If I understand this correctly, Paypal, along with all on-line payment sources like Venmo, etc. will now be sending out 1099 forms for all payments totaling $600 you receive in 2022 for goods or services. The only way around this is to use Paypal friends and family for payment which eliminates any buyer protections. Is everyone aware of this?
1. Going forward only use PayPal friends and family. Buyer loses buyer protection. But seriously, how much protection is PayPal going to give the buyer? I suspect not much. The real protection I have always relied on is via my credit card issuers and in my opinion American Express is the best. If the buyer wants the protection then they can pay friends and family with their credit card. PayPal let’s buyers do that. The Buyer will be charged the usual PayPal fee that they would have had to include in a goods/services transaction with me anyway. But Buyers real protection is working with sellers who have 95-100% positive feedback over many transactions over years.
2. The IRS has put us in business now. Submit a scheduled C list the cost basis of everything you sold from your purchase records. Now you can deduct packing and shipping expenses, probably home office or listening room expenses related to evaluations of all the equipment you bought and sold, maybe your Roon subscription and who knows what else. The IRS has made a mistake here. They have messed with the wrong hobbyists. A bunch of middle aged guys with disposable income and probably a bunch of CPAs. As DrCWO from RooExtend says: “Have fun with it!”
I agree. However the 1099K would show income of $2300. My question is how do you report this on your tax return? My research seems to indicate "Other Income" on the 1040 and then Schedule 1, Line 2z and then Line 24z for the 2k offset. Then the 2k adjustment on Line 10 would be subtracted from the 2.3k on the 1040 with tax owed on the $300. Only a profit can be taxed. A separate statement/worksheet is suggested to show each transaction.
In your example, lets say you sell two couches. You paid $1,200 for each. You sell couch one for $1,500 and six months later sell couch two for $800. You owe tax on the $300 gain. You get no benefit or offset on the $400 loss from couch two. In order for you to offset those, it must be a business.
The IRS has released an example of someone who has purchased a couch for $1200 and sold it for $800 on E-bay. This would NOT be taxable "income" despite the fact that Paypal would send out a 1099k. No different for those of us receiving less than we paid for stereo equipment. My question remains what IRS form/schedule will be needed to show such offsets?
Hopefully somebody here can answer the question of how to report losses to offset "income" when one receives a 1099k in 2023. Unfortunately, IRS will not answer questions regarding tax laws over the phone! I don't have an accountant, as I do my own taxes.
I am making copies of my PP transactions while they are alive on the site and saving them in Excel format for easy searching. I am also keeping a notebook to describe the transactions and putting those transactions in with my tax files as they occur. Also, I put all my emails from Paypal or purchases for audio gear in a folder called 2 Channel as a triangulation set of data, especially purchases. Say, when you buy a piece from a dealer and you get a receipt, then you compare that to your Paypal sale as a loss down the road. So, in essence, this is making us have business records.
Last year I received around 10K in sales of stereo equipment via 11 transactions using Paypal. On 10 of the 11, I took losses....with a small profit of $100 on 1 sale. If this was the case in 2022, I would receive a 1099 despite the fact I had losses totaling around $900. In some cases, the purchases go back further than PP or AG, AM, E-bay keep records of....so no receipts. I do not run a side business, this is a hobby. How would I be able to report the offsetting losses in my tax return?
Paypal notified me that they will send me form 1099 this year for selling used gear. I used Paypal for the transaction.
Paypal has been withholding fund that I get paid for selling my used gear on Audiogon. Paypal withholds my funds for weeks and requests tons of information concerning the Audiogon sale for releasing the funds to me. Is there a better online payment service company out there? Is Zelle a good alternative? Please help, I need to stop using Paypal.
Highly recommend anyone making a true PROFIT from this business talk to a good tax lawyer in your own state. I used to write off expenses in a high-end horse breeding project in which the difference between a hobby and a taxable business was determined by whether you could declare a PROFIT in 2 out of 7 years.
