Can we discuss the new IRS rules on selling, and how it affects sellers?

[Grasswire2]

It's my understanding that any sales over $600/year ?? will be reported to IRS as business income?

But if it's your own stuff, family stuff, how is that business income?

And does it also apply to garage sales, estate sales, etc?

And how will this change the whole idea of collecting?

[samplegirl]

1. My girlfriend is very sad

as her EBay days have ended. She’d like to know the answer to that question as well.
Once again the small guy is screwed.

[msongs]

2. when she's a billionaire she may never pay tax again. thanks to our congress both

dems and repubs

[msongs]

3. here's a link to ebay and an explanation of the new rules which are for ONLINE sales

https://community.ebay.com/t5/Selling/ebay-posts-about-the-new-IRS-Rules-the-600-Reporting-Rule/td-p/32508579?mkevt=1&mkcid=1&mkrid=711-53200-19255-0&campid=5337590775&customid=&toolid=10001

[MichMan]

7. Not just online, but anything paid through payment sites like Paypal, Venmo etc.

Last edited Tue Apr 5, 2022, 07:08 AM - Edit history (1)

Regardless of what it is

[Hoyt]

14. If you got more from ebay than you paid for the item, you were always supposed to pay taxes.

In fact, if one didn't pay taxes on the proceeds, less the cost or the item, maintenance, selling costs, etc., one was be a tax cheat.

[MichMan]

16. So if I bought a widget 25 yrs ago and sold it yesterday for $5 more than I paid.....

Now the entire selling price will be considered by the IRS as "income", not just the $5 "profit"

[Hoyt]

17. Mich, no one is coming after you for $5 profit, which would be about a dollar in taxes.

No, the entire selling price will not be considered taxable, unless you found it, stole it, was given as a gift, etc.

[MichMan]

18. Just throw away the 1099 and pretend I never received it?

The point is that let's say it was a bicycle I bought secondhand in 1997 that I sold last week for $500. I will receive a 1099 saying I had $500 in misc. income. The IRS has no idea what I paid for it, and even IF I remember it was $495, which is unlikely, I have zero proof if I paid $100, $1000 or anything in between.

I have three options

1) Just pretend the 1099 I got doesn't exist, tear it up, and don't even enter it on my tax form. (Not clear if programs like H & R Block or Turbotax will even let me file without it being rejected by the IRS)

2) Guess I might have paid $495 and hope like hell it doesn't get flagged for audit with penalties and interest

3) Pay income taxes on the entire $500.

#1 sounds like tax fraud to me, and the IRS might force me to prove #2 with a receipt, but if DU says it's OK.......

[sl8]

19. The 1099K doesn't report income, it reports transactions.

The amount of the transaction(s) might include income and they might not.

[Hoyt]

20. Pick #2 and don't worry about it any more.

[Paper Roses]

5. Hi Grasswire2. I just found about this ruling yesterday. So much for plans.

Last edited Tue Apr 5, 2022, 07:12 AM - Edit history (1)

This is grossly unfair. Anything you sell on FB, Marketplace, eBay or other site will be sending you a 1099 if you exceed $600 worth of sales. I believe it also includes postage within that amount.. I had a link to the article but it was already posted. All the stuff you've collected, not just dealers but the general public is subject to this. Who of us has any receipts from stuff we bought years ago. I had already put together some stuff to try and sell on-line . I guess this is not going to happen. A few states have indicated a higher level to meet before the 1099 but I'm not sure how that applies because this is an IRS thing. I think the article is confusing and not written for the average householder.

As I read the article, yes it applies to garage sales, estate sales. I guess it applies to just about anything you want to sell. My stuff is all mine, not bought for resale, many family items that my kids don't want.
I think this is going to be a big boondoggle.

I would like to know how this came about. I sold a few things this year, nothing over $ 20 dollars but I have no idea how much I paid or even where or when I bought them. I had planned to sell a couple on Cast Iron Pans, Guess not. I don't need this baloney!

Best to all as you try and figure this out. The market prices of some of the stuff we might want to sell is very bad now. A couple of pieces of good furniture and you're over the limit.

