 

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Then we apparently just don't understand how things work just as the economist that challenged the idea was told in an interview session 😂🤣

[tobaccocardyahoo]

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@jackpine-cll wrote:

I am a 77 year old man selling a few baseball card i collected before I was a teenager...no cost basis of course..how does that make me a business...I do not have an ebay store.

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You do not have to be a business to have business income. Even not for profit organizations can have business income.

If you own it and you sell it for more than you paid for it, it is potential business income. If you wish to treat this income as a hobby, you will still have to report it but might lose the ability to deduct some business expenses.

Life is simpler when you earn a wage and receive a W-2 form from your employer.

[stephenmorgan]

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@jackpine-cll wrote:

I am a 77 year old man selling a few baseball card i collected before I was a teenager...no cost basis of course..how does that make me a business...I do not have an ebay store.

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You don't have to be a business.

Since the cards are your personal property you would be selling Capital Assets.  Depending on your entire financial picture for the year, you may or may not owe Income Tax on any gains you made by selling the Capital Assets.  Selling a Capital Asset there are very few things that can contribute to reducing the Cost Basis.  You are not a Business so you do not get all the business deductions.  You would not however owe Self Employment Tax from the sale of Capital Assets because it is not Earned Income.

[mam98031]

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@jackpine-cll wrote:

I am a 77 year old man selling a few baseball card i collected before I was a teenager...no cost basis of course..how does that make me a business...I do not have an ebay store.

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@jackpine-cll 

For some reason lots of people feel as you do.  You, as others are, are hung up on the word "business".

IRS could care less what you don't want to call yourself a business or if you do want to call yourself a business.  It is NOT a qualifier for having to claim your income on your tax returns.  So to resolve it for you, simply don't consider yourself a business as that is simply not important.

https://community.ebay.com/t5/Announcements/eBay-and-TaxAct-partner-to-help-you-navigate-new-Form-10...

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

https://www.irs.gov/businesses/gig-economy-tax-center

https://pages.ebay.com/seller-center/service-and-payments/2022-changes-to-ebay-and-your-1099-k.html

https://www.irs.gov/pub/taxpros/fs-2022-41.pdf

[mam98031]

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@dbfolks166mt wrote:

Meanwhile, one presidential candidate is floating the absurd notion that tariffs could allow us to get rid of income taxes altogether.

     While I would be fine with that there are always trade offs for every action. I cannot imagine what the tariffs would do to the price of imported products or any domestic product that is made with imported parts. 

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The cost of the products being sold would increase for sellers, which in turn results in higher costs against what the item was re-sold for.  Highly likely that for some products [yet to be determined] would cost too much to be resold.

[mam98031]

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@tobaccocardyahoo wrote:

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@jackpine-cll wrote:

I am a 77 year old man selling a few baseball card i collected before I was a teenager...no cost basis of course..how does that make me a business...I do not have an ebay store.

---

You do not have to be a business to have business income. Even not for profit organizations can have business income.

If you own it and you sell it for more than you paid for it, it is potential business income. If you wish to treat this income as a hobby, you will still have to report it but might lose the ability to deduct some business expenses.

Life is simpler when you earn a wage and receive a W-2 form from your employer.

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You don't want the IRS to consider your income here as Hobby income on your tax return.  That isn't a designation you should want.  Hobby income can't deduct any costs.

Beginning in 2018, the IRS doesn't allow you to deduct hobby expenses from hobby income. you must claim all hobby income and are not permitted to reduce that income by any expenses. For tax years prior to 2018, you can deduct hobby expenses as an itemized deduction subject to 2% of your adjusted gross income.

https://turbotax.intuit.com/tax-tips/self-employment-taxes/4-tax-tips-for-money-making-hobbies/L89qz...

[lamewing]

And there’s the magic word, profit. If a person is selling stuff that they purchased years ago and no longer want, they most likely are not making a profit on junk they’re getting rid of. The problem then is they have to prove somehow rather that the old stereo from seven years ago has not appreciated in value. This is why the threshold should exist. So that people are that are just getting rid of old junk aren’t paying the IRS, the federal government, for things that they’re not making a profit on. There is the letter of the law and there is the spirit of the law. If I buy a camera brand new for $500 and even a year later sell it for $350, I should not have to pay a penny in taxes. I might even have the receipt to show that after one year. But say I decide to sell my canon AE one that I purchased in the 1980s. I’m not gonna have that receipt. So this puts a ton of work on just the average who is trying to get rid of old stuff. 

[sin-n-dex]

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@mam98031 wrote:

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@tobaccocardyahoo wrote:

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@jackpine-cll wrote:

I am a 77 year old man selling a few baseball card i collected before I was a teenager...no cost basis of course..how does that make me a business...I do not have an ebay store.

---

You do not have to be a business to have business income. Even not for profit organizations can have business income.

If you own it and you sell it for more than you paid for it, it is potential business income. If you wish to treat this income as a hobby, you will still have to report it but might lose the ability to deduct some business expenses.

Life is simpler when you earn a wage and receive a W-2 form from your employer.

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You don't want the IRS to consider your income here as Hobby income on your tax return.  That isn't a designation you should want.  Hobby income can't deduct any costs.