So by all means, you must document your expenses (Roon, Qobuz, postage, Absolute Sound, packaging, internet fees, cable fees, any car use for the business, travel to shows, meals at shows, etc., etc. It's pretty easy to show a loss so you can write off stuff but your sphincter can get a workout around year 6 if you haven't declared a profit yet.
If you sell a pair of old JBL's for $200 more than you paid for them, nobody's going to know or care, but if you're making a living, it's taxable like any other job.
To those of you who understand basis in property, I say (with an ode to AC/DC) I SALUTE YOU !!!
Example: I buy an amplifier for $5,000.00 and I pay 6% sales tax, My basis in the amp is $5,300.00. I sell it 2 years later for $3,300.00--I am selling it for a loss. The buyer has to pay tax depending on his/her jurisdiction, but I have no tax liability.
The 1099-K you may receive is only an indicia of what you received/transacted, not a precursor that automatically invokes a taxable event.
Technically, this has always been the law, it’s just the government lagged behind in updating existing laws to reflect online commerce. So I bid you all adieu, into the wild blue........
This is a great thread and thank you as I got a - '' Notice '' from Pay-Pal that I had to give them my SS# and also my individual tax status. I thought it was actually a SCAM - which in all ways Pay-Pal is. They are corporate thives…...I have been on Audiogon for almost 22 years and between the Pay-Pal fees an Audiogon's fees along with shipping it is making it nearly impossible to do business here or on line for any stereo purchases. Politics aside which there are some good points here but usual we have the '' ideas'' that everything is a conspiracy and also let's keep giving more money to the people who don't want to work - not the ones who who can't work - but the ones who don't want to work …...so far left and far right. We need to get in the middle and work together otherwise we will be leaning either Chinese or Russian and no offense to the people of that country but more as usual to the leaders. We need to get some B****S here in the US an stop in the fighting between us. The government is looking for more revenue and taxing transactions on the Internet is where they are going. But to ALL of the individuals who noted that '' if ''we do report the above $600 transactions to the IRS - then I too want to be able to write off the depreciation as well. Fair is fair IRS.....but I is unnerving when the Bezeo's . Gates and Musks along with what 55 other US corporations do NOT pay the same proportion of taxes that I do . Now that is wrong but nobody that is Republican, Democrat or Independent or voted for Alice Cooper wants to take that on make it fair …...that's what we should all be ticked at . I understand that I have to pay taxes but let me just pay my fare share. This is still the best country in the world......but we need to look over our shoulders. I have not responded to Pay-Pal and I probably won't. Stay safe everyone.
I do not like paypal. They have no loyalty to their customers. If they made any changes for 2022 it is not for your benefit. I don't know how they tax items twice. Once when the item was sold brand new and again when is sold used, it sounds illegal and unethical.
I have been scrambling to find some documentation of the price I paid for my equipment purchased on Agon as I was planning to sell some of my gear.One in question that I would like to sell was purchased just before 2012 in late 2011.Agon told me they delete everything before 2012 and cannot retrieve it.Anyone with the same problem? Another question I have is would a Agon receipt from Agon Deshboard be sufficient for the IRS?
I used to love Let go....meet in a safe location and you get payed in Cash....no shipping, big chance of damage, I worked for the old PO and saw guys ,drop or throw packages that were lable ,please be careful....its a joke ,years later I work for UPS in the claims department and saw,first hand damaged packages and was rated by the number of claims you denied. It's a joke....and I worked for a wholesale electronics company, and package Dual and Panasonic plus other audio equipment. It's a joke for the guy who after spending thousands for audio equipment to now sell it and have to pay taxes on it....when he orginally paid taxes on it when he bought the stuff....Please.....
