Questions about the 200 Transactions that count towards a 1099 form.

[docstill299n]

I know that until next year, the threshold for a 1099 form is $20,000 AND 200 transactions.  However, I seem to recall that repeated sales to the same Buyer only count as a single transaction.  Is that true?  So, if I sold the same Buyer something in April, June and August, that only counts as one transaction?  For sure?

Also, do cancelled or refunded/returned transactions count?

[downunder-61]

You are sort of correct as to when you will receive a 1099k - but ALL income, regardless of the 1099k threshhold must be reported each year to the IRS.

This is the thread mentioned about the IRS catching up with a seller who did not declare income as noted up thread.

https://community.ebay.com/t5/Selling/The-IRS-is-charging-me-for-eBay-sales/m-p/32173729#M1814990

[coolections]

Finally an answer the OP was looking for.

[eleanor*rigby]

Never presume to know what I'm getting at.

[bearswatching]

I knew that! Does that make me weird?

[dnasilver]

You only get deductions if you are a legally registered business. Hobbyist deductions have all gone to the way side with the last administrations tax changes.

[downunder-61]

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@dnasilver wrote:

You only get deductions if you are a legally registered business. Hobbyist deductions have all gone to the way side with the last administrations tax changes.

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What ? Are you sure about that, many sellers are NOT reg'd as a business and still have to report income, and income reported means deductions can be made surely??

I am in Oz, of course, so if what you say is true then that is very harsh (thank goodness it is not way over here)

[eleanor*rigby]

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@downunder-61 wrote:

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@dnasilver wrote:

You only get deductions if you are a legally registered business. Hobbyist deductions have all gone to the way side with the last administrations tax changes.

---

What ? Are you sure about that, many sellers are NOT reg'd as a business and still have to report income, and income reported means deductions can be made surely??

I am in Oz, of course, so if what you say is true then that is very harsh (thank goodness it is not way over here)

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According to TurboTax:

Updated for tax year 2020 (so keep an eye out for 2021 information).

A Tax Filing Factsheet for eBay Sellers 

[lacemaker3]

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@downunder-61 wrote:

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@dnasilver wrote:

You only get deductions if you are a legally registered business. Hobbyist deductions have all gone to the way side with the last administrations tax changes.

---

What ? Are you sure about that, many sellers are NOT reg'd as a business and still have to report income, and income reported means deductions can be made surely??

I am in Oz, of course, so if what you say is true then that is very harsh (thank goodness it is not way over here)

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@downunder-61, yes, it is correct. Until the 2018 tax changes, hobby sellers could deduct expenses, but not since then.

USA tax payers have the choice of either itemizing their deductions, or use a standardized (default) deduction instead. The 2018 tax reform (deceptively called the Tax Cuts and Jobs Act by the Trump administration) disallowed many of the deductions that non-business sellers were allowed to use on the Itemized Deduction form.

It also increased the standard deduction, but for many tax-payers, the change was a net loss. The increased standard deduction didn't compensate for the loss of the specific deductions they had been entitled to. Many tax-payers have to pay more income tax after this change.

Business sellers have a completely different form to file, called a Schedule C. This is used to report the business income and expenses. With this form, business sellers can use all of their legitimate expenses to offset the business income, and reduce the total amount of income that is subject to tax.

[duffy4444]

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@dnasilver wrote:

You only get deductions if you are a legally registered business.

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   Totally not true. 

   Although it helps, you don't have to be a legally registered business to take deductions or get the attention of the IRS and state tax agencies. That's a part of what this whole lowered-threshold 1099-K change is all about. All a seller has to do is treat their online sales in a fashion of being a profit-making business, registered or not. A lot of sellers for many years were not registered businesses, but we still took our generous Schedule C expense deductions. Our sales, profits and online activities demonstrated business behavior.

   This is also a net to gather in all those profit-making sellers who are actually a business, but prefer to think of themselves as "hobbyists", which is a way that a lot of them just think they can continue getting away with evading taxes.

   Around a week ago there was a post from a very distraught seller here, obviously NOT a registered business, who received a letter from the IRS with a HUGE tax bill of tens of thousands or dollars, prompted by his unreported online sales. I don't know if he considers himself a "hobbyist" or not, but you can bet he'll be keeping expense deduction records now, scramble to gather all the past expense records he can, and be forced to file some amended returns.

   Whether a registered business taking deductions or a self-proclaimed "hobbyist", sellers need to accept their real online sales identity, keep all expense records, and get into income reporting compliance pronto.

   A lot of online sellers, including myself, know all of this. Even when under  the current 1099-K threshold of 20K, we have been reporting our Schedule C income for years, including expense deductions. We rest quite easily.

Cheers, Duffy

[eleanor*rigby]

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@duffy4444 wrote:

. . . you can bet he'll be keeping expense deduction records now, scramble to gather all the past expense records he can, and be forced to file some amended returns, and he'll be trying to figure out where he can come up with some hard, cold cash to fork over to the IRS.

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FTFY.

[lacemaker3]

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@lacemaker3 wrote:

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@downunder-61 wrote:

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@dnasilver wrote:

You only get deductions if you are a legally registered business. Hobbyist deductions have all gone to the way side with the last administrations tax changes.

---

What ? Are you sure about that, many sellers are NOT reg'd as a business and still have to report income, and income reported means deductions can be made surely??

I am in Oz, of course, so if what you say is true then that is very harsh (thank goodness it is not way over here)

---

@downunder-61, yes, it is correct. Until the 2018 tax changes, hobby sellers could deduct expenses, but not since then.

USA tax payers have the choice of either itemizing their deductions, or use a standardized (default) deduction instead. The 2018 tax reform (deceptively called the Tax Cuts and Jobs Act by the Trump administration) disallowed many of the deductions that non-business sellers were allowed to use on the Itemized Deduction form.

It also increased the standard deduction, but for many tax-payers, the change was a net loss. The increased standard deduction didn't compensate for the loss of the specific deductions they had been entitled to. Many tax-payers have to pay more income tax after this change.

Business sellers have a completely different form to file, called a Schedule C. This is used to report the business income and expenses. With this form, business sellers can use all of their legitimate expenses to offset the business income, and reduce the total amount of income that is subject to tax.

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A correction to my answer ...

As @duffy4444 pointed out, in the USA a seller doesn't need to be "registered" as a business in order to benefit from the tax benefits of being a business. They just have to act as a business; such as keeping good records, making decisions and taking steps that would increase their profits (or chances of making profits), and filing a Schedule C with their taxes.

[coastaltechsolution]

what does 1099 matter anyway?

Keep track of sales/returns/expenditures

Claim on taxes, done deal 

[giannarose]

Why am i receiving a 199 for sales that were never completed

[kh-gary]

Hi everyone,

Due to the age of this thread, it has been closed to further replies. Please feel free to start a new thread HERE if you wish to continue to discuss this topic.

Thank you for understanding.