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“PayPal will calculate the reporting threshold separately.”
Yeah – well PayPal HAS sent me a 2021-year 1099-K form and reported the below threshold amount for my 2021 sales, which was only 26 transactions for a total of a little over $3000. SO – I needed to put together an accounting of my 2021 sales and needed to provide my original cost of each item next to what it sold for, to get my net gains per item. Then I had to put together my expenses for the sold items (PP fees, USPS shipping costs, packaging material costs, mileage to Post Office) to help offset those net gains. The net gains are what the IRS will tax you for…. Luckily, I have those items documented I just needed to dig for them and set up an Excel spread sheet for my Tax Lady showing all the math.
If ANY of you have received a 1099-K from PayPal you MUST MUST report it, no matter how little the amount is and even if it is below the tax law information – eBay may not have sent anything, but if PayPal did you need to go through this ‘taxing’ exercise.
Good Luck! For the rest of 2022 I’m probably going to be trading ONLY and no new sales after March 2022.
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*** Come visit me on deviantArt at http://ela-hara.deviantart.comI’m going to ask, as I have no clue, but in Canada, with online banking, I can send money via Interact eTransfer to anyone who registered their email address with their bank. There’s a limit per day, like when you withdraw money at the ATM, which depends on your type of account, etc.
Do you have this type of option in the States?
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http://www.sarahjestin.com/feedbacklists.htmI don’t know. But I also don’t do online banking nor feel comfortable using apps like Venmo, which also falls under the new IRS laws like eBay and PayPal does.
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*** Come visit me on deviantArt at http://ela-hara.deviantart.comI’m going to ask, as I have no clue, but in Canada, with online banking, I can send money via Interact eTransfer to anyone who registered their email address with their bank. There’s a limit per day, like when you withdraw money at the ATM, which depends on your type of account, etc.
Do you have this type of option in the States?
Yes. Zelle is a thing. It’s used with your bank account, and all you need is the recipients email OR phone number. I don’t know if there is a limit per day.
I have heard that these count as taxable funds/income as well. I didn’t look into personally, but I was told it was to be taxed.Zelle is not part of the new laws that PayPal, Venmo, etc fall under. See the statement below regarding types of transactions and payment platforms.
In a statement to NBC News, Early Warning Services, LLC, the network operator of Zelle, said, “If payments received on the Zelle Network are taxable, it is the consumer or organization’s responsibility to report them to the IRS.”
“The law requiring the issuance of forms 1099K applies to third party payment networks that handle the settlement of funds. Payments between friends and family, and eligible small businesses sent through the Zelle Network are not subject to this law because Zelle facilitates messaging between financial institutions, but does not hold accounts or handle settlement of funds.”
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Sun Dragon Koi #3Sounds like even though zelle isn’t going to send a 1099-K, technically, legally, you probably are supposed to report zelle earnings on your taxes?
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Article from the New York TIMES, written by Alan Rappeport, dated 12-23-2022:
[b]I.R.S. Delays Tax Change for Users of Venmo, Cash App and Other Digital Wallets – Users who receive income through digital payments will have another year before having to comply with a new tax rule that had sowed confusion and concern. [/b]
The Internal Revenue Service said on Friday that it is delaying by one year a new tax policy that will require users of digital wallets and e-commerce platforms to start reporting small transactions to the tax collection agency.
The delay of the rule comes in the wake of bipartisan backlash from lawmakers and an uproar from small business owners, who only recently became aware of the tax change.
The I.R.S. said that the delay is intended to provide a smooth transition period for taxpayers to comply with the policy, which was enacted as part of the American Rescue Plan of 2021 and which was supposed to take effect this year. Many users of services such as Venmo, PayPal, Cash App, Stub Hub and Etsy only recently became aware that they would be receiving I.R.S. tax forms associated with their transactions, sowing fears of surprise tax bills.
“The I.R.S. and Treasury heard a number of concerns regarding the timeline of implementation of these changes under the American Rescue Plan,” Doug O’Donnell, the acting I.R.S. commissioner, said in a statement. “To help smooth the transition and ensure clarity for taxpayers, tax professionals and industry, the I.R.S. will delay implementation of the 1099-K changes.”
