eBay

this_-66 · ‎02-19-2022

Unless I’m misinterpreting the tax code, a seller who doesn’t make enough taxable income to owe income tax would still be required to pay self-employment tax if their net earnings from eBay sales exceeds $400. If correct, low-income and retired sellers who insist they don’t have to file are going to run into a problem if the IRS gets a 1099k for their eBay sales.

The IRS website explicitly states that even if someone is already receiving Social Security, they are still liable for the self-employment tax.

Without a tax filing that deducts expenses, would the IRS treat the full amount on the 1099k as income, and bill the individual for unpaid tax?

nobody*s_perfect · ‎02-19-2022

Yes, they would.

If ANY seller who gets a 1099-K fails to report the income, they will get a note from IRS asking them to pay the income tax and self-employment tax on that amount.

A hobby seller can take the simple route: just use Schedule 1 and report the whole amount on their 1040 if it's less than their standard deduction.

A seller who falls under the IRS definition of a business would have to file a Schedule C and deduct their expenses, to then figure out Schedule SE. And even if they don't owe any income tax, they might owe self-employment tax based on the bottom line on Schedule SE.

Defining business vs hobby: https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

Paying taxes if you're a hobby: https://www.irs.gov/newsroom/heres-what-taxpayers-need-to-know-about-paying-taxes-on-their-hobby-act...

buyselljack2016 · ‎02-19-2022

They could use a free online file program.

Punch in the numbers, and see what it says. (they don't have to leave the #'s in)

$400 does not sound like a business that would fall into the "self-employment" zone unless it was just a really poor "expenses" vs "selling $$"

solidguitar1961 · ‎02-19-2022

You have to pay social security and Medicare Tax.

coolections · ‎02-19-2022

You need to consult a tax person who knows about your question. No one here can answer your question as they are just Ebay sellers and not tax professionals.

nobody*s_perfect · ‎02-19-2022

@buyselljack2016 wrote: ... $400 does not sound like a business that would fall into the "self-employment" zone unless it was just a really poor "expenses" vs "selling $$"

$400 was mentioned ("if their net earnings from eBay sales exceeds $400") because it's the threshold for having to pay self-employment tax. The question could apply to a Social Security recipient who ran a small business and made $9K (i.e., less than the standard deduction).

dnasilver · ‎02-19-2022

It would depend on what you are selling. You basically have two types of income, earned and unearned would be those options. Either read up or hire a good CPA or Tax Lawyer to help explain the advantages or disadvantages of each. Only earned income has FICA taxes.

espresso_warehouse · ‎02-19-2022

@this_-66 wrote:
Unless I’m misinterpreting the tax code, a seller who doesn’t make enough taxable income to owe income tax would still be required to pay self-employment tax if their net earnings from eBay sales exceeds $400. If correct, low-income and retired sellers who insist they don’t have to file are going to run into a problem if the IRS gets a 1099k for their eBay sales.

The IRS website explicitly states that even if someone is already receiving Social Security, they are still liable for the self-employment tax.

Without a tax filing that deducts expenses, would the IRS treat the full amount on the 1099k as income, and bill the individual for unpaid tax?

If you are getting a 1099, your sole source of income is NOT just Social Security so you will need to file taxes, even just to show you do not owe. Otherwise, you'll get a letter from the IRS.

short_circuit.lineman61 · ‎02-19-2022

@this_-66 wrote:
Unless I’m misinterpreting the tax code, a seller who doesn’t make enough taxable income to owe income tax would still be required to pay self-employment tax if their net earnings from eBay sales exceeds $400. If correct, low-income and retired sellers who insist they don’t have to file are going to run into a problem if the IRS gets a 1099k for their eBay sales.

The IRS website explicitly states that even if someone is already receiving Social Security, they are still liable for the self-employment tax.

Without a tax filing that deducts expenses, would the IRS treat the full amount on the 1099k as income, and bill the individual for unpaid tax?

The main thing that you need to understand is that this is the reality of how "tax the rich" works.

espresso_warehouse · ‎02-19-2022

@short_circuit.lineman61 wrote:
@this_-66 wrote:
Unless I’m misinterpreting the tax code, a seller who doesn’t make enough taxable income to owe income tax would still be required to pay self-employment tax if their net earnings from eBay sales exceeds $400. If correct, low-income and retired sellers who insist they don’t have to file are going to run into a problem if the IRS gets a 1099k for their eBay sales.

The IRS website explicitly states that even if someone is already receiving Social Security, they are still liable for the self-employment tax.

Without a tax filing that deducts expenses, would the IRS treat the full amount on the 1099k as income, and bill the individual for unpaid tax?
The main thing that you need to understand is that this is the reality of how "tax the rich" works.

In what sense does reporting income have to do with political slogans?