Beginning in 2018, the IRS doesn't allow you to deduct hobby expenses from hobby income. you must claim all hobby income and are not permitted to reduce that income by any expenses. For tax years prior to 2018, you can deduct hobby expenses as an itemized deduction subject to 2% of your adjusted gross income.

https://turbotax.intuit.com/tax-tips/self-employment-taxes/4-tax-tips-for-money-making-hobbies/L89qz...

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I'm in Canada, so I don't know a lot about tax laws, but would like clarification on what you posted.

If you have a hobby income, and sell a $5 item with $3 shipping, and then pay $3 for shipping to mail it, is that meaning you cannot deduct the $3 you paid for shipping and have to pay tax on the entire $8 gross sale?

I remember also reading in previous threads something about how you need a certain number of "profitable years" in a given time period to continue declaring your business income with expenses, otherwise you get the hobby designation. (I do understand with a hobby income you can't deduct use of home, internet, meals and all those other types of expenses, I was just wondering about expenses relating directly to the shipping of your item, or FVF's, and stuff like that which reduces your net income on the sale). I'm presuming with hobby income you don't deduct the cost of the goods because it's a hobby, and the item was never intended to be purchased for reselling.

In Canada, a lot of what you're allowed to do is based on what's reasonable. While you're technically supposed to declare every dollar of your income, they don't expect you to be filing out a T-2125 (our version of Schedule C) if you are making $200 in sales of hobby items.

There's also no rule that says you need to keep being profitable or be profitable a certain number of years in a time period, however if you keep being not-profitable you may get audited. When I sold jewellery and purses (before I did coins and stamps) I was never profitable because of how much I spent on materials, market rent for my space to sell, etc. I was told by a tax agent in my genre of doing crafts, they expect most people to not turn a profit, but since I have a job and pay taxes on my T4 (our version of W2) income, they will not be auditing me for declaring a couple thousand dollars in losses every year. I was told if my business income was my only income and I was always declaring losses, I would be examined on my financial situation of how I pay for housing and food with no income.

In Canada they want people to pay taxes, but they don't set up rules to say your business has to be profitable, you just can't have a negative income all the time, you need to have some other source of funds if your business is always losing money.

C.

[sin-n-dex]

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@lamewing wrote:

And there’s the magic word, profit. If a person is selling stuff that they purchased years ago and no longer want, they most likely are not making a profit on junk they’re getting rid of. The problem then is they have to prove somehow rather that the old stereo from seven years ago has not appreciated in value. This is why the threshold should exist. So that people are that are just getting rid of old junk aren’t paying the IRS, the federal government, for things that they’re not making a profit on. There is the letter of the law and there is the spirit of the law. If I buy a camera brand new for $500 and even a year later sell it for $350, I should not have to pay a penny in taxes. I might even have the receipt to show that after one year. But say I decide to sell my canon AE one that I purchased in the 1980s. I’m not gonna have that receipt. So this puts a ton of work on just the average who is trying to get rid of old stuff. 

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I have a Canon AE that I've been wanting to list for parts (and it has collected dust since it was last used in 2007, hence parts).

Sorry, I digress, it's just been a long time since I ran across anyone who even knew what a Canon AE was... I got my first digital camera in 2001 (3.1 MP).

C.

[nobody*s_perfect]

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@mam98031 wrote: ....

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You don't want the IRS to consider your income here as Hobby income on your tax return.  That isn't a designation you should want.  Hobby income can't deduct any costs.

Beginning in 2018, the IRS doesn't allow you to deduct hobby expenses from hobby income. you must claim all hobby income and are not permitted to reduce that income by any expenses. For tax years prior to 2018, you can deduct hobby expenses as an itemized deduction subject to 2% of your adjusted gross income.

https://turbotax.intuit.com/tax-tips/self-employment-taxes/4-tax-tips-for-money-making-hobbies/L89qz...

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Last November, the IRS issued specific instructions aimed at hobby sellers, showing how they can zero out their eBay income:

If you sold personal items at a loss, you have 2 options to report the loss:

Report on Schedule 1 (Form 1040)

You can report and then zero out the Form 1099-K gross payment amount on Schedule 1 (Form 1040), Additional Income and Adjustments to Income PDF.

Example: You receive a Form 1099-K that includes the sale of your car online for $21,000, which is less than you paid for it.

On Schedule 1 (Form 1040):

• Enter the Form 1099-K gross payment amount (Box 1a) on Part I – Line 8z – Other Income: "Form 1099-K Personal Item Sold at a Loss, $21,000"
• Offset the Form 1099-K gross payment amount (Box 1a) on Part II – Line 24z – Other Adjustments: "Form 1099-K Personal Item Sold at a Loss $21,000"

These 2 entries result in a $0 net effect on your adjusted gross income (AGI)....

https://www.irs.gov/newsroom/irs-announces-2023-form-1099-k-reporting-threshold-delay-for-third-part...

[mam98031]

@nobody*s_perfect 

I don't see where that has anything to do with a seller that defines themselves as a Hobby seller.  I think I understand what you posted above, just not that it has to do with a Hobby seller.  Nor do I see anything on the two links you gave specifically about Hobby Sellers.

I'm just trying to understand.  I'm very willing to learn.

[nobody*s_perfect]

Isn't "selling personal items at a loss" pretty much the definition of a hobby seller?

https://www.irs.gov/newsroom/hobby-or-business-heres-what-to-know-about-that-side-hustle