He added: “The additional time will help reduce confusion during the upcoming 2023 tax filing season and provide more time for taxpayers to prepare and understand the new reporting requirements.”
Before the rule change, services like Venmo supplied users with a snapshot of their income called a 1099-K form only if they had received more than $20,000 and had more than 200 transactions. The forms were supposed to be submitted with tax returns to the I.R.S. and were intended to help determine how much a taxpayer owes.
Those thresholds were lowered to $600 for the entire year, regardless of the number of transactions, significantly broadening the number of people who are likely to be required to pay more taxes.
Lawmakers from both parties scrambled this week to scale back or reverse the tax measure in the spending package that Congress is set to pass this week, but none of the changes were ultimately included in the final legislation.
The Treasury Department, which oversees the I.R.S., has been under pressure from lobbyists and lawmakers to find a solution to the widespread confusion before taxpayers begin receiving the tax forms in the coming weeks.
“I urge the I.R.S. to use their authority now to delay the implementation and allow Congress to continue working to find a lasting solution that prevents this harmful regulation from impacting small businesses,” Senator Joe Manchin III, Democrat of West Virginia, said in a statement on Thursday.
Hey Etruscan – thanks so much for posting this – it does seem to be good news.
However if PayPal sends me a 1099-K for 2022 I’ll probably still report it on my taxes. Because if PayPal tells the IRS that I made money by submitting a 1099-K you can bet if I don’t declare those funds as ’income’ the IRS will most likely come after me for tax evasion – I don’t care what they’re saying in the news.
The government has been exemplary in telling people one thing and doing another. And the left hand never knows what the right hand is doing. They’re great at doing what benefits themselves in the long run.
Hopefully PayPal won’t even submit the 1099-Ks but I’m not optimistic. I mean they submitted one to me for tax year 2021 for $3,200 when the law wasn’t even going into effect until 2022! …. So, PayPal probably already has their computers all ready to split 1099-Ks out right after the clock strikes 12:01am on January 1st 2023.
Thanks for the information though! I’m still not going to sell stuff any more unless I get paid by good old fashioned paper checks, cash at yard sales, or USPS Money orders now. No more PayPal!
And again I ask ….. When will the IRS start trolling community yard sales for their cut…. I mean taxing $600 you make FOR THE ENTIRE YEAR for online sales?!? Come on! Really?
Everyone should be concerned about this not just Small Business owners. Under this law those individuals who sell a Windstone (or Windstones) on the second hand market totally over $600 FOR THE ENTIRE YEAR will need to pay taxes on the money made. I’m thinking about all the posts I see on FB selling Windstones and other stuff. Boy, some people are going to get a rude awakening!
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*** Come visit me on deviantArt at http://ela-hara.deviantart.com“Everyone should be concerned about this not just Small Business owners. Under this law those individuals who sell a Windstone (or Windstones) on the second hand market totally over $600 FOR THE ENTIRE YEAR will need to pay taxes on the money made. I’m thinking about all the posts I see on FB selling Windstones and other stuff. Boy, some people are going to get a rude awakening!”
YES!
The way I was understanding it was that as long as you didn’t make “profit” from the sales they were not taxable. Meaning if I bought an Elven Male Dragon and then I had to then sell it for one reason or another, I would only have to claim the difference (if there was one) between what I paid for it and what I sold it for.
Seems like a lot of ridiculous record keeping for us collectors if that is indeed the case… or if I’m incorrect (which I very well could be) I’ll be more so interested in trading pieces than selling them unless I’m in a bind because $600 a year is NOTHING when it comes to buying and selling Windstones.
Still though, I don’t feel it’s fair for someone who isn’t a business to sell their own property and be taxed on it when they already used their taxed income to pay for the item in question, probably paid sales tax on that item, and then have to be taxed to sell your own property you were already taxed to purchase in the first place. That just makes no sense to me. You’re not making any income, just getting back what you spent. No different than if I had to sell my TV or furniture. That shouldn’t be counted as income.
