Regards,
mam98031 • Volunteer Community Member • Buyer/Seller since 1999
Hi @timsmitty
What do you mean it's great news for many? Do you mean people who do not report their income from internet sales regardless of whether or not they reach the current 20K threshold??? Ahhh, that would be tax evasion sorry to say. They can't drop the threshold to $ 600 fast enough in my opinion ...
That isn't exactly what they said but you are correct, IRS is not requiring the 1099K to have a $600 threshold for the FORM.
So important to keep in mind this is JUST A FORM. Everyone is still responsible to report their income to the IRS with or without this form. So if you received $400 selling here, you need to report that income on your Federal Tax forms.
And just so there is no mistake, it absolutely does NOT mean that those that sell $19,999 do not have to report their income. Any 1099 is merely a FORM and nothing more than a FORM.
The other thing to also keep in mind is that some states have 1099K requirements and ALL of those remain in place and some are much lower than the threshold that the IRS has for the form, so you could be getting one because your STATE requires it.
This is older information. I will go try to find something more current, but it is a start.
@lenaonce369 wrote:He means, it`s good news for moms and papas who sells their old shoes and sweaters and vintage pillows... on eBay just to generate a little income for family. I think it`s ridiculous to pay taxes for selling crap from your closet. Ebay just sent me a message about Form 1099 and holds funds even my sales are below $600. Ebay`s Agent informed me that they count cancelled sales as well.
Except @lenaonce369 this is way overstated by a whole lot of sellers. It is very unlikely that $600 in Gross Receipts [before subtracting costs and refunds] would cause most people to have any kind of meaningful Income tax impact.
And because they changed the threshold on a FORM does not mean that the IRS requirements for reporting income changed at all. Cuz it didn't. With or without the FORM you are suppose to claim all your income.
@timsmitty wrote:Ha Ha! Great news I say! You assume everyone is a criminal but maybe doing taxes is so complicated with these, it is best not to have to
I don't think @mr_lincoln thinks that way at all. But try looking at it this way. People are celebrating that they are not requiring this FORM to be issues for as low as $600 in Gross Receipts. The question is why?!?
If you always claim your income, then it should not matter if you get this form or you don't. You would be claiming the income anyway because the IRS rules for reporting income has NOT changed. A form did, but not the rules for reporting income.
So why do so many want to celebrate this change when it simply shouldn't matter one way or the other.
@monroe67 wrote:"I think it`s ridiculous to pay taxes for selling crap from your closet."
You are not alone. Did you read the full IRS announcement? I'm pretty sure it starts with a sentence about how the Service (that's the Internal Revenue Service) has received comments from taxpayers and marketplace facilitators (such as eBay) and accountants and all kinds of people expressing their confusion and general displeasure with the low $600 threshold. Many of those accountants and taxpayers and others also seem to think it's kind of ridiculous to have that low of a threshold.
But remember: eBay Did Not Set that $600.00 Threshold !!
If you read on further, yesterday's IRS announcement talks about possibly implementing a threshold of $5,000.00 instead of a minimum Six Hundred Dollars.
Oh, yes, BTW -- yes, the dollar amount of cancelled sales and returned items would/will be included in Box 1a of the 1099-K, "Gross Amount of Payment". That Gross Amount of Payment also includes shipping costs paid by your buyers. (It does not include sales taxes paid by your eBay buyers.)
THEN, you, the taxpayer, would need/want to deduct the amounts of the cancelled or returned transactions and those shipping costs as types of business deductions -- as are the costs of padded envelopes or empty boxes, or rolls of bubble wrap, or spools of wrapping tape, or packages of blank mailing labels, and even the mileage for driving your sales to the post office and going to Staples or Target or Walmart to purchase more supplies.
Remember this ONLY changes the FORM. Nothing more than that, just the FORM and when it has to be issued.
The IRS rules for reporting income remain the same. With or without this FORM, you are suppose to be reporting ALL your income. So the ONLY thing that changes for those with smaller sales is that they won't get the FORM. They still need to report their income to IRS, they just won't get the FORM.
@mam98031 wrote:
@timsmitty wrote:Ha Ha! Great news I say! You assume everyone is a criminal but maybe doing taxes is so complicated with these, it is best not to have to
I don't think @mr_lincoln thinks that way at all. But try looking at it this way. People are celebrating that they are not requiring this FORM to be issues for as low as $600 in Gross Receipts. The question is why?!?
If you always claim your income, then it should not matter if you get this form or you don't. You would be claiming the income anyway because the IRS rules for reporting income has NOT changed. A form did, but not the rules for reporting income.
So why do so many want to celebrate this change when it simply shouldn't matter one way or the other.
You are correct @mam98031 and if memory serves @timsmitty in my state (the last time I checked) the minimum threshold for reporting sales from selling personal items out of one's home at yard or garage sales was $ 500. However, the state has no infrastructure to monitor how much people sell that way but the internet sales industry does.
At the end of the day I don't think the Federal Government is after the folks who sell $ 600 per year but that amount might fall in line with or be just over what many state require so that's where they put the lower limit. I suspect they are much more concerned with getting tax money from the folks who sell to just under the 20K threshold and have for years but never reported the income. All of that is just my opinion of course.
