Regards,
mam98031 • Volunteer Community Member • Buyer/Seller since 1999
@mam98031 wrote:
@mr_lincoln wrote:
@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.
Yes, they would include Cancelled transactions in the 1099K total because Sellers can deduct the refunded amount on their income tax return along with the cost of packaging material, a % of their home used for selling, travel expenses to the carriers, value of inventory and on and on.
Our state (the last time I checked) has a $ 500 threshold for reporting the sale or personal items at yard and garage sales so I suspect the Federal $ 600 threshold lines up with a lot of State requirements ... our state has no infrastructure to monitor yard and garage sales but that could change in time. My issue with the resale of any used item is that sales tax is levied on the transaction despite the fact that (other than 5 states) sales tax was charged at the time items were originally purchased. And while I would love NOT to have to pay income taxes on eBay sales I use the IRS schedule C to take advantage of as many deductions that can apply to what I do. That helps reduce the tax burden at the end of the year.
A cancelled transaction would ONLY be included on a 1099K Gross Receipts IF the buyer had PAID for the transaction and then the transaction was cancelled. Cancelled transaction that were never paid by the buyer are NOT included in the 1099K numbers.
@mam98031 Thank you for adding that clarification ...
@bryo_3145 wrote:"ANY income made is taxable income. " At least that what my accountant told me."
"Just to think of all the sellers that have not paid taxes for their sales over the past 10 years or more."
I'm sure ebay inc. has to pay taxes on their income.
Ever since the start of PayPal there is a track record of all transactions.
OK what does that have to do with the subject we are talking about?
@bryo_3145 wrote:Then you have to ask.
Where do all our tax dollars go. Is it being mismanaged. Who is accountable.
Congress. The same group that passes the budgets for the various needs of the government.
Just a little note here ......... since eBay has been collecting sales tax on your sales and submitting those funds to your state taxing authority or State Treasurer on your behalf you just might find at some point down the road that you failed to include that income on your State Income Tax filing and have accrued interest and penalties and that quite possibly you have been operating a business without a license. I wonder if you will find you also owe your city and county of residence a few dollars.
Sales tax is based on the Buyer's ship to location, NOT the seller's.
I know it is popular for some to try and scare others regarding this subject. But really it is unnecessary and really can be harmful to others. IDK why anyone would want to do that when it simply isn't necessary. Most of us have enough to be worried about without others throwing stuff out there without any research for what they are saying.
Just like with the 1099K and the $600 threshold on the form. Statements scaring people how they may owe additional income taxes from this income. Which by the way is HIGHLY unlikely. It simply isn't enough money to make an impact on taxes owed and may not even cost the seller a single penny.
Income is income and is legally required to be reported and taxes paid. Federal, state (if your state taxes income), city and county. Everybody wants a piece of your pie.
Yes, but clearly you are unsure as to how that gets reported to the various states.
Again, this is a legal matter and should be discussed with a licensed accountant, licensed tax preparer and your attorney.
It is not necessary to do that. Your advice is simply going to have someone waste their hard earned money on a professional they don't need because you have the desire to scare others about something that is not only untrue but a complete and utter misunderstanding of the process.
@lenaonce369 wrote:How do you estimate the original cost if you bought something so long time ago and receipts all gone? What about vintage stuff that you inherited? Yes I can estimate on my personal used goods but there is no way I can proof the original price ;(
These links may help you.
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
@lenaonce369 wrote:Humans are born to pay taxes. You are right about this.
Well we all use things that those taxes pay for too. Some more than others, but we ALL use things, likely on a daily basis that our tax dollars pay for.
@koreycabra wrote:Since the government delayed this change, will eBay still be submitting a document to the IRS or will they be updating us soon that they will not? Because I would prefer to opt out of that. It will make tax time more complicated on me.
This change just happened the day before a long Holiday weekend. It is likely Ebay needs a little time and staff back from time off to get this accomplished.
You can't opt out of having a 1099K sent to the IRS.
We have plenty of time here. We are a little over two months away from Ebay issuing 1099Ks.
Why would a 1099K make your tax time more complicated @koreycabra ? It really shouldn't, so it is likely some of us here could help you if you want. Even without the 1099K, you would still need to report your income from selling on the internet. IRS did not change their tax reporting rules, they simply changed a FORM.
If you don't want to post your questions on the thread, you are welcome to send me a private message and I will certainly try to help you.
@lenaonce369 wrote:Same here. I obviously didn`t know a lot of thing on eBay like how count cancelled transactions and ect. Nice folks here were very helpful explaining.
All 1099K's are issued stating your Gross Receipts, that is NOT the same as gross income or gross sales. Gross receipts is based on the total amount of money processed through your MP account before any refunds or costs.
So to reconcile the numbers for tax time, you would subtract any refunds issued to buyers, shipping costs, product costs, shipping supplies, Ebay fees, office supplies, etc.
You do get to subtract your costs of sales [COGS] to arrive at your Net Taxable Income.
So someone that sold $600 worth of stuff might only end up with a couple hundred as their net taxable income.
Look through those links I posted in an earlier post for you. They will help you.
