eBay 1099K reporting requirement

[jeff14621]

I just received a notification from eBay that my payments are on hold until I provide my SSN because my sales have exceeded the $600 IRS reporting threshold.   According to my records (and eBay's),  I have $523 in sales so far this year, so I am still under the threshold.  I sell used personal items and old computer parts that I purchased many years ago and have no way to prove how much I paid for these items.  To avoid this tax nightmare, I planned to stop selling for the remainder of the year when I get close to the $600 limit.  It now appears that eBay wants my SSN even though I am under this threshold and is withholding payments until they get it.            

[nobody*s_perfect]

Federal law requires eBay to provide 1099-K's for all sellers who go over $600. They cannot take a chance on not having your SSN on the day that your sales go over that threshold; thus, they demand it BEFORE a seller passes $600, not afterwards.

Also, the total on the 1009-K includes whatever amount buyers paid to you for shipping and handling, so you aer probably close to the threshold than you think and if you have collected over $77 in S&H, then you have gone over the $600 mark.

[slippinjimmy]

@jeff14621 

Does the $523 include shipping charged to buyers? If not then you may already be over the $600 amount.

If you are selling personal items you can use reasonable values to establish their "cost". Unless you are in a very high tax bracket your potential amount of tax payable would be very small. If the bulk of your sales are below your estimated values (or what you actually paid for them) and after deducting all expenses (eBay fees, shipping costs etc.) your tax liability is likely to be ZERO.

There would not be any type of "tax nightmare".

[gracieallen01]

To avoid the tax nightmare?

Seems like you are exacerbating it since any income received from selling online has income tax due or a filing with exemptions. 

[monica-sells]

sorry....but I see these posts and just don't understand

(I am NOT a full-time ebay seller)

"Penny Wise and Pound Foolish" comes to mind

People would give up making hundreds of dollars in sales for (possibly) a few bucks in income tax?

For most of the people selling, the tax implications are barely existent.....

the tax nightmare is non-existent....

You wouldn't "pay yourself" a couple hundred dollars to fill out 7 lines on a tax form?

in addition, the 'supposed' threshhold does not mean that is the point where you need to report a sale...technically, a $10.00 sale should be "reported" as income, with or without a 1099-K

sorry, not picking on you, I just see these posts all the time and it makes no sense to me

(stop selling at 599.00 to save $1.00)

[jeff14621]

My total sales include shipping.   EBay states that the SSN is required once sales reach $600, not before.  

[jeff14621]

My total sales include shipping.  Anyone who has dealt with the IRS before knows that they do not like estimates.  Tax due or not, I wanted to avoid the hassle of filing a schedule C.

[jeff14621]

If that is the case, then why did the IRS not make the threshold $0 instead of $600?

[wrong66]

Your SS# is required when eBay says it's required. Simple as that. They determined it's required because they have no idea that you're going to stop selling before you reach the $600 threshold, just so you can avoid declaring your sales as income to the IRS (better known as "tax dodging").

[714ricki]

I would just provide them with the number. You're probably not accounting for shipping & tax to your totals. Plus, its also possible you had a December 31st transaction that is being added to the 2022 totals. Just probide the information & report your profits. It's quite easy & you will hardly notice the difference when filing in 2022.

[lamber9347]

@monica-sells I'm replying to your post and not the OP. I agree with what you wrote, I see these posts continuously and it amazes me how many ordinary folks have absolutely no understanding of how yearly tax reporting works. I ignore these posts because there is no way to make them understand they are wrong. These people have made up their minds and would rather live in fear of nothing instead of educating themselves on how the process works and what the actual requirements are. It's easier for them to live like that and pointless to attempt to inform them IMHO....

[kensgiftshop]

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@jeff14621 wrote:

 To avoid this tax nightmare, I planned to stop selling for the remainder of the year when I get close to the $600 limit.       

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That doesn't matter, you're still supposed to be reporting your income.

It wouldn't be a nightmare if you'd been doing it all along.

[nocoolnamejane]

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@jeff14621 wrote:

If that is the case, then why did the IRS not make the threshold $0 instead of $600?

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Not to add an extra burden on those required to emit the 1099s.

Someone selling one $20 used old game a year doesn’t need one. The deciders decided that $600 was a good starting point to approximate when most people start possibly making a profit.

[nobody*s_perfect]

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@nocoolnamejane wrote: .... The deciders decided that $600 was a good starting point to approximate when most people start possibly making a profit.

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The deciders originally thought that $20,000 was a good starting point. Then they noticed the flood of revenue flowing to states that had already reduced the threshold to $600.  

As you noted, a lower threshold would impose a significant burden on the participating funds processing companies. Also, $600 is the threshold for most of the other earned income 1099's.

[kensgiftshop]

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@jeff14621 wrote:

If that is the case, then why did the IRS not make the threshold $0 instead of $600?

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The threshold is only when Ebay and other payment processors have to report your income.

There is no threshold on the amount when you have to report it.