New Tax Reporting ($600 Threshold per year) and Consignments 21 21

[skypinkblu]

On 3/12/2024 at 4:45 PM, ttfitz said:

"expenses" she isn't talking about the cost of the book, but other things like storage, office space, etc

Yes, that was what I meant. If I buy a book that has sales tax, I pay the sales tax because I'm not a registered business.

[NewWorldOrder]

On 3/12/2024 at 1:12 PM, the blob said:

Seems nuts to pay $500 for a book, sell it for $500 and be expected to pay taxes on that. There was no profit.

 

Then you owe nothing.

[NewWorldOrder]

This thread is great

If they raised the threshold to 50K most of you here from the posts I have read would think the Gov't would allow you to keep your profit as long as your gross sales were kept under 50k, and they didn't send you a 1099.

Edited March 12 by NewWorldOrder

[jharvey]

On 3/12/2024 at 5:34 PM, NewWorldOrder said:

Then you owe nothing.

Seems nuts to pay $500 for a book, sell it for $500 and be expected to pay taxes on that. There was no profit.

In theory anyway. However, that could be difficult to prove if you bought it 10 years ago and didn't get/keep any sort of record or receipt.

[Nick Furious]

On 3/12/2024 at 5:41 PM, NewWorldOrder said:

This thread is great

If they raised the threshold to 50K most of you here from the posts I have read would think the Gov't would allow you to keep your profit as long as your gross sales were kept under 50k, and they didn't send you a 1099.

If the threshold were raised to $50k, what do you think would be the purpose behind that?  Do you not agree that the current threshold is an intentional buffer zone to allow for small transactions to go unreported?     

[Mr. Zipper]

On 3/13/2024 at 7:43 AM, Nick Furious said:

If the threshold were raised to $50k, what do you think would be the purpose behind that?  Do you not agree that the current threshold is an intentional buffer zone to allow for small transactions to go unreported?     

Of course it is. The reason the limit is what it is is because at one time, the government couldn't be bothered with chasing down taxes from people selling off odds and ends. It was a mulligan with no expectation or enforcement that Grandpa had to report his income from the old fishing rods he sold at a garage sale or unloading his stamp collection. Then the government gave away trillion$ of pandemic payments and needed a cash grab, hence the lowering of the limit from $20,000 to $600. (Sounds like a totally reasonable modification, right? ) 

So that is the objection. A draconian shift in the limits and then the expectation that casual sellers/collectors have to suddenly start behaving like a business at tax time with receipts, expenses, etc. etc. All with no paperwork to support decades worth of hobby purchases.

There is always the sanctimonious finger wagging from the few who apparently document and report every nickel they made at a yard sale. I couldn't care less what they think -- the holier-than-thou are usually the biggest cheats and phonies.

[Robot Man]

Kept records?  I was way more busy digging up stuff for my collection than documenting what I paid for it.

This endevor has always been just a hobby for me. I never in my wildest dreams thought this stuff would be worth much. Any money I made usually just went back into buying more junk most people just threw away. Stuff that taxes were paid on when new.

I’m just a little fish hobbyist not a financial genius. The financial gain I might make is a pure accident if I were to sell it all. And certainly not my motivation.

There are 1%ers out there making billions and paying nothing or next to nothing in taxes. And, yet they waste their time on folks like me…

[jimjum12]

On 3/12/2024 at 6:15 PM, skypinkblu said:

Yes, that was what I meant. If I buy a book that has sales tax, I pay the sales tax because I'm not a registered business.

Alot of places I go won't let me skip the tax, claiming they aren't set up for it. I just comply and pay it. You can save a bit with the places that do. It adds up. One thing that folks overlook when starting a business is the payroll tax, or social security tax. It's a bit more when you aren't working for someone. I had an average year, before my stroke, and that part of my tax this year was almost $1400... for basically part-time. That's based on my profit so if you aren't making money, you aren't paying. Some years I don't make much. Best second job I ever had. Wish I could make it full time. @the blob said, it's easy to make $500 profit per month, but $5000 is another story. GOD BLESS... 

-jimbo(a friend of jesus)

Edited March 13 by jimjum12

[rsouxlja7]

On 3/13/2024 at 9:52 AM, Robot Man said:

Kept records?  I was way more busy digging up stuff for my collection than documenting what I paid for it.

This endevor has always been just a hobby for me. I never in my wildest dreams thought this stuff would be worth much. Any money I made usually just went back into buying more junk most people just threw away. Stuff that taxes were paid on when new.

I’m just a little fish hobbyist not a financial genius. The financial gain I might make is a pure accident if I were to sell it all. And certainly not my motivation.

There are 1%ers out there making billions and paying nothing or next to nothing in taxes. And, yet they waste their time on folks like me…

Unfortunately it's because the rich have all of the resources to challenge the IRS on their audits and they don't have the manpower to make them pay up. It's infinitely cheaper and easier to send automated notices to the common man that received a 1099 from PayPal that they can tell didn't get reported on a Schedule C without having a human involved, and the common man is more likely to pay up without a fight. Just the world we live in. 

[the blob]

On 3/12/2024 at 6:34 PM, NewWorldOrder said:

Then you owe nothing.

I read Sharon's post as saying she does not deduct expenses, which I would read as the cost of the book, but as someone else pointed out, could be the myriad of other expenses. The problem is ebay reports $500, so it is up to you to be in a position to prove that it wasn't 100% taxable profit.