[MichMan]

6. It was part of the Infrastructure bill passed last November

Let those who voted for it explain why

Edit: I was wrong. It was actually in the American Rescue Plan bill from March 2021

[C_U_L8R]

8. What if I have no receipts?

Approach retirement, I planned to offload a lot of personal stuff I've accumulated over the years. Some things may sell for less than I paid (like computer stuff). Some things may have appreciated (like a rare guitar). I don't really know as many were purchased 10-20 years ago. And I don't understand how fair market value is calculated. Any wise advise on how to approach this without frustration or getting in trouble?

[MichMan]

10. Sell for cash only, or pay the IRS

[Hoyt]

15. It's easy enough to estimate what you paid for a rare guitar or something. Plus, the IRS isn't

going to chase down everyone who sales a few items.

[MichMan]

9. They say that only goods that are sold for a profit are considered taxable, but how to prove it ?

According to ebay;

"Only goods that are sold for a profit are considered taxable, so you won’t owe any taxes on something you sell for less than what you paid for it. For example, if you bought a bike for $1,000 a few years ago, and then sold it on eBay today for $700, that $700 you made generally would not be subject to income tax."

IRS: Fine, just show me your receipt for that bicycle that shows you paid $1000. Oh wait, you don't have one because you bought it in 2002 and don't have it? Too bad.

Please pay the income tax on the $700 then, since you have no documentation.

[Paper Roses]

11. I think this information and link should be posted in "General Discussion".

So many people want to move on household goods. Long lost receipts, no idea know what they paid for any items. People who never had a yard sale or are not in business would also be stung.

I've been in my house for 53 years and have much that I wanted to sell. Since most was bought in the 1980's or early 1900's, the receipts are long gone. I don't even know where I bought most of it. Lots of things like kitchenware, linens, dinner service(I know what I paid for it about 1980 but the receipt is long gone.) How about the inlaid dining room table I paid $2000 for, no receipt. With the disappearance of Antique shops in my area, I'd be lucky for find a dealer to buy it at any price. Most have closed or have no extra funds.
Like most of us, my receipts may prove what I paid if I had them. Remember...the IRS said you could dispose of all old tax records(including receipts) after 3 years.

I'd consign some of my better items but they take 50% of the selling price, if they will even accept them.
We're all screwed with this piece of genius legislation.

[Chainfire]

12. We are now paying sales taxes for items bought from individuals on ebay.

In my state that had never been required before. So the real question is, are we buying from the seller or are we buying from ebay? Ebay seems to have it both ways as it works to their benefit. Yes, you bought it from us and that is why you are paying sales tax. No, you bought if from the seller so don't think you will hold us responsible for *****.

I have sold tens of thousands of dollars of stuff on ebay in the past 20 years or so, but I dropped my selling last year when they demanded direct access to my bank account. I no longer need either the money, the hassle or the exposure. Local charity thrift stores now benefit from my disposing of "surplus property."

Of course, we need to applaud new taxes on working classes. It relieves the responsibility for the rich to pay, and that means that they will create more jobs and the positive benefits will trickle down on us, yet again.

At my age, if I sold more than $600.00 on ebay, I would toss the 1099 in the trash and let the IRS prove that I owed them money.

[Chainfire]

13. We are now paying sales taxes for items bought from individuals on ebay.

In my state that had never been required before. So the real question is, are we buying from the seller or are we buying from ebay? Ebay seems to have it both ways as it works to their benefit. Yes, you bought it from us and that is why you are paying sales tax. No, you bought if from the seller so don't think you will hold us responsible for *****.

I have sold tens of thousands of dollars of stuff on ebay in the past 20 years or so, but I dropped my selling last year when they demanded direct access to my bank account. I no longer need either the money, the hassle or the exposure. Local charity thrift stores now benefit from my disposing of "surplus property."

Of course, we need to applaud new taxes on working classes. It relieves the responsibility for the rich to pay, and that means that they will create more jobs and the positive benefits will trickle down on us, yet again.

At my age, if I sold more than $600.00 on ebay, I would toss the 1099 in the trash and let the IRS prove that I owed them money.