Tax Form 1099 and the $600 Threshold

[bsharp5utk]

Hello fellow eBayers,

I have tried to contact eBay about this and they will not answer me. I am being requested to provide a SSN so a 1099 can be sent to me for reaching a so called $600 threshold in sales. I went back and did the math and I am not even close to the $600 threshold, I went back and did calculations for the calendar year and a running year and it still doesn't add up. I try to limit how many places I provide my SSN to and now my account is on hold with no way to obtain my payout of the items I send to the buyers. I don't appreciate my money being held hostage by this website and I'm very close to closing my account after 16 years of being an eBayer buyer and seller.

Can anyone provide any clarity on this or has this happened to anyone else?

[soh.maryl]

Will leave it to other more knowledgeable people to explain, just would like to ask if you're aware that this is not an eBay requirement, but an IRS requirement. And how does the fact that you haven't reached that level by late August impact the fact that there are still 4 months of selling time left in 2022?

[bsharp5utk]

Well, it says it needs to send me a 1099 for reaching $600 in sales, but I haven't reached that threshold. I am aware that it is an IRS requirement, but eBay has put a hold on my account unnecessarily.

I guess a better question would be, how is this $600 threshold calculated? Does it make an estimate of what your sales will be for the rest of the year or something?

[buyselljack2016]

@bsharp5utk 

$600 is based upon buyer payment not including sales tax.

[tealt]

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@bsharp5utk wrote:

I guess a better question would be, how is this $600 threshold calculated? Does it make an estimate of what your sales will be for the rest of the year or something?

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The calculation is item price+shipping paid by the buyer.  If the item included free shipping the calculation is only the item price.

The calculation does not include any sales tax paid.

Any refunds given by the seller to a buyer are not subtracted from the calculation.

I think eBay must ask for you SS# as you get close to $600 so protect itself in case you do go over during the rest of the calendar year.  How close is close, I have no idea.

[nobody*s_perfect · Accepted solution]

eBay is legally required to send you a 1099-K if you reach $600 So they require your SSN BEFORE you reach that threshold, so they are not stuck in the awkward legal position of not having your SSN already on the day that you hit $600.

[bsharp5utk]

Thanks  for the answers guys,

I don't like it, but it makes sense due to the new reporting requirements.

I'll have to decide whether I want to keep using this platform to sell my garage sale junk. I imagine the government will succeed in driving small sellers away and directing everyone to big corporations like amazon to buy new stuff.

[lonebuck-books]

As others have already said, it is the item price plus shipping.  The $600 threshold is for the calendar year, Jan-Dec.  My best guess is that eBay looked at what you have sold so far this year and is predicting you will cross over the $600 line before the end of the year based on your sales history.  

This isn't an eBay thing, it is a federal government IRS requirement.  eBay has no authority to ignore the law.  Also, the $600 threshold is when they are required to issue the 1099, not when they are required to get the tax info.  They can require the info for the 1099 long before you hit that number.  My guess is that they will start (if they don't already) requiring that info when a new seller opens their account before they have sold a single item.  eBay has no obligation to wait until you hit $600 before requesting the required info and honestly, it would be stupid for them to do so.  Most sites are now requiring the info immediately upon opening a selling account.  Amazon requires it before you list your first item.

Give them the required info and get your money.  If you don't cross $600, you have nothing to worry about regarding the 1099.  If you want to make sure you don't cross it, stop selling until January.  

[wrong66]

Are you signed up for Managed Payments? How do you get paid without giving eBay your SS#?

[bsharp5utk]

Yes I am signed up, all they needed was my banking info.

[wrong66]

Just give them the SS#, or quit selling. We all did one or the other.

[onefootflipper]

Your social security number is in hundreds of databases, it hasn't been some sort of private secret information for many, many year.

[luckythewinner]

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@bsharp5utk wrote:

I guess a better question would be, how is this $600 threshold calculated? Does it make an estimate of what your sales will be for the rest of the year or something?

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The IRS threshold is calculated by adding up all payments processed for all accounts that are associated with you. 

The eBay decision to require your SSN before releasing any more payments to you is based on the eBay user agreement that says they can do that. 

But just as eBay cannot force you to give them your SSN, you cannot force eBay to release your money. 

So your choice is pretty straightforward. Give your SSN to eBay, or stop using eBay and collect your money from your state's unclaimed property department in a couple months.