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

[ttfitz]

I think it's a little unfair to suggest that nobody here has suggested they didn't have to pay taxes before and that's why they are upset about this change in reporting. There's been any number of responses that have basically said something along those lines - a recent one was something like (and despite the quotation marks, this is a paraphrase) "with these new requirements, selling isn't worth it, as it's a lot less fun and less profitable." It would only be "less profitable" if you weren't paying taxes on your profits before this. Nothing has changed in regard to what is supposed to be paid, only what is being reported to the IRS by others.

That said, I can also sympathize with people who feels this puts a lot of additional trouble in their lives with no actual change in revenue to the government. I am a season ticket holder for Va Tech football - Go Hokies! - and last year, our dog was dealing with cancer, so we ended up not going to any of the games and I sold our tickets on SeatGeek. Despite the threshold being raised, I was sent a 1099k from SeatGeek for the gross amount of my ticket sales. All of those were sold for a loss, but now I will have to report those sales on my taxes and also report that my profit was zero.

So yeah, there are things about this that are a pain. It just doesn't change what your tax obligation is.

[NewWorldOrder]

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

I think it's a little unfair to suggest that nobody here has suggested they didn't have to pay taxes before and that's why they are upset about this change in reporting. There's been any number of responses that have basically said something along those lines - a recent one was something like (and despite the quotation marks, this is a paraphrase) "with these new requirements, selling isn't worth it, as it's a lot less fun and less profitable." It would only be "less profitable" if you weren't paying taxes on your profits before this. Nothing has changed in regard to what is supposed to be paid, only what is being reported to the IRS by others.

 

So yeah, there are things about this that are a pain. It just doesn't change what your tax obligation is.

That's the vibe & sentiment this thread gave me on all pages from many different boardies. 

Right, no one is saying it isn't annoying, but people here are acting as if this is something brand new.  Many people should have been doing this from eBay sales for example since 2000, and luckily they got away with it.

Seems I am just reading a lot of how people just can't keep all their profit anymore like they used to posts.   The real Threshold really doesnt matter.  What you said in bold is the key I think many people back in 2022 when this thread started didn't quite have a tax burden grasp on, and some in the last couple of days.

 

Edited March 15 by NewWorldOrder

[shadroch]

Tell me about this profit thing. I've always found it a very elusive creature.  It's like bigfoot, always around the next corner.

[NewWorldOrder]

On 3/14/2024 at 10:59 PM, shadroch said:

Tell me about this profit thing. I've always found it a very elusive creature.  It's like bigfoot, always around the next corner.

I think you do all right.

[shadroch]

My business plan is to lose money on every sale but make it up with volume.

[Ryan.]

On 3/15/2024 at 1:01 AM, ttfitz said:

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.

I was going on the assumption that these qualifiers were already in place. I live in a $600 threshold state so I've been dealing with these reporting obligations for years.

[Nick Furious]

On 3/15/2024 at 12:27 AM, ttfitz said:

I think it's a little unfair to suggest that nobody here has suggested they didn't have to pay taxes before and that's why they are upset about this change in reporting. There's been any number of responses that have basically said something along those lines - a recent one was something like (and despite the quotation marks, this is a paraphrase) "with these new requirements, selling isn't worth it, as it's a lot less fun and less profitable." It would only be "less profitable" if you weren't paying taxes on your profits before this. Nothing has changed in regard to what is supposed to be paid, only what is being reported to the IRS by others.

 

Fair enough. But to ask what changes with the reporting, I would compare it to a speeding analogy.  If the speed limit is 60, typically you can keep it under 65 and feel confident that you are not who the police officer is looking to ticket.  You are still breaking the law and may still get a ticket, but under normal circumstances it is acceptable to go 61-64 mph in a 60 zone and in fact may be the only way to stay consistent with the flow of traffic.  The new reporting law is more of "we have video evidence that you were on the highway.  Either pay this fine for speeding or argue that you were not speeding, and risk being audited for further investigation".  That's what changes with the $600 reporting threshold change.  The burden of proof of innocence trickles down to folks who likely won't have the resources or courage to argue their innocence rather than pay the fine.      

[namisgr]

On 3/15/2024 at 10:43 AM, Nick Furious said:

Fair enough. But to ask what changes with the reporting, I would compare it to a speeding analogy.  If the speed limit is 60, typically you can keep it under 65 and feel confident that you are not who the police officer is looking to ticket.  You are still breaking the law and may still get a ticket, but under normal circumstances it is acceptable to go 61-64 mph in a 60 zone and in fact may be the only way to stay consistent with the flow of traffic.  The new reporting law is more of "we have video evidence that you were on the highway.  Either pay this fine for speeding or argue that you were not speeding, and risk being audited for further investigation".  That's what changes with the $600 reporting threshold change.  The burden of proof of innocence trickles down to folks who likely won't have the resources or courage to argue their innocence rather than pay the fine.      

The audit rate for taxpayers earning less than $500,000 in annual income is below 0.2%.  And there are plenty of common mistakes that can trigger audits, making submission of a few thousand dollars worth of collectibles sales with a rough good-faith estimate of cost basis and so net profit extremely unlikely to trigger one.

