New IRS reporting for 2021? 8 8

[rjpb]

On 3/12/2021 at 4:20 AM, Pontoon said:

Don't get me wrong, this topic is good fodder for a thread for sure, but I have a real nutty suggestion, fellas. Rather than rely on conjecture on a comic forum chat board about tax regulations, talking to a tax professional might be the best course of action. We've been using an accountant for years. Unless you're an EZ form filer, the fees involved have paid for themselves many times over just from saving the time and effort we'd invest otherwise.

I guess I'm weird in that I kind of enjoy doing calculations and don't mind catching up on changes in the tax code, but I've found tax accountants to be expensive for what they deliver, especially these days when tax software usually prompts the right questions, and does the math for you. I used one for a couple of years when I was flipping houses, but you still have to do all the prep work and give them the numbers to input into the forms, and I realized I wasn't saving much in the way of time, nor were they coming up with added deductions I hadn't considered. Unless you have complicated income streams, or a business big enough you should have a full time accountant anyway, my sense is most people hire tax accountants because they don't want to have to think about filing anymore than they have to, and they want someone to make them feel better about questionable deductions that might be disallowed in a full audit, but is unlikely to happen. 

But then maybe I'm a bit of a masochist, as I'm currently not only doing my own taxes, but for both my daughters as well.

[Math Teacher]

I know that I am getting into this topic quite late, but I do have a question that has probably already been answered.

Does this 1099-K go into effect for the 2021 tax year, or does it go into effect for the 2022 tax year?

Also, I had over 200 sales last year. Much of this was TPBs and action figures. To calculate my profit/loss on an item, I first looked up the MSRP on either mycomicshop.com or Amazon. During the time I was buying all these TPBs and action figures, I belonged to a comic book subcription service, G-Mart Comics in Chicago. At that time, I was routinely getting a 15% - 20% discount on my purchases. So, to determine the price I paid for the book when I sold it, I took the MSRP and multiplied by 0.8 (20% discount). I then took the selling price of the book and subtracted this discounted amount. This occasionally led to profit, but more often it led to loss. Here's an example: I sold Flash Archives #1 - #4 for $75. The MSRP on all four books was $49.99. I multiplied $49.99 by 4, and I then multiplied that amount by 0.8, which led to my estimated price I paid being $160. I then took $75 and subtracted $160, which led to a loss of $85. In addition, I kept track of all my Ebay fees and supplies (such as boxes, tape, and bubble wrap), which was a non-trivial amount of money. At the end of the year, I had a net loss of approximately $600. I told our accountant about this, and I also told him that I had not gotten a 1099-K. His response was, "Don't worry about it. If you lost money during the year, there's no point of adding this to your return, especially since you didn't get a 1099-K."

I hope I don't get branded as a tax cheat here. If my accountant said, "Don't include it in your return," then I have to take his word for it. Taxes is the main thing he does to make a living, so I have to consider him to be the expert.

[Tnexus]

20 minutes ago, Math Teacher said:

I know that I am getting into this topic quite late, but I do have a question that has probably already been answered.

Does this 1099-K go into effect for the 2021 tax year, or does it go into effect for the 2022 tax year?

Also, I had over 200 sales last year. Much of this was TPBs and action figures. To calculate my profit/loss on an item, I first looked up the MSRP on either mycomicshop.com or Amazon. During the time I was buying all these TPBs and action figures, I belonged to a comic book subcription service, G-Mart Comics in Chicago. At that time, I was routinely getting a 15% - 20% discount on my purchases. So, to determine the price I paid for the book when I sold it, I took the MSRP and multiplied by 0.8 (20% discount). I then took the selling price of the book and subtracted this discounted amount. This occasionally led to profit, but more often it led to loss. Here's an example: I sold Flash Archives #1 - #4 for $75. The MSRP on all four books was $49.99. I multiplied $49.99 by 4, and I then multiplied that amount by 0.8, which led to my estimated price I paid being $160. I then took $75 and subtracted $160, which led to a loss of $85. In addition, I kept track of all my Ebay fees and supplies (such as boxes, tape, and bubble wrap), which was a non-trivial amount of money. At the end of the year, I had a net loss of approximately $600. I told our accountant about this, and I also told him that I had not gotten a 1099-K. His response was, "Don't worry about it. If you lost money during the year, there's no point of adding this to your return, especially since you didn't get a 1099-K."

