New IRS reporting for 2021? 8 8

[OuterboroGuy]

2 hours ago, CatskillMike said:

You don't pay taxes on your primary residence anymore if you sell it.  Way back you were allowed a one time lifetime exclusion, then they went to every 5 years or something, and now it is tax free after 1 year I think.  My brother in law sold/bought 3 houses in a matter of 10 years or so and never paid any income taxes on them. He always sold them for a little more than he bought them for.

 

This is just wrong.  See: Turbo Tax on sales of primary residence

Of course, most people (like your BIL) don't realize home sale profits of the size that put you in the capital gains tax bucket (e.g., over $500k profit for a sale by a married couple).  And a lot of houses end up in estates so a different tax regime applies.  Of course, if he was flipping houses as a business, any profits are taxable regardless of the fact that it was a home that was sold (as opposed to a comic book or a widget).

[the blob]

1 hour ago, shadroch said:

Have you really never looked into the advantages a small business offers? Just be a pre-revenue start-up.

I may have to now. My wife has a consulting side business so we do something already, but it is small $ and simple

[the blob]

1 hour ago, D84 said:

You are still required to report all income from any source to the IRS. Selling comics is considered for most as hobby income.

So only paying taxes off the primary source is not "paying your fare share."

You are assuming profits.  In the land of comics that is a big assumption.

[jcjames]

1 hour ago, shadroch said:

The law on the taxes has not changed. The difference is that before the IRS expected us to self-report. You can see how well that worked out. 

In all likelihood, this will cost you more in time spent keeping records than it will in dollars.  Just because ebay or paypal tells the IRS you sold $20,000 worth of stuff doesn't mean you owe taxes on that amount.  Suppose you practice my old model- lose money on every sale but make it up with volume.  We used to have hobbies. Now we have a business. Take advantage of it. 

I don't run a business, and I don't consider my hobby as a business anymore than my time spent volunteering can be monetized and written off as a charitable donation (which it can't).

How exactly do you "lose money on every sale but make it up with volume"? Losing money on every sale even with high volume of sales just means losing more money.

 

 

Edited March 9, 2021 by jcjames

[OuterboroGuy]

34 minutes ago, the blob said:

You are assuming profits.  In the land of comics that is a big assumption.

No profits required if you are selling comics as a hobby, and not as a business.  If you sell some comics as a hobby, there are no deductions.  All sales proceeds are income -- not the sale proceeds minus what you paid.

See here and here. 

So keep good records, so that if the IRS ever comes calling, at least you can try to retroactively call it a business and get to deduct what you paid.

And if you are already selling comics as a business (whether on eBay, here on the boards, on FB or hawking them on the streetcorner ("Get your comics here!  I'm putting my mother through college!")) then presumably you're reporting all your net income already, and the change in 1099 reporting shouldn't affect you.

Actually, ignore all that -- if you are doing intermittent sales, these are probably treated as sales of collectibles, which puts it in the capital gains rules.  Here's a good summary:  Taxation of Collectibles

Either way, the tax man wins.

Edited March 9, 2021 by OuterboroGuy

[jcjames]

edit

 

Edited March 9, 2021 by jcjames

[jcjames]

20 minutes ago, OuterboroGuy said:

.... if you are doing intermittent sales, these are probably treated as sales of collectibles, which puts it in the capital gains rules.  Here's a good summary:  Taxation of Collectibles

Either way, the tax man wins.

"You need to know your cost basis to calculate your taxable gain, and that means the price paid plus any costs, fees, and commissions involved with that purchase."

Utterly unknown and unknowable for me. I have no idea how much I paid for a Wolverine #1 that I think I got maybe four (or was it seven?) years ago.

Sheesh... 28% capital gains, no thanks buhbye.

[jcjames]

Speaking of 28% capital gains taxes on a few hundred dollars in comic sales for someone in a low income-tax bracket, why is $100 income from "activity ABC" taxed different from $100 income from "activity XYZ"?

If you want to talk about people paying their "fair share", the IRS already fails miserably with the "fair" part.

[shadroch]

1 hour ago, jcjames said:

I don't run a business, and I don't consider my hobby as a business anymore than my time spent volunteering can be monetized and written off as a charitable donation (which it can't).

How exactly do you "lose money on every sale but make it up with volume"? Losing money on every sale even with high volume of sales just means losing more money.

 

 

You can lead a horse to water..........

[jcjames]

22 minutes ago, shadroch said:

You can lead a horse to water..........

...but you can't win for losing.

 

[Shrevvy]

10 hours ago, D84 said:

Another thread of people whining about no longer being able to hide income from the IRS.🤦‍♂️

No, it is not. Maybe some are "whining" about that, but policies like this are onerous for small businesses and individuals. It is a reach into private lives that is not justified. We issued more 1099s for services this year than we ever have. The IRS continues to push that issue with higher fines for non-compliance. I am certain all those 1099s (which cost time and money to file) generated exactly $0 in additional federal income taxes. The cost burden has been placed on us as a small business.