As the IRS loses billions in legally owed taxes from compliance failures, that's a lot of lost revenue the agency would like to at least partially recapture.  And, as mentioned already, they're getting increased resources to go after the major contributors to compliance failure, the top income earners and the large and highly profitable corporations that pay single digit tax on their profits, no tax at all, or in some cases no tax accompanied by a refund such as Tesla.

Edited March 15 by namisgr

[NewWorldOrder]

On 3/15/2024 at 7:43 AM, Nick Furious said:

Fair enough. But to ask what changes with the reporting, I would compare it to a speeding analogy.  If the speed limit is 60, typically you can keep it under 65 and feel confident that you are not who the police officer is looking to ticket.  You are still breaking the law and may still get a ticket, but under normal circumstances it is acceptable to go 61-64 mph in a 60 zone and in fact may be the only way to stay consistent with the flow of traffic.  The new reporting law is more of "we have video evidence that you were on the highway.  Either pay this fine for speeding or argue that you were not speeding, and risk being audited for further investigation".  That's what changes with the $600 reporting threshold change.  The burden of proof of innocence trickles down to folks who likely won't have the resources or courage to argue their innocence rather than pay the fine.      

Once payments went electronic everything was now under surveillance.

The big one of course was once eBay went from checks/money orders to adding PayPal.

You are assuming a doomsday scenario for most people, and that is just unwarranted from the small amount of gross sales they generate annually.  Large yearly sales amounts one can assume then they were already a business, and should keep records.  An individual that generates 8K in 2023 doesnt need a OJ Simpson legal team to fight the IRS , or proof they incurred expenses that they can deduct. 

Edited March 15 by NewWorldOrder

[FlyingDonut]

On 3/15/2024 at 1:27 AM, ttfitz said:

I think it's a little unfair to suggest that nobody here has suggested they didn't have to pay taxes before and that's why they are upset about this change in reporting. There's been any number of responses that have basically said something along those lines - a recent one was something like (and despite the quotation marks, this is a paraphrase) "with these new requirements, selling isn't worth it, as it's a lot less fun and less profitable." It would only be "less profitable" if you weren't paying taxes on your profits before this. Nothing has changed in regard to what is supposed to be paid, only what is being reported to the IRS by others.

That said, I can also sympathize with people who feels this puts a lot of additional trouble in their lives with no actual change in revenue to the government. I am a season ticket holder for Va Tech football - Go Hokies! - and last year, our dog was dealing with cancer, so we ended up not going to any of the games and I sold our tickets on SeatGeek. Despite the threshold being raised, I was sent a 1099k from SeatGeek for the gross amount of my ticket sales. All of those were sold for a loss, but now I will have to report those sales on my taxes and also report that my profit was zero.

So yeah, there are things about this that are a pain. It just doesn't change what your tax obligation is.

You can deduct the losses from your income.

[shadroch]

A star is paid $50,000 for a convention appearance.  A company pays $100,000 for someone to fly to their hq for a signing.

  Are these 1099 events?

[RockMyAmadeus]

On 3/14/2024 at 10:09 AM, the blob said:

I hit 50 back in 2002

[FlyingDonut]

On 3/15/2024 at 1:00 PM, shadroch said:

A star is paid $50,000 for a convention appearance.  A company pays $100,000 for someone to fly to their hq for a signing.

  Are these 1099 events?

Yes both - a 1099-MISC. See attached.

[ttfitz]

On 3/15/2024 at 12:27 PM, FlyingDonut said:

You can deduct the losses from your income.

Only if I am in the business of selling football game tickets.

From https://www.irs.gov/businesses/what-to-do-with-form-1099-k

[shadroch]

On 3/15/2024 at 11:43 AM, ttfitz said:

Only if I am in the business of selling football game tickets.

From https://www.irs.gov/businesses/what-to-do-with-form-1099-k

You didn't sell football tickets; you sold unwanted personal property and can offset it with sales of other personal property. 

[FlyingDonut]

On 3/15/2024 at 2:51 PM, shadroch said:

You didn't sell football tickets; you sold unwanted personal property and can offset it with sales of other personal property. 

Or a profit made on selling other things on eBay.

[the blob]

On 3/15/2024 at 1:46 PM, RockMyAmadeus said:

I am pretty sure we are the same age.

 

[ttfitz]

On 3/15/2024 at 2:51 PM, shadroch said:

You didn't sell football tickets; you sold unwanted personal property and can offset it with sales of other personal property. 

Once again, only if the items are sold as part of a business. Make note of the place on the page about selling personal items, where it says "If you sold a mix of personal items at a loss and a gain, report losses and gains separately."

 

[jimjum12]

On 3/15/2024 at 1:46 PM, RockMyAmadeus said:

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

I hit 50 back in 2002

I tried to tell him that hot wiring that Delorean might not end well ... GOD BLESS ...

-jimbo(a friend of jesus)

[Upgrayedd2]

When reporting taxes from eBay sales, not sure if an non-business can take the following into consideration: (1) time spent listing items (2) fees to list items (3) time reading and responding to inquires (4) time, fuel, and costs to drive and purchase packing materials (5) time spent carefully packaging the items (6) time spent driving to FedEX/UPS/DHL/USPS and standing in line to ship the items (7) time/costs (use of printer and ink) to print out any statement which may go in the package (8) shipping insurance (9) vehicle insurance (not the entire cost, but a portion)