I hope I don't get branded as a tax cheat here. If my accountant said, "Don't include it in your return," then I have to take his word for it. Taxes is the main thing he does to make a living, so I have to consider him to be the expert.

If the sales were from one source (Paypal, Ebay), etc and you didn't get a 1099, you should be fine. You can check your tax documents on those sites, so you may just want to double check though. IRS will be much more inclined to go after people who ignore it than at least show some reportings.

I think in the end, for the average person it's going to be easier to just say, "Here's what I made this year and here's how much I spent". Then subtract that and get a final number.

[rsouxlja7]

3 hours ago, Math Teacher said:

I know that I am getting into this topic quite late, but I do have a question that has probably already been answered.

Does this 1099-K go into effect for the 2021 tax year, or does it go into effect for the 2022 tax year?

Also, I had over 200 sales last year. Much of this was TPBs and action figures. To calculate my profit/loss on an item, I first looked up the MSRP on either mycomicshop.com or Amazon. During the time I was buying all these TPBs and action figures, I belonged to a comic book subcription service, G-Mart Comics in Chicago. At that time, I was routinely getting a 15% - 20% discount on my purchases. So, to determine the price I paid for the book when I sold it, I took the MSRP and multiplied by 0.8 (20% discount). I then took the selling price of the book and subtracted this discounted amount. This occasionally led to profit, but more often it led to loss. Here's an example: I sold Flash Archives #1 - #4 for $75. The MSRP on all four books was $49.99. I multiplied $49.99 by 4, and I then multiplied that amount by 0.8, which led to my estimated price I paid being $160. I then took $75 and subtracted $160, which led to a loss of $85. In addition, I kept track of all my Ebay fees and supplies (such as boxes, tape, and bubble wrap), which was a non-trivial amount of money. At the end of the year, I had a net loss of approximately $600. I told our accountant about this, and I also told him that I had not gotten a 1099-K. His response was, "Don't worry about it. If you lost money during the year, there's no point of adding this to your return, especially since you didn't get a 1099-K."

I hope I don't get branded as a tax cheat here. If my accountant said, "Don't include it in your return," then I have to take his word for it. Taxes is the main thing he does to make a living, so I have to consider him to be the expert.

Well if you added it to your return you would've gotten a tax deduction = to 600*(your tax bracket), but you would have had to pay for the accountant to prepare the form, but you could've deducted the cost of the tax preparation as well further increasing your deduction, so all in all he did you a disservice by suggesting not to add it IMO. 

[Math Teacher]

2 hours ago, rsouxlja7 said:

Well if you added it to your return you would've gotten a tax deduction = to 600*(your tax bracket), but you would have had to pay for the accountant to prepare the form, but you could've deducted the cost of the tax preparation as well further increasing your deduction, so all in all he did you a disservice by suggesting not to add it IMO. 

I can no longer itemize my deductions. Our mortgage is paid in full, and we would have to donate MANY things from our house to get up to $12,400 in donations, let along $24,800 for the two of us. Also, I read somewhere that you are not allowed to apply losses toward your tax bill, unless you are a dealer.

[KCOComics]

5 hours ago, Math Teacher said:

I know that I am getting into this topic quite late, but I do have a question that has probably already been answered.

Does this 1099-K go into effect for the 2021 tax year, or does it go into effect for the 2022 tax year?

