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

[ADAMANTIUM]

On 3/14/2024 at 7:15 PM, NewWorldOrder said:

It's like any thing in life when it comes to a business.  You are not going to jail because you forgot to report the 5K sales in 2023, you are going to jail for not filing your taxes from 2014 to 2024 and you generated 3 million dollars of gross sales   if you can't back pay and prove the assets - liabilities.

Year 1 of any business its a learning curve.  You learn as you go.

The threshold for the form was then also pertinent to those curious, if your cause rings true for them then that's on them to ask a tax preparer. Still good to know for their knowledge when asking.

Also is a bit confusing as the IRS page stated something like to "phase in" that is also good to know as it goes across platforms and for each separately currently. Ie PayPal, eBay, other all separate, to know what deductions lay where.

Just food for thought. I did have a LCS tell me that cash wasn't the end all be all, or they'd still have to charge me tax. Idk nor remember how true that is, but hey it's their books and they keep them how they are stated.

That and I was offered $40 in trade in credit for stuff I brought in. Rather than have the cost at $55 for three slabs and pay cash at that total and still with tax, I put a book back with the new total of only $40 of the slabs I wanted, which is what I was offered in trade credit. I then went to the counter to pay the tax, and he told me we're even because the cost at $40 was "barter"

So it all kind of hit me all of a sudden having been done with taxes for 2023 for quite sometime 😂

Edited March 15 by ADAMANTIUM

[musicmeta]

We just had our taxes for 2023 done by our CPA with all the necessary paperwork (i.e. W2s, 1099-<insert what 1099 it is here>, ..etc) and a spreadsheet of the comics I sold from minus expenses and what I paid for the books.  
Our CPA liked how the spreadsheet was done. 
 

[Dr. Love]

Just because, as a hobbyist, you deducted various selling expenses (bags and boards, admission to conventions, gas to get to the post office) from the sales price in addition to the actual cost of goods to determine the profit, does not mean you (or your preparer) determined the amounts correctly.  See below.  I would argue, if I had to, that slabbing fees are cost of goods deductions as slabbing intrinsically creates a different product than a raw comic, beyond a presentation aspect like a bag and board.  Again, this is the type of detail that would only come up in an audit, imho.  

"Hobbies are fun. They can also cost money. Sometimes they can make money. If you have an expensive hobby, can you deduct any of your expenses? Starting in 2018 after the passage of the Tax Cuts and Jobs Act (HR 1, "TCJA"), the short answer is "no."

For tax purposes, a hobby is an activity you engage in primarily for a purpose other than to make a profit. The IRS commonly classifies inherently "fun" activities like creating art, photography, crafts, writing, antique or stamp collecting, or training and showing dogs or horses as hobbies. Even if you occasionally make money doing such an activity, it is a hobby if your prime motivation is having fun, not earning a profit.

Because hobbies are not businesses, hobbyists have never been allowed to take the tax deductions to which businesspeople are entitled. However, for decades the tax law did permit hobbyists to claim as an itemized deduction their hobby-related expenses up to the amount of income the hobby earned during the year. This was not a very generous deduction because of the limitations on itemized deductions, but it was better than nothing.

Unfortunately for people who earn income from hobbies, the TCJA completely eliminates the itemized deduction for hobby expenses, along with all other miscellaneous itemized deductions. The prohibition on deducting these expenses goes into effect for 2018 and continues through 2025. This means that taxpayers will not be able to deduct any expenses they earn from hobbies during these years, but they still have to report and pay tax on any income they earn from a hobby! The deduction is scheduled to return in 2026.

Example: Charles paints part-time as a hobby. He earns $3,000 from selling paintings in 2018 and has $2,000 in expenses. He must report and pay tax on his $3,000 in hobby income, but he may not deduct any of his hobby expenses, even if he itemizes his personal deductions.

Example:  if your hobby is selling baked goods, you could deduct the cost of ingredients. But you could not deduct expenses like the cost of delivering items or fees to be a vendor at a market."

[Nick Furious]

On 3/14/2024 at 5:54 PM, NewWorldOrder said:

Right, but again whether they send the form or not what does it matter to you on your taxes?

Income is income.

If I sold 1K on whatnot or ebay I am supposed to report it is my point.