[the blob]

On 3/13/2024 at 10:56 AM, jimjum12 said:

Alot of places I go won't let me skip the tax, claiming they aren't set up for it. I just comply and pay it. You can save a bit with the places that do. It adds up. One thing that folks overlook when starting a business is the payroll tax, or social security tax. It's a bit more when you aren't working for someone. I had an average year, before my stroke, and that part of my tax this year was almost $1400... for basically part-time. That's based on my profit so if you aren't making money, you aren't paying. Some years I don't make much. Best second job I ever had. Wish I could make it full time. @the blob said, it's easy to make $500 profit per month, but $5000 is another story. GOD BLESS... 

-jimbo(a friend of jesus)

$5000 a month is a real job unless you have a vast supply of primo stuff you paid discount prices for, yeah, a $500 (profit) side hustle is easy. It's weird, I hit 50 back in 2002 and lost my energy for this stuff. I guess I'll find it again next time I'm scrambling for money.  I know you were supposed to pay taxes regardless, but the old reporting rules seemed fair to allow for a side hustle and to not force people into a nightmare of paperwork. $6K now I guess is a decent compromise.

[Dick Pontoon]

On 3/14/2024 at 1:09 PM, the blob said:

$5000 a month is a real job unless you have a vast supply of primo stuff you paid discount prices for, yeah, a $500 (profit) side hustle is easy. It's weird, I hit 50 back in 2002 and lost my energy for this stuff. I guess I'll find it again next time I'm scrambling for money.  I know you were supposed to pay taxes regardless, but the old reporting rules seemed fair to allow for a side hustle and to not force people into a nightmare of paperwork. $6K now I guess is a decent compromise.

2002 is a typo, no? I thought you're in your 50s now, not 70s.

[the blob]

On 3/14/2024 at 1:32 PM, Pontoon said:

2002 is a typo, no? I thought you're in your 50s now, not 70s.

2022. I just feel like I'm in my 70s. As if things weren't bad enough with my achilles injury that has been a slowwwwwwww recovery, last night and this morning I had bursitis in my knee and could barely walk. 12 advils later I am ok. 

[namisgr]

On 3/13/2024 at 10:52 AM, Robot Man said:

There are 1%ers out there making billions and paying nothing or next to nothing in taxes. And, yet they waste their time on folks like me…

Actually, the IRS just this fiscal year received an infusion of money in order to upgrade their digital systems and provide resources to enforce legally owed taxes on the wealthiest individuals.  It's estimated that the IRS loses hundreds of billion dollars a year in compliance failures on legally owed taxes by the top 1% of income earners.

[NewWorldOrder]

On 3/14/2024 at 9:11 AM, the blob said:

I read Sharon's post as saying she does not deduct expenses, which I would read as the cost of the book, but as someone else pointed out, could be the myriad of other expenses. The problem is ebay reports $500, so it is up to you to be in a position to prove that it wasn't 100% taxable profit.

Correct and that really not too much effort. Takes 5 seconds.

BTW $500 to the US Govt is basically .00000000000000000000000000000000000000000000000000000000000000000000000000000000001.

They are 110% not going to audit you if you report the $500, and make you provide paperwork on those expenses you deducted where you claim the profit was $200. 

500K a year?  Yes you should have all your expenses and be organized.

[NewWorldOrder]

On 3/13/2024 at 4:13 AM, jharvey said:

Seems nuts to pay $500 for a book, sell it for $500 and be expected to pay taxes on that. There was no profit.

In theory anyway. However, that could be difficult to prove if you bought it 10 years ago and didn't get/keep any sort of record or receipt.

All I see in this thread is a bunch of worry warts.

Do you actually think the USA Gov't is going to spend their time and resources on that?  Come on now.

Literally just give it your best guess on how much you paid and write in the expenses box and call it life.

I love how most comic collectors can tell you exactly who and what con they bought their ASM 300 at, but yet when it comes to remembering what they a paid it slips their mind.....

[NewWorldOrder]

What is the number #1 thing on the mind of every IRS employee that comes into work each day? 

Same as mostly all employees in history of the world.  "Whats the threshold for how long my lunch time is?"

The vast majority of the time they don't give 2 hoots about your $500 comic book.

Report the $500 on your taxes, and if you don't have the purchase paperwork from the year 1985 then give it your best college guess and call it life.  Not that hard.

Edited March 14 by NewWorldOrder

[shadroch]

On 3/13/2024 at 4:43 AM, Nick Furious said:

If the threshold were raised to $50k, what do you think would be the purpose behind that?  Do you not agree that the current threshold is an intentional buffer zone to allow for small transactions to go unreported?     

The $600 limit wasn't small when set, but it shrinks with inflation every year.

In 1978, the IRS declared that Winning bets over $600 had to have taxes withheld.  It hasn't changed in nearly fifty years, although $600 is now worth almost $3,000 today. 

Edited March 14 by shadroch

[The humble Watcher lurking]

On 3/14/2024 at 3:34 PM, NewWorldOrder said:

your $500 comic book.

Exactly their lawyers would cost $500 an hour. They will not come after people for such a low amount. 

[the blob]

On 3/14/2024 at 3:07 PM, NewWorldOrder said:

Correct and that really not too much effort. Takes 5 seconds.

BTW $500 to the US Govt is basically .00000000000000000000000000000000000000000000000000000000000000000000000000000000001.

They are 110% not going to audit you if you report the $500, and make you provide paperwork on those expenses you deducted where you claim the profit was $200. 

500K a year?  Yes you should have all your expenses and be organized.

Between me and my wife, her 4 jobs, consulting business, etsy sales, and a myriad of deductions my taxes are more complicated than my 1099 and an ebay sale though