Also, I had over 200 sales last year. Much of this was TPBs and action figures. To calculate my profit/loss on an item, I first looked up the MSRP on either mycomicshop.com or Amazon. During the time I was buying all these TPBs and action figures, I belonged to a comic book subcription service, G-Mart Comics in Chicago. At that time, I was routinely getting a 15% - 20% discount on my purchases. So, to determine the price I paid for the book when I sold it, I took the MSRP and multiplied by 0.8 (20% discount). I then took the selling price of the book and subtracted this discounted amount. This occasionally led to profit, but more often it led to loss. Here's an example: I sold Flash Archives #1 - #4 for $75. The MSRP on all four books was $49.99. I multiplied $49.99 by 4, and I then multiplied that amount by 0.8, which led to my estimated price I paid being $160. I then took $75 and subtracted $160, which led to a loss of $85. In addition, I kept track of all my Ebay fees and supplies (such as boxes, tape, and bubble wrap), which was a non-trivial amount of money. At the end of the year, I had a net loss of approximately $600. I told our accountant about this, and I also told him that I had not gotten a 1099-K. His response was, "Don't worry about it. If you lost money during the year, there's no point of adding this to your return, especially since you didn't get a 1099-K."

I hope I don't get branded as a tax cheat here. If my accountant said, "Don't include it in your return," then I have to take his word for it. Taxes is the main thing he does to make a living, so I have to consider him to be the expert.

So this is my big question. Is that a suffient  way to calculate prices paid? Or do you need receipts? 

I've built my collection over decades. I have several books that were cash deals or trades or whatever. 

I have an excel spreadsheet with what I remember paying. I also have started tracking big expenses, like grading, shipping, insurance....but I don't have receipts.  If I decide to sell everything, I'm fine with paying my share on the gains.  I just don't want to pay taxes on the entire sale because I can't "prove" my costs with receipts. 

[MustEatBrains]

45 minutes ago, Math Teacher said:

I can no longer itemize my deductions. Our mortgage is paid in full, and we would have to donate MANY things from our house to get up to $12,400 in donations, let along $24,800 for the two of us. Also, I read somewhere that you are not allowed to apply losses toward your tax bill, unless you are a dealer.

In no sane universe can this be correct.

[shadroch]

For $100 I will ordain anyone who desires a dealer.  For $25 more, you get a glossy 8X10 certificate and two wallet sized cards.

But wait, there is more. 

Act now and you'll get a top secret report showing you how to register with your state and local tax authorities 

[Xenosmilus]

No expert here but would a loss be considered if you sold an item under the current market value too or is it strictly based on the profit you made?  In theory we all could base grading based on Dylan's grading system and declare a loss LOL

[ttfitz]

3 hours ago, KCOComics said:

So this is my big question. Is that a suffient  way to calculate prices paid? Or do you need receipts? 

In the message you quoted, if I understood correctly @Math Teacher had bought most of his sales items at retail price (less a discount) and was using that as his cost basis. I very much doubt in that case it wouldn't be sufficient (it wouldn't be technically legal if the discount wasn't considered, but still unlikely to be challenged).

It's when you get away from the price the item was originally offered for sale that you run into possible troubles, when you claim that you spent hundreds of dollars for a comic which originally sold for under $2-3 that you might have a need for a receipt.

[rsouxlja7]

10 hours ago, Math Teacher said:

I can no longer itemize my deductions. Our mortgage is paid in full, and we would have to donate MANY things from our house to get up to $12,400 in donations, let along $24,800 for the two of us. Also, I read somewhere that you are not allowed to apply losses toward your tax bill, unless you are a dealer.

Sorry deduction was the wrong word to use. It’d be a reduction in income on schedule C. It doesn’t affect the standard or itemized deduction. 
 

and the dealer thing is incorrect. 

Edited March 15, 2021 by rsouxlja7

[1Cool]

Profit is profit.  Doesn't matter if it comes from working a job - having a stock go up in value and then selling it - or buying and selling comics.  The tax rate obviously varies and what you can deduct probably changes depending if it is a business or not but in general all profits are typically taxed.  I feel we are overly taxed but that is a whole another discussion which would probably get political quick.

