New level on sending out 1099 from eBay for 2022 ($600.00)

[trading-post-619]

So, this seems to be going around now that the new stimulus bill was signed. on it, ot states, if you make 600.00 you will now get a 1099 not the 20k + 200 trans.

anyone else hear about this?

[jahood1984]

I started at the first year with a spreadsheet to calculate everything for tax purposes.  That's how I realized I was being charged fees for international shipping regularly even though I don't offer nor do it, Fed Ex changes shipping totals from the estimate on nearly every order and Ebay fees never came out to what I was calculating based on the fee chart (in part due to international fees I never realized I was charged).  Tax time is going to suck...

[releasethekraken_1]

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@jahood1984 wrote:

That's how I realized I was being charged fees for international shipping regularly even though I don't offer nor do it

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If you don't do international shipping, you're not being charged fees for it. You may be getting charged for receiving international PAYMENTS, but that's a completely different thing.

[azh-71]

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@jayjaspersgarage wrote:

"You are not wrong, but the people who are aghast because they are coming to a realization that the Congress just made every sock, plate, or toy that they own a taxable inventory (unless there's a receipt for it) are not wrong either."

And every shirt, pair of socks, pair of pants, dishes, lamps will get you a nice tax deduction when you donate it to a non-profit org.  It really isn't hard to offset a few hundred in taxable income.  

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Dumping the excess into a retirement account is probably better, but my point stands - this thing will generate a ton of work for tens of thousands of casual sellers, while bringing in zero tax revenue.  And when they realize that, they will blame it on offline sales and go after Zelle etc., and cash deposits.

[kythrill]

Yes.  It is now the law.  Democrats want to reach into the wallets of casual sellers and steal their money.  It is effectively a tax hike on the middle and lower classes.

Congrats if you voted for them, you are getting what you deserve!

[kythrill]

Yes, but income isn't what appears on a 1099.  You can have ZERO income, but still have to deal with a 1099 now.

[kythrill]

And just an example of how casual sellers will be screwed.  IRS rules state that if you are an individual and not a business, you can only deduct the cost basis of them item from your selling price.  It instructs that any expenses, like shipping and E-Bay fees must be itemized on your Schedule A.

So if every year, you just use the standard deduction, because you don't have enough to itemize.  You will likely be SCREWED now.

Say you sell $400 in merchandise on E-Bay, that you paid $200 for.  And your shipping charges on the $400 was $200.

You hit $600 and will get a 1099K.  The IRS rules say as an individual or hobby, you can deduct the cost basis.  $600-$200=$400.

The $200 for shipping will need to be itemized on Sch. A.  The $60 you paid in E-Bay fees will go on Sch. A.  Any other expenses will go on Sch. A. 

And then if you take the standard deduction, all that goes away and you don't get to deduct any of it.  You pay tax on the full $400, which means you will pay Federal and State tax on all the shipping and fees that E-Bay charges you.

The casual seller has JUST BEEN ROBBED, by Joe Biden and his Democrats.  Congratulations if you voted for them!  Your hard earned middle class dollars can now be used to buy votes with stimulus checks.

A business will be able to deduct $400 from the $600, and only pay taxes on the actual gain of $200.  That is why you see all these snarky business owners on here rubbing it in.  They see that the individual will be driven out, and they won't have to compete so hard.

[mrslegolamb]

If you sell items for less than what you paid for them, I guess it could be considered a loss then, right? Should work both ways.

[laynalucy]

Can anyone offer good software to help ease the pain of reporting profits  and deductions for ebay sales in 2022?

[azh-71]

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@laynalucy wrote:

Can anyone offer good software to help ease the pain of reporting profits  and deductions for ebay sales in 2022?

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Keep your inventory, and records in general, in check, use cost method, don't delay working on your taxes until April, and TurboTax Home and Business will get you through it.

[dbfolks166mt]

You are correct you can actually sustain a loss which would be a tax write off but there are limits on what you can claim under these circumstances. 

[dbfolks166mt]

     Welcome to the world several of us have been dealing with this year as well as 2021 and forward. I happen to live in a state where the law was changed in 2020 so I received a 1099 from PayPal, Venmo and several others for the 2020 tax year. So in 2021 I will still get those along with the added one from eBay and any other third party financial processors I happen to establish an account with in 2021. 

     The irony of the state law is the item level is set at 0 so I don't actually have to sell anything a simple fund transfer from a friend or family member triggers the 1099 requirement regardless. 

[dbfolks166mt]

     You can be an individual and still be a business as a sole proprietorship. You do not have to have a EIN or a TIN to be a business. Simply use schedule C to report the 1099 income and expenses. 

[1tuna]

I think a lot of people do not realize that.

here in PA if you are the sole propriotor of an internet based buiness you do not even have to register as a buisness

I am registerd with a tax number but that state tax form just gives me the right to collect and pay sate taxes

there are a few layers of registering a buisness VS just getting a tax number like I have.

I have paid SS for the last 20 years and will be thankful in 2027 when I can start getting SS

[katzrul15]

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@dbfolks166mt wrote:

     You can be an individual and still be a business as a sole proprietorship. You do not have to have a EIN or a TIN to be a business. Simply use schedule C to report the 1099 income and expenses. 

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This is 100% correct and how our CPA has dealt with ours for 18+ years.

This is not new.  You always were required to claim your sales per the IRS, regardless if a 1099 was issued or not.

If you have not been claiming your online sales, you might be in for a rude awakening.  

[duffy4444]

   OOOOOH, I can't wait until next January and February to hear the squealing on this and other Ebay forums about all the under-$20,000 sellers who got away with avoiding (evading??) reporting income for the last 25 years. The sad part of this is that there are a bunch of lemming-like sellers who will blame Ebay for it.

   It won't be Ebay's fault! It is the fault of a Federal Law/Congressional/IRS enforcement issue.

   ALL sellers using Ebay as an ongoing money-making business (even "hobbyists") should have been reporting their income on Schedule C all along. I woke up after my first 1099K about 18 years ago, and have been reporting my income, even nearly always under the $20,000 threshold, ever since... No IRS problems.

   HINT: For a reasonably small monthly or annual fee, get an online bookkeeping service like GoDaddy.com, which can in real-time automatically keep track of income and expenses for you. The only thing you need to calculate by hand is mileage and certain cost-of-goods purchases. GoDaddy can link to Ebay, Amazon, Etsy, and other venues seamlessly. At any time, and especially at the end of the year, I get a report to simply hand over to my CPA. Done! No headaches, and no concern about having a smiling Federal or State Revenue Agent ringing my doorbell with some bad news...

Cheers, Duffy