I stopped selling my electronics a while back because I always regretted it. If I buy online I try to avoid any tax by buying from dealers who have businesses in states who don't require I pay sales tax, although little by little they are becoming scarce. Nice to know that PayPal will be reporting transaction info to the government so that if I do sell something with a high price tag I won't be using PayPal except perhaps family and friends.
If the privately owned Fed can generate trillions out of nothing and every dollar created as an IOU. All to be repaid by following generations, why pay taxes?
@dadork I agree with @grannyringand congratulate you on your success. There are many like you, proud to get out of poverty and we need more like you, not government dependency.
For most of us selling used gear, there likely should be a loss, so keep your receipts of purchases which again for most of us are in our outlook, or other online service. If you are fortunate to sell something at a gain, I’m pretty certain you can’t net against other losses unless you have a business and file schedule C, etc.
@audioelevationsIf you're buying/selling $200K in audio gear a year, hats off to you btw, I think you've jumped from hobbyist to being a small dealer. Good for you doing all cash transactions otherwise you would already be paying tax.
@dadorkStop the nonsense rants nothing that you're saying is anything but rhetoric devoid of fact. Try reading up on some real statistics regarding poverty sometime the truth minus any myths is pretty harsh,
I suspect one would have to be careful doing so, but the possibility might exist to receive multiple payments in lieu of one larger lump sum (e.g., three $500 transactions in lieu of a single $1,500 transaction). Of course, you would incur additional fees in doing so and the IRS might view this is some sort of "structuring". Hard to believe they would target hobbyists, but in this day and age, nothing would surprise me.
Such a bummer, glad I sold most of my old gear last year. I have a few more items to sell and will probably require cash in person, multiple payments, or BTC.
For some time now I’ve bought and sold 100k easily every 6 months
I pay in cash and accept cash only. . You can’t afford to do this find another hobby. I pay cash to individual to drive anywhere and cash is king..
I do the same on autos I collect. That’s tricky due to title work. Can’t recall getting a title on a 30k amp.
@dadork, you're not going to get any affirmation from me so why do you keep alerting me to your silly rants? Are you using this as a way to vent your frustrations on a forum dedicated to audio? Don't you have farcebook or 8kun or parlor to post on?
While you have my attention, just who are these people you keep referring to?
Lmfao @nonoise. The answer isn't in giving things to people. The answer is in people working and gaining dignity and pride in what they are able to accomplish. The government has been giving people all of those things since FDR and LBJ and those people are exactly where they were then and in long look worse off. They don't take care of anything because nothing belongs to them. They don't learn self-accomplishment and pride and they certainly never step on the ladder of prosperity. It's become generational. In a capitalist society in which you seem to frown upon the employee has leverage as well. People that decided to learn in school rather than goof off have better opportunities. People that work have better opportunities and people that give a rip advance and if they can't advance where they are are free to go somewhere their abilities are compensated. I don't know why nobody ever told you but three things are antithetical to your ideal Utopia. Life is not fair. People don't have equal abilities. Actions have consequences; good and bad.
My story was not a sob story. I'm proud of myself. The me of 20 years ago would have thought the me now was rich. I own two houses now, one I rent out and use the rent to pay for this one. I own a business painting houses of people who I would consider rich. I employ between 2-8 people depending on what time of year it is. Rich is always relative. I guarantee one thing though friend, if I had blamed my condition on everyone else or even at just one group of people I would have never moved from where I was. People today are being conditioned to blame groups, told that they are incapable of making anything of their lives because someone else is stopping them and that they should just be happy with what the government gives them. People are being told that they should instantaneously achieve what they see other people have who have worked all their lives for.
Could you imagine how many people could go to work, gain some dignity, advance in life if government weren't such a glutton? Where companies could pay people more if they didn't have to pay so much in taxes? Where companies didn't have to spend sometimes millions annually to keep abreast of current tax law?