[Barth]

11 hours ago, KCOComics said:

If I decide to sell everything, I'm fine with paying my share on the gains.  I just don't want to pay taxes on the entire sale because I can't "prove" my costs with receipts. 

This

What do you do when you decide to sell your collection? 

[Math Teacher]

12 hours ago, KCOComics said:

So this is my big question. Is that a suffient  way to calculate prices paid? Or do you need receipts? 

I've built my collection over decades. I have several books that were cash deals or trades or whatever. 

I have an excel spreadsheet with what I remember paying. I also have started tracking big expenses, like grading, shipping, insurance....but I don't have receipts.  If I decide to sell everything, I'm fine with paying my share on the gains.  I just don't want to pay taxes on the entire sale because I can't "prove" my costs with receipts. 

I think it is HIGHLY unreasonable to expect me to have a receipt for the Batman  Archives Volume 1 I purchased in 1990. Now, if I had spent $10,000 on a high-grade FF #1 back then, I could understand the need for a receipt. However, in all likelihood, I might not have it because 1) I never got a receipt - bought it from my next door neighbor, 2) wasn't offered a receipt - bought it at a show, 3) I just can't find it, or 4) I never kept it. Look, I have enough trouble finding our grocery receipt after we are done putting away the groceries. The chance of me keeping and being able to find a 8" x 3" piece of is SO unlikely that I would assign it a probability of 0.

[Math Teacher]

12 hours ago, MustEatBrains said:

In no sane universe can this be correct.

Remember, you're talking about the IRS, the same institution that sent me a tax bill for $26,000+ because they didn't even look in Box 4 for the letter D (deceased). The only way I got this settled is with a lawyer and my congresswoman.

[Math Teacher]

9 hours ago, Xenosmilus said:

No expert here but would a loss be considered if you sold an item under the current market value too or is it strictly based on the profit you made?  In theory we all could base grading based on Dylan's grading system and declare a loss LOL

This is what I believe constitutes a loss. I bought the Flash Archives for approximately $39.99 ($49.99 * 0.8). I sold it for $18.75 on Ebay. $18.75 (sale price) - $39.99 (purchase price ) = $21.24 (loss of $21.24). The FMV is determined by the amount you sold it for.

Just like many of us, I am not a tax professional.

[Math Teacher]

2 hours ago, rsouxlja7 said:

Sorry deduction was the wrong word to use. It’d be a reduction in income on schedule C. It doesn’t affect the standard or itemized deduction. 
 

and the dealer thing is incorrect. 

Well, we got a $3,600+ federal refund, so I'm not going to quibble over $600. I am sure there are times in the past where I underpaid (but didn't get caught), so I'm just going to call this good.

[vodou]

On 3/12/2021 at 1:39 PM, NewWorldOrder said:

I am not saying you shouldn't report profit income, but IRS isnt going after small amount.

This completely assumes there is not and never will be rules based automation like every other industry in the world.

To each their own on that but I love a good hypocrisy, and that's exactly what it is when you want the Rule of Law to protect from "whatever" befalls others in other places where things are a lot more hinky (Law of the Jungle?) than Western Suburbia, but...you just don't want to pay for it  

[vodou]

On 3/14/2021 at 10:26 AM, NewWorldOrder said:

What country does this not happen so I can move there?

 

Monaco.

[vodou]

19 hours ago, Tnexus said:

You can check your tax documents on those sites, so you may just want to double check though. IRS will be much more inclined to go after people who ignore it than at least show some reportings.

They do and it's super simple (from IRS pov):

1. They default to 100% of 1099-K being taxable income and add it to what you've already reported, then
2. apply the top bracket rate to come up with unreported income tax due,
3. then calculate penalty and interest and send you a letter: you owe this. Or, tell (prove) where we're wrong.
4. Can't prove? Oh well...pay the bill or enjoy what comes after ignoring that letter  

Edited March 15, 2021 by vodou