eBay

shelbycat2 · ‎01-28-2021

While on Lockdown I sold tons of old clothes in my closet. I just got a 1099K from Pay Pal showing I made $2950. Am I supposed to claim that on my tax form. I see Illinois requires this form to be sent for income over $1000 but I keep reading it should only be if you sell over 20K or have 200 transactions which I did not.

dhbookds · ‎01-28-2021

Federal is 20,000 +200, some states have smaller requirements.......I think VA is $600

buyselljack2016 · ‎01-28-2021

@shelbycat2

Your state requirements over rides the 20K and 200 transaction threshold.

What you claim on your tax form will be based of what came in minus expenses.

Initial cost.

Seller fees.

You may end up as a minus.

Shipping.

Shipping supplies.

Fuel costs if any involved.

Other expenses.

nobody*s_perfect · ‎01-28-2021

$20K is the federal threshold . Illinois is one of several states that have set thresholds that are much lower; in my state, it's just $600.

Regardless of the threshold, you are supposed to report your eBay income. Use Schedule C, where you can deduct all of your expenses. Read the instructions for that form to help you understand how the IRS sees it.

jack_bucks_ghost · ‎01-28-2021

@nobody*s_perfect

Use Schedule C, where you can deduct all of your expenses. Read the instructions for that form to help you understand how the IRS sees it.

thank you for that--i was going to post a question about what to use to document expenses...

purple-rain-store · ‎01-28-2021

Must be something new for IL requiring it for anything over $1000. I'm from IL as well & this is the first time I've ever gotten a 1099 K from Paypal & I've sold over $1000 each year here since 2016. I did read in the 1099-K instructions on Paypal about the IRS Code 6050W & thought that was why I got one & was thinking this would apply to everybody just about. So confused!

buyselljack2016 · ‎01-28-2021

@purple-rain-store wrote:
Must be something new for IL requiring it for anything over $1000. I'm from IL as well & this is the first time I've ever gotten a 1099 K from Paypal & I've sold over $1000 each year here since 2016. I did read in the 1099-K instructions on Paypal about the IRS Code 6050W & thought that was why I got one & was thinking this would apply to everybody just about. So confused!

That which you posted on another thread has the word "or" in there.

I read it as Accepting cc payments, and the 3rd party network thresholds are separated by that "or", and those not in states that have a lower thresholds will not be getting a 1099K if they do not meet the 20K AND 200 threshold just as it has been for years.

caldreamer · ‎01-28-2021

There seems to be some confusion as to reporting income to the IRS and sales threshold that triggers getting a 1099.

I was mistakenly under the impression that you only had to report income if you received a 1099 until I talked to my CPA. He said all income must be reported to IRS even if you don't receive a 1099.

m60driver · ‎01-28-2021

@caldreamer wrote:
I was mistakenly under the impression that you only had to report income if you received a 1099 until I talked to my CPA. He said all income must be reported to IRS even if you don't receive a 1099.

I believe that all licensed CPAs are required by law to make that statement.

And look, for about 60% of us the IRS already knows what taxes we owe. All they do is compare what we send in after either hiring a CPA or spending hours on TurboTax to what they have already calculated. Then they correct any differences and charge us interest if there was an error in our calculations and additional money was owed. Other countries allow you to just have the tax bill sent to you but Intuit and other corporations here in the US lobby against that concept.

jayjaspersgarage · ‎01-28-2021

We are all supposed to line up like ducks in a row and pay pay pay and pay more. Even if you sell a shovel at a garage sale you are supposed to pay taxes. We know that 90% of ebay sellers since 1995 have never reported their gross sales or profits.

Often it isn't enough to matter to the feds or even the states if you sell less than $1,000. If your effective tax rate is 11% and your net profit on $1,000 gross sales is $300 they are going to get an extra $33 in taxes.

Before the 2008 reset over shipping being included in final value fees people schemed every day to underprice the auction and overprice the shipping. Sellers beat the system two ways with one game.

The real question is IF you get caught by the IRS how many years will they go back to open your wallet? Is there a statute of limitations for tax evasion?

theteamsetguy · ‎01-29-2021

There is NO statute of limitations on tax evasion. If they audit you and discover tax evasion they can just keep on going back until they are satisfied. No one likes to pay taxes but every dollar that is cheated has to be made up by the rest of us who haven’t cheated.

skeletonstore · ‎01-29-2021

I think it's pretty ridiculous to have to report you sold old clothes. Some people are very stockholm syndromish and just love to act like this is even fair. How many people actually make a profit on selling THEIR old clothes? You know, the ones we bought new in a department store? I would say very few. Also how do you even remember what you paid or how would you even prove that if the irs has been known from time to time to hold a person to a penny? Tax revenue, the most ridiculous immoral concept since usury. But yeah as other said the threshold is much lower. Oh and do make sure you come up with the expenses even if you have to roughly guess because the IRS loves to slap on a self employment tax. I always have to pay around 10% even if I make very little like you just did. You could be on payrole and make 3 times that and not have to pay anything(in my experience).

mcc1775 · ‎01-29-2021

@shelbycat2 wrote:
While on Lockdown I sold tons of old clothes in my closet. I just got a 1099K from Pay Pal showing I made $2950. Am I supposed to claim that on my tax form. I see Illinois requires this form to be sent for income over $1000 but I keep reading it should only be if you sell over 20K or have 200 transactions which I did not.

You need to claim ALL income. Period

nobody*s_perfect · ‎01-29-2021

it's not possible for eBay or the IRS to know how much you paid for those clothes that you sold. Are they your own, or are they something that you recently picked up at a yard sale for 50 cents? How could eBay or the IRS know that? Enter the appropriate information on Schedule C and if you didn't make any actual profit then you don't owe any income tax.