albertabrightalberta
mam98031 • Volunteer Community Member • Buyer/Seller since 1999
@vipclubber wrote:With IRS asking for personal information for sale of over $600 (which is not eBay problem) and 12.9% fee which just cost over $700 in sales, it becomes more and more difficult to business with ebay as oppose to their alternatives. eBay must review and reconsider their policies and fees. Thanks.
Are you saying that you haven't been claiming your ebay (and other site) online income in past years? Because if you haven't been claiming it, you should have been!
@prairieprimitives wrote:If you live in the U.S. and if eBay processes $600 or more for you in a calendar year, you will receive a 1099-k. This means the amount shown on the 1099-k has been reported to the IRS. Although you should have been reporting your eBay income on your income taxes all along, now you're really going to have to do that ... or risk whatever penalties the IRS may toss your way.
It sounds like you're saying that, after deducting your eBay fees, the remainder is below $600. That's how income taxes for small businesses work. You report your gross income and your business expenses on Schedule C. The remainder is your profit and that gets transferred to your IRS 1040. You'll only be paying taxes on the profit, not on your total sales!
If you're a casual seller (not a business), then you'll need to talk to an accountant ... or possibly use Schedule D, which is typically used to report capital gains and losses.
No that wasn't what the OP was describing. Their concerned is that Ebay shows 3 sales of the same item.
The first was returned to the seller and fully refunded to the seller.
The seller relisted the item, it got purchased, the buyer requested a cancellation, so the order was cancelled by the buyer.
The seller relisted the item again. It sold again and so far the buyer seems happy with their purchase.
So the OP was just concerned about what amount of sales would that be in regards to a 1099K. A very good question for someone that this is all new to. The 1099K reports Gross Receipts. Not sales or income, RECEIPTS. That means the total amount of money that comes into your MP account BEFORE any deductions for fees, cancellations, refunds, etc.
"This was the one odd piece in the equation and it may be that eBay has an internal glitch. For two of the sales there was actually a movement of funds through managed payments so logically those would factor into the 1099 Gross revenue calculation. The third was canceled at the request of the buyer and I am assuming no funds were actually ever processed so that should not be factored into the gross revenue on the 1099. If this is happening it is going to cause some HUGE issues at tax time given all the Non-Payment and other cancelations. "
Except that the 1099K does not and has not ever represented Gross Revenue.
It was the second sale that was cancelled and I don't know if money exchanged or not. But if it did not, it would not be represented on a 1099K in the first place, but if it did have a payment associated with it, then it WILL appear on the 1099K if the seller reaches the $600 minimum requirement for the form to be created.
What a 1099K reports to the IRS is very simple. It is Gross Receipts. Nothing more or less. Just the TOTAL amount of money that came INTO the MP account. No adjustments at all. Just the total money that came into the account.
When you are calculating your Income taxes reports is when you deduct from the 1099K number reported for any fees, shipping costs, refunds, etc.
This is why reconciling your 1099K prior to actually filling out your income tax reports is so important. You need to find out what your costs of sales are and deduct those costs, all of them, to arrive at your Net Income before taxes. And that is the amount in which your income tax for this money will be calculated.
But a 1099K does NOT report Sales, Revenue or Income. It reports Gross Receipts to the IRS. You can also see this if you look at one of the forms.
This is an older form, but it isn't likely the one for 2022 will be much different.