@dadork, Hey, good for you. Your sob story is really touching. If you really want to go after waste and abuse, then follow the money and where it really goes. Tell companies to pay a living wage so we taxpayers at the bottom won't have to subsidize their profits by paying for food and housing programs, for a start. Until, stop pontificating as it's rather boring.
@nonoiseI'm a guy who makes less than a 100k a year. I was homeless 20 years ago. I knew then as I do now the government is a glutton with billions of wasteful and fraudulent spending. I knew then as I do now that it is not right to take from one who earned or produced something to someone who didn't. I knew then as I know now that until waste and fraud is stopped or extremely curtailed, we shouldn't raise taxes on anyone. My hair is just fine.
This is why I save all receipts from every audio related thing that I buy. So I have records. I put them all in a drawer and save them. But like I said. This should make all audiophiles who turn over gear a business with business expenses and deductions.
God bless the Black Market. Bureaucrats are stupid. They just increase everyone's paperwork and most of us find work arounds. What this will do is hurt companies like eBay and Audiogon as we will find ways to work around them. Do I really care?
I pay $450,000 tax on my boat few year ago. Some guy get away with less because they take guy out and call it charter business. I no skirt tax. If people make money here and it business pay tax or don’t sell or be like liberal and make excuse that category no fit way you like and pay people argue. I proponent flat sale tax but I no political leader. I know how tax work just system efficiency like thiel and complicate as system that make Bad recording sound good. Kdl system.
If you go into your Audiogon account, click on the BUYING link, then click on the BOUGHT tab you will find the equipment you bought on Audiogon, the price you paid and the date you purchased it.
You can do the same thing for items you sell.
It will take a while to sort out exactly what this new 1099 means for individuals. In the meantime, stay cool and save documentation for purchases and sales.
Yes this a confusing topic. Question to the CPA's. If I sell an item at a loss over the threshold, do I need to even file the 1099-K. If I don't need to file the 1099-K, do I need to keep documentation and in what form would that documentation take.
Everyone receiving a PayPal payment that is NOT family & friends will get a 1099-k tax form, if above the dollar limit. Business or not.
I do my own taxes using TurboTax. Including last year when I had the 1099-K from PayPal. I reported the PayPal form on Schedule D of form 1040, accompanied by a detailed Form 8949 that I mailed over, which I reported on form 8453 of my electronic tax return. That's the best I could do based on the information I had gathered. I printed all the receipts (buy and sell, shipping, etc. etc.) and I am keeping them just in case of an audit.
I did contact a few CPAs I knew, but they had no answer. They were looking things up in the Internet, no different than me. Not all CPAs know what to do. I guess I am just unlucky to not know a good CPA.
That's all I have to offer. I will stop it right here. If anyone has a better idea I am all ears. I will keep an eye in the subject matter, needless to say. But I have nothing left to contribute. Good luck everyone
@thynameThis is getting even more confusing. The simple fact that you received a 1099 when you don't have a business throws a monkey wrench into the whole tax filing process. There are good links above that indicate that getting a 1099 from Paypal should not happen if you don't have a business. But you got one and now you've got to figure out what to do with it.
It is my understanding that you can't just ignore a 1099. If your return doesn't account for it somewhere then you will get a notice from the IRS that you have a problem with your return. Schedule C is the only place I know of to account for a 1099. I do consulting and I've received many 1099s. Schedule C is where you account for your expenses against the 1099 income. It is not set up to account for the sale of personal items if you have no business. The problem is that I don't know of any other form that deals with 1099s.
I searched using multiple criteria and I found several articles saying that the Paypal 1099 is not intended for the casual sale of household goods but I could not find anything that described how to account for it on your return if it only includes the sale of household items.
Too bad we don't have a CPA in the group who would generously provide us free advice. In the absence of that I think you'll have to go to a CPA for an answer. When you get this figured out please let us know.
Press button on fire extinguisher, point at hair on fire, continue doing so until no more fire, keep fire extinguisher conveniently located as hair tends to spontaneously combust from time to time.
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