If I bought something for $200 and sold it for $350 then I’m making a $150 profit. THAT I would understand. It still sucks for collectors like us, but at least that would make some logical sense… In the end government will just keep on robbing us in every way they possibly can I’m sure.
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Dreamscape, Orion, Poison Dart, Fireberry, Spangler + Tigerberry DragonsYou only would pay taxes on the profit, if any. You add together the amount you paid for the piece, postage costs to mail it to the buyer, and Paypal fees on the sale, and then subtract that from the total amount the buyer paid for the piece (before Paypal fees were deducted).
You’re right, though, it is a lot of record keeping just to prove that you didn’t have a profit from the sale, or to document how much of a profit you made!
EXACTLY!
And that’s what I did for my 2021 taxes after PayPal sent me a 1099-K, which it didn’t NEED to do since that law wasn’t going to go into effect until 2022…I made a spreadsheet of the original cost I paid for the item, how much I sold it for, what the difference was (+ or -), and what my expenses on the sale were (Postage, PP fee, cost of packing materials, mileage to USPS) and that gave me the total profit or loss I made on the item. Of course I had to do this for EACH item I sold. Then my tax lady used that spread sheet, which you need to keep as your back-up incase the IRS audits you, to determine what my ‘income’ or ‘losses’ were for tax purposes.
So yes, it’s a lot of record keeping, which WILL be necessary. AND if you are doing this throughout the year you MAY need to pay ESTIMATED taxes on a quarterly basis to the IRS since they WILL see your selling as a potential ‘small business’ – Nice Uh?
I’m more inclined to trade as well since this information came out at the end of last year. And if I do sell I ask for payment from those who know me in either USPS Money Orders or in Windstone Gift Certificates, if they would like.
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*** Come visit me on deviantArt at http://ela-hara.deviantart.comThis whole thing is confusing to me. Let’s say you didn’t make a profit, but you did get the 1099, how do you faithfully report to the IRS that you got a 1099 but also indicate that you shouldn’t pay taxes on it because it wasn’t a profit?
I guess it will make more sense once I actually look at the forms.
It’s also confusing because does this mean now we have to register as sole proprietors of a small business and file as a different type of taxpayer just because we sold some windstones?
I’m an independent contractor and for my job it actually made sense for me to incorporate as an LLC, so I’m the sole member/owner and employee of a small business already, and now on top of that I have a secondary small business where I’m just a sole proprietor selling windstones? So confusing!
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Hmm double taxation.
I agree,trade or m.o.whenever possible.Every act matters.No matter how small💞
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Male Hearth....one day🤞Dream on.This whole thing is confusing to me. Let’s say you didn’t make a profit, but you did get the 1099, how do you faithfully report to the IRS that you got a 1099 but also indicate that you shouldn’t pay taxes on it because it wasn’t a profit?
I guess it will make more sense once I actually look at the forms.
It’s also confusing because does this mean now we have to register as sole proprietors of a small business and file as a different type of taxpayer just because we sold some windstones?
I’m an independent contractor and for my job it actually made sense for me to incorporate as an LLC, so I’m the sole member/owner and employee of a small business already, and now on top of that I have a secondary small business where I’m just a sole proprietor selling windstones? So confusing!
There is a form for reporting profit/loss on a number of miscellaneous things including the sale of collectibles, coins, etc. Unfortunately I don’t remember the ID number of the form at the moment. It isn’t the form for reporting profit/loss on stocks and investments.
IRS has ‘suspended’ the new 1099 law/$600 limit for 2022. My personal opinion is that they are too busy trying to find their new 8000 employees and get them trained to audit us all to take on this chore this tax season.
Reading everyone’s responses, I have a few other comments – which I will offset by – talk with your tax professional. If you do a ‘trade’ deal, IRS still looks at it as a fair market value kinda transaction and you will still need to pay taxes on it. If you are doing this as a hobby, you cannot take out any expenses (you will pay on the $$$ or trade value received). You can do the expenses thing if you report as an actual business. And, this goes beyond Paypal, Venmo, etc… your banks/credit unions will also be reporting money deposited…
It’s not a pretty picture out there.Linda Watson Gresham
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