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.            

[johnrj1226]

eBay  also  states they will not  send funds to your checking account until you provide  your SSN and  complete all the other requirements of Managed payments.  Some day you might be able to  file a case  for those unclaimed funds or $500 some dollar.   eBay makes the rules, policies, etc.  if you not want to play ball by those  rules that you agreed to comply with on the USER AGREEMENT you signed to don't sell on their venue. 

[bearswatching]

Since you have to report ALL your income from ALL sources what difference does it make at what point you report it? Most people won’t remember what they paid for something they bought twenty years ago but the chances the IRS is coming for you after all these years is just about zero. Just continue to keep reporting all your income and you will rest easy at night. Not sure if this is true but I read they can only go back ten years.

[jeff14621]

Thanks.  I feel a lot better now.  The people at the IRS are reasonable and understanding folks. 

[dbfolks166mt]

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)

It's like not putting your money in a bank or any interest bearing account so you can avoid getting a 1099-INT once you receive more than $10 of interest in a calendar year. 

[jeff14621]

Thank you for your reply.  I have never made a net profit from selling on eBay, but proving that might be a problem.   The so-called "income" I get from selling stuff I purchased and no longer need is not worth the time and effort required to keep records, prepare listings, package items, stand in line at the post office, etc.  So I am going to heed your advice and stop selling on eBay. I will just haul the stuff down to Goodwill or trash it.     

[luckythewinner]

First, Managed Payments does not report "sales" on the 1099-K, it reports "payments processed".

Second, eBay does not wait until you reach $600 in order to ask for your SSN. If they did and you did not provide it, they would be in violation of the law.

Third, I think you promised to provide it when you signed up for Managed Payments regardless of the threshold.

[greatstuff80]

Free advice here may be worth what you pay for it. Provide SSN or do not get paid. Talk to a tax expert.  There are many ways to look at this. Are you just  a hobby seller or earn a living this way? Taxes are different for each case. You were always required to report all income, even if it was LESS than $600 and you did not get a 1099.  

[jeff14621]

Thank you for the advice. 

I am retired and my only income is from Social Security, which is below the threshold at which I am required to file an income tax return.  I made a few hundred extra dollars selling things on eBay that I purchased many years ago (when I worked), and have never made a profit.  I use the money I get from selling to buy things on eBay that I need.  Because I am not required to file a tax return, I never bothered keeping records on the things sell.  My concern is that providing my SSN and receiving a 1099K will require me to file a tax return.

[jeff14621]

Thank you for the reply.

I am retired and my only income is from Social Security, which is below the threshold at which I am required to file an income tax return.  I made a small amount selling things on eBay that I purchased many years ago (when I worked), and have never made a profit from selling.  Because I am not required to file a tax return, I never bothered keeping records on the things sell.  My "nightmare" is that providing my SSN and receiving a 1099K will require me to file a tax return.  I understand that this requirement is not eBay's fault, but the government trying to squeeze a few more pennies out of those who can least afford it.    

[dbfolks166mt]

I am retired and my only income is from Social Security, which is below the threshold at which I am required to file an income tax return.  I made a few hundred extra dollars selling things on eBay that I purchased many years ago (when I worked), and have never made a profit.  I use the money I get from selling to buy things on eBay that I need.  Because I am not required to file a tax return, I never bothered keeping records on the things sell.  My concern is that providing my SSN and receiving a 1099K will require me to file a tax return.

     Simply getting the 1099 may or may not require you to file a return. You receive a SSA-1099 or SSA-1042S for Social Security every year and that does not automatically require you to file a tax return. Take a look at your total gross revenue from your eBay sales. That report is available through the eBay reports, and see if it will push you over the current filing minimum which I believe is $14,500 if you are over 65 and filing single. If it pushes you over talk to a tax consultant even if you have to file you will likely not owe any taxes anyway. 

     You may want to consider other alternatives for selling things and deal in cash. In theory it's still income but you avoid dealing with the 1099 issue. 

[nobody*s_perfect]

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@dbfolks166mt wrote: ... Simply getting the 1099 may or may not require you to file a return. You receive a SSA-1099 or SSA-1042S for Social Security every year and that does not automatically require you to file a tax return. Take a look at your total gross revenue from your eBay sales. That report is available through the eBay reports, and see if it will push you over the current filing minimum which I believe is $14,500 if you are over 65 and filing single. If it pushes you over talk to a tax consultant even if you have to file you will likely not owe any taxes anyway. .... 

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Social Security 1099  income is not taxable.

Income reported on 1099-K is subject to Social Security tax (AKA Self Employment, via Schedule SE) if it's over  about $400 after deducting expenses (i.e., the bottom line on Schedule C). That's a question for a tax expert: If you don't file, will you automatically be billed for the Schedule SE tax based on the full amount on the 1099-K? If so, it would be worthwhile to file just to itemize the expenses to reduce the amount that goes into Schedule SE.