Here's the part you are missing:  Taxable income is based on profit, not revenue.  Currently someone selling $6K on Ebay but making no profit after expenses does not have to address it on their tax return.  With the new threshold, Ebay will report the $6K in sales to the IRS and the tax filer will need to address it on their tax return whether they made an profit or not.  Otherwise the IRS will adjust your income by $6K and send you a bill.  Eventually that number will reach $600 according the the legislation that has been delayed as it becomes clear how onerous that will be.  

Edited March 15 by Nick Furious

[NewWorldOrder]

On 3/14/2024 at 7:02 PM, Nick Furious said:

Here's the part you are missing:  Taxable income is based on profit, not revenue.  Currently someone selling $6K on Ebay but making no profit after expenses does not have to address it on their tax return.  With the new threshold, Ebay will report the $6K in sales to the IRS and the tax filer will need to address it on their tax return whether they made an profit or not.  Otherwise the IRS will adjust your income by $6K and send you a bill.  Eventually that number will reach $600 according the the legislation that has been delayed as it becomes clear how onerous that will be.  

 

So all these years that I have been using my gross sales as my taxable income has been wrong?

I just assumed if I sell a comic book for 10K I have to pay the full tax amount on that sale to the Gov't. 

What can I do to bring my Gross taxable income down on each sale I do?

Can you please give me an example of Taxable income based on profit and not a Gross sale?  I am lost.

 

Edited March 15 by NewWorldOrder

[Nick Furious]

On 3/14/2024 at 10:27 PM, NewWorldOrder said:

 

So all these years that I have been using my gross sales as my taxable income has been wrong? 

 

I assume you get that part.  It's the rest of it that you are dismissing when you ask why the change in reporting threshold will matter for people.  It matters because now they will have to address small amounts of revenue on their tax returns that they didn't previously need to address.  It's a lot of extra work and adequately addressing the small revenues with offsetting expenses opens the door to more likelihood of audits.   

[NewWorldOrder]

On 3/14/2024 at 8:34 PM, Nick Furious said:

I assume you get that part.  It's the rest of it that you are dismissing when you ask why the change in reporting threshold will matter for people.  It matters because now they will have to address small amounts of revenue on their tax returns that they didn't previously need to address.  It's a lot of extra work and adequately addressing the small revenues with offsetting expenses opens the door to more likelihood of audits.   

So what were people doing prior the threshold?

Lets say I sold 3K worth of comics on ebay in 2022.  

Edited March 15 by NewWorldOrder

[Nick Furious]

On 3/14/2024 at 10:35 PM, NewWorldOrder said:

So what were people doing prior the threshold?

There has always been a threshold.  Previously it was intentionally set at a high enough amount ($20K?) to let the little fish swim through the net without getting caught up in the need to address small amounts of revenue from selling personal items.  

[NewWorldOrder]

On 3/14/2024 at 8:43 PM, Nick Furious said:

There has always been a threshold.  Previously it was intentionally set at a high enough amount ($20K?) to let the little fish swim through the net without getting caught up in the need to address small amounts of revenue from selling personal items.  

So using your example above of 20K threshold. Are you saying that people could sell $19,999.99 and not have to report those gross sales numbers (minus deductions) on their taxes for that year?  Basically they get to keep all that money.

Edited March 15 by NewWorldOrder

[ADAMANTIUM]

Sheesh 3 pages of no one taking about that point of view, except Newworldorder, and magically the topic came up. What a coincidence if there were such. 

 

Edited March 15 by ADAMANTIUM

[Nick Furious]

On 3/14/2024 at 10:45 PM, NewWorldOrder said:

So using your example above of 20K threshold. Are you saying that people could sell $19,999.99 and not have to report those gross sales numbers (minus deductions) on their taxes for that year?  Basically they get to keep all that money.

If I was saying that, you wouldn't be asking if I was saying that.  Anyone can be audited.  But the higher threshold intentionally gives the tax filer the option of deciding for themselves if they need to address the revenues and expenses at the time of filing.  The lower reporting requirement makes it mandatory to address all revenues over $600 at the time of filing or pay taxes on those revenues as if they are pure profit.  You asked, "if they send the form or not, what does it matter to you on your taxes?"  I attempted to answer that question.  Did I provide an adequate answer?  