Issuing 1099s for $600 of eBay sales is cumbersome and costly for the individual. The IRS knows that someone selling $600 a year is not making $600 of income. They also know that a portion of those filers don't know that and will pay taxes on $600 of "income." They also know the cost in time and money may even justify that person to pay those taxes. A household making $100,000 gross income (married filer) would pay $72 in taxes on that $600 if no costs are netted against that. This will no doubt capture a number of people selling off excess used goods. No income taxes should be due on those sales. Someone cleaning out an attic or routinely selling used products after they get their use, will now be forced to file. 

This proposal will likely hit those households that this bill is purported to help. This is in no way "relief."

I suspect you do not have a small business (maybe I am wrong as just as you are with your assumption) and do know the compliance burden that the IRS forces upon others.

[jharvey]

6 hours ago, jcjames said:

"You need to know your cost basis to calculate your taxable gain, and that means the price paid plus any costs, fees, and commissions involved with that purchase."

Utterly unknown and unknowable for me. I have no idea how much I paid for a Wolverine #1 that I think I got maybe four (or was it seven?) years ago.

Sheesh... 28% capital gains, no thanks buhbye.

It's actually a "maximum" rate of 28%. If you are in a 12% tax bracket, then you pay 12% tax. If you are in a 37% tax bracket, then you pay the maximum of 28%. 

[theCapraAegagrus]

17 hours ago, BigLeagueCHEW said:

If there is no social security number tied to eBay, can't you use a fake name?

There is, though.

[CatskillMike]

 

10 hours ago, CatskillMike said:

You don't pay taxes on your primary residence anymore if you sell it.  Way back you were allowed a one time lifetime exclusion, then they went to every 5 years or something, and now it is tax free after 1 year I think.  My brother in law sold/bought 3 houses in a matter of 10 years or so and never paid any income taxes on them. He always sold them for a little more than he bought them for.

 

7 hours ago, OuterboroGuy said:

This is just wrong.  See: Turbo Tax on sales of primary residence

Of course, most people (like your BIL) don't realize home sale profits of the size that put you in the capital gains tax bucket (e.g., over $500k profit for a sale by a married couple).  And a lot of houses end up in estates so a different tax regime applies.  Of course, if he was flipping houses as a business, any profits are taxable regardless of the fact that it was a home that was sold (as opposed to a comic book or a widget).

I should have been clearer. 

Not a business, just life and new jobs.

These were "small" amounts, like $40-50 k profits each time. He wishes he realized a gain of 500k!

 

 

 

 

[CatskillMike]

My business has been filing 1099's for many years now.  Any payments I made over $600 to individuals or non incorporated businesses receive these.  If I had an electrician rewire a building or something like that and and the bill was $601 or $6000, he gets a 1099.  Businesses have been doing this for many years.  It is the law. I did not like the fact they were making me the "policeman", but that's how it is. 

The plumber does not have to pay taxes on the $601 or whatever amount. He will pay the taxes on the profit.  This 1099 thing is just so EVERYBODY knows he received it.  Me, him, and the IRS.  That way he need to include it in his gross sales.  He can't "hide" it anymore. Even if paid in cash.

 

[the blob]

15 hours ago, mattn792 said:

IL was also on PayPal's new 1099 list, and it took me like 12 hours to reconcile the figures before turning everything over to my accountant.  And it wasn't the big ticket stuff sold here, because I already track that throughout the year.  It was those miscellaneous $1-$10 items that I sporadically sold on eBay throughout the first part of the year because I figured I'd make a little beer money instead of throwing them out that were a total hassle.  I hope the taxing bodies put the extra $12.75 they'll collect from me this year to good use.

Yes, the small sales are a brute. $11, but $7 went to fees And shipping.

[the blob]

16 hours ago, THE_BEYONDER said:

 

When every new sale is a new record high....it shouldn’t take long to reach the ceiling.  Steady increases year after year are one thing, but when books like ASM 238 jump from 4K to 5K in like a week, and bin fodder  like West Coast 45 become 1k books virtually overnight....

I have always tended to go after the books that are not hot. That are in a lull. As I have said repeatedly, there are a huge number of books that are down right now or just never picked up at all. This hobby is not expensive if you don't follow trends. Sometimes this strategy works. Sometimes not.

[Galen130]

Looks like I left feebay just in time.  Been selling here on the boards only, since last July.  It’s not like I’m paying the mortgage with my sales...I wasn’t on eBay either.  It’s more of a hobby, with less hassle and a better group of buyers...IMO. 

[BigLeagueCHEW]

1 hour ago, Galen130 said:

Looks like I left feebay just in time.  Been selling here on the boards only, since last July.  It’s not like I’m paying the mortgage with my sales...I wasn’t on eBay either.  It’s more of a hobby, with less hassle and a better group of buyers...IMO. 

Another trick for FeeBay is to find out if the seller has an actual website and buy from there 

[Galen130]

3 minutes ago, BigLeagueCHEW said:

Another trick for FeeBay is to find out if the seller has an actual website and buy from there 

Good point.  I don’t have a website because it would be too much like work.