[ADAMANTIUM]

On 3/14/2024 at 11:05 PM, Nick Furious said:

If I was saying that, you wouldn't be asking if I was saying that.  Anyone can be audited.  But the higher threshold intentionally gives the tax filer the option of deciding for themselves if they need to address the revenues and expenses at the time of filing.  The lower reporting requirement makes it mandatory to address all revenues over $600 at the time of filing or pay taxes on those revenues as if they are pure profit.  You asked, "if they send the form or not, what does it matter to you on your taxes?"  I attempted to answer that question.  Did I provide an adequate answer?  

Don't tilt at the windmill. All I mentioned the new threshold for was to update the thread title since it is wrong, and I still got asked for what purpose. Either not taking things at face value or idk?. I have no opinion anymore on it as I don't feel the need to control things I can't

Edited March 15 by ADAMANTIUM

[Nick Furious]

On 3/14/2024 at 11:10 PM, ADAMANTIUM said:

Don't tilt at the windmill. All I mentioned the new threshold for was to update the thread title since it is wrong, and I still got asked for what purpose. Either not taking things at face value or an agenda. I have no opinion anymore on it as I don't feel the need to control things I can't

It's all good.  History is full of debates between the letter of the law and the intent of the law.  The $20k threshold showed that the intent of the law was different than the letter of the law.  The reduction to $600 indicated a change in intent that would bring us closer to the letter of the law.  The delays in implementation indicates a reconsideration of that change.  It's fair game for debate.      

Edited March 15 by Nick Furious

[ADAMANTIUM]

On 3/14/2024 at 11:40 PM, Nick Furious said:

It's all good.  History is full of debates between the letter of the law and the intent of the law.  The $20k threshold showed that the intent of the law was different than the letter of the law.  The reduction to $600 indicated a change in intent that would bring us closer to the letter of the law.  The delays in implementation indicates a reconsideration of that change.  It's fair game for debate.      

Ya and I'm in the interim of hot nights waiting to use the air conditioner because Texas weather will get cold due to rain in the middle of the night.

Late night nerves in Texas heat @NewWorldOrder 

I think that it was I that was the grumpy guss, and not you. My bad 😬😔

[NewWorldOrder]

On 3/14/2024 at 9:05 PM, Nick Furious said:

If I was saying that, you wouldn't be asking if I was saying that.  Anyone can be audited.  But the higher threshold intentionally gives the tax filer the option of deciding for themselves if they need to address the revenues and expenses at the time of filing.  The lower reporting requirement makes it mandatory to address all revenues over $600 at the time of filing or pay taxes on those revenues as if they are pure profit.  You asked, "if they send the form or not, what does it matter to you on your taxes?"  I attempted to answer that question.  Did I provide an adequate answer?  

Weren't you always supposed to be addressing those revenues and expenses for every year regardless of a 1099 threshold?

If I sold 3K worth of books in 2008 I am not still responsible for money to be shown as a loss, break even, or a profit on my annual tax return? 

Edited March 15 by NewWorldOrder

[ttfitz]

On 3/14/2024 at 6:32 PM, Ryan. said:

On 3/14/2024 at 6:30 PM, NewWorldOrder said:

Wesley snipes?

Again point being if someone forgot to report their saving account interest of $150 for the year 2023 I wouldnt lose sleep over it.

Nor I. But I also wouldn't be surprised to receive an assessment letter saying I owed $6. That letter likely wouldn't come until 2026 when the low level admin gets around to sending it but it will come.

Well, if you got a 1099k and if you then didn't include that information on your return, then yeah, maybe you'll get such a letter.

But I'd say the likelihood of getting a letter if you did report it - and reported that your cost basis was higher than the reported amount - is pretty low.

[ttfitz]

On 3/14/2024 at 7:18 PM, NewWorldOrder said:

Its a miracle one person in this thread who gets it. Well to be fair so does @FlyingDonut and @namisgr

Ahem.

[NewWorldOrder]

On 3/14/2024 at 10:05 PM, ttfitz said:

Ahem.

andddddddddd @ttfitz 

Remember buy Oil stocks win long term.

[ttfitz]

On 3/15/2024 at 1:08 AM, NewWorldOrder said:

Remember buy Oil stocks win long term.

It's been a long time since I've bought any oil stocks - but my wife worked for ExxonMobil for 17 years, so we've got stock from her time there which has been pretty good for us.

[NewWorldOrder]

On 3/14/2024 at 10:16 PM, ttfitz said:

It's been a long time since I've bought any oil stocks - but my wife worked for ExxonMobil for 17 years, so we've got stock from her time there which has been pretty good for us.