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#1
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Taxes and Auction Site Question
So I'm getting ready to sell off a big ticket item that will exceed ebay's/irs' $20,000 gross sales portion of the 'tax rule' but not the 200 yearly sales 'tax rule'... yet but I will stop before I get to that level.
Rule listed on ebay: Form 1099-K is an IRS information return that includes the gross amount of all payment transactions you received within a calendar year. The purpose of the form is to help improve voluntary tax compliance. We'll provide you with Form 1099-K by January 31st each year if you're a managed payments seller who has received payments above the minimum IRS reporting thresholds in the previous calendar year: You received more than $20,000 in gross payments, and You had more than 200 payment transactions For you tax and major selling experts: As I read the requirements, I can safely expect to NOT BE REQUIRED TO CLAIM THIS SALE ON MY TAXES, if I only meet one of them, correct? Do Auction Houses like the ones mentioned on this site have the same requirement? Additionally, I'd love to sell the card on the b/s/t to a fellow collector but know the exposure comes from ebay or another large auction site. I want to sell for the most money and the best overall deal to the buyer, knowing there's a good possibility he/she will have to pay sales tax and I will have to pay sellers commission unless sold on the b/s/t. Thanks for any info. |
#2
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Try to get your number on BST first, there is a larger network of private collectors here than one might think, call the medium size auction houses like LOTG or Birmingham and ask what their reporting policy is. There are better options for high dollar cards than eBay. Either way, even if you dont get 1099'd you should claim any income on your tax return.
Last edited by Casey2296; 02-13-2021 at 04:52 PM. |
#3
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To put it up front, you technically have to pay federal income taxes on your sale no matter where you sell it, no matter whether the company you sell through gives you a 1099 at the end of the year. Hobby income is income. Company income is income. If you file certain schedules or file as business income, you can deduct your original purchase price and the fees you expended to make the sale.
eBay is *required* to send you a 1099 if you meet BOTH the 200 transactions and 2,000 items sold. However, they reserve the right to send you one if you get part of that, and in some states the minimum amount of sales is $600 or $1,000. So you really won't know if you're getting a 1099 direct from eBay or PayPal until they send it to you. Add: That being said, we'll see this year how the IRS deals with a ton of new card sellers trying to skirt tax laws because their $10 LeBron cards are now selling for $10K each. How many get audited? How many that weren't given 1099s and didn't report any income were audited? What income threshold does the IRS think is worth fighting the battle over, versus not willing to expend the resources to check in-depth. I personally think they could make huge inroads by subpoena'ing the records of the major auction houses, since most of those auction houses do not report your sales to the IRS, to my knowledge. But a new law written into the Federal tax code could really put a dent into the easy money of selling through an auction house.
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-- PWCC: The Fish Stinks From the Head PSA: Regularly Get Cheated BGS: Can't detect trimming on modern SGC: Closed auto authentication business JSA: Approved same T206 Autos before SGC Oh, what a difference a year makes. Last edited by swarmee; 02-13-2021 at 10:22 AM. |
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What eBay’s policy is regarding them providing 1099s has NOTHING to do with whether you report and pay taxes on card sales. You report and pay taxes on card sales if you had card sales and you made money (if you lost money you claim a loss). It’s that simple.
What you have provided is EBay’s policy on when and to whom they will provide a tax document, called a 1099. Just because you don’t qualify under EBay’s policy regarding 1099s in no way means you don’t have to file, and maybe pay, taxes Last edited by Rhotchkiss; 02-13-2021 at 10:32 AM. |
#5
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Just a few random question to throw into this mix for consideration 1) What penalties could the IRS impose if you are caught not reporting the income 2) Realistically what do you think the penalty would be if caught?
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Current Wantlist: E92 Nadja - Bescher, Bridwell, Cobb, Donovan, Doolan, Doyle (with bat), Lobert, Mathewson, Miller (fielding), Tinker, Wagner (throwing), Zimmerman E/T Young Backrun - Need E90-1, T216 (all versions) E92 Red Crofts - Anyone especially Barry, Shean, and Evers |
#6
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Quote:
I was audited about 5 years ago. After $20k in fees to my accounting firm, the IRS concluded its audit and wrote me a check for $4,000. The audit sucked! And it cost me $20k. Luckily, I was squeaky clean (in fact, more than squeaky clean). But had I been found to owe money, or worse, intentionally not reported something.... it would have cost me much more in accounting-firm fees (because they would have had to argue the IRS' findings and/or negotiate a settlement) and then I would have owed taxes, interest, and perhaps penalties. And I bet I would be on their radar for another audit in the near future. If you are paying taxes, it means you made money. Take comfort in that and do what you are supposed to do. Sleep comes a lot easier when you do! |
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Bitcoin?
Sent from my SM-G950U using Tapatalk |
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Here's a bit of free legal advice: pay your taxes. If you make the money you have to pay your taxes. If you intentionally do not declare a large chunk of income you are committing tax fraud, and by posting your schemes on public social media that is routinely read by law enforcement you have just handed any future prosecutor evidence of intent. Not a smart move. FYI, the conviction rate on Federal tax fraud prosecutions is the highest of all crimes: you get charged you are basically going to prison.
Just pay the taxes you owe and be happy you made a profit.
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Read my blog; it will make all your dreams come true. https://adamstevenwarshaw.substack.com/ Or not... |
#9
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Not to hijack this thread, but I did an entire YT video for this similar subject below:
https://www.youtube.com/watch?v=QYsMIwsfLSI&t=1416s You are free to watch and DM me basic questions. I think I covered all your questions in the video and a follow up I did last night night, this is not my channel and I make $0 profit by you watching it. Yes, I am a CPA. Yes, I am willing to state in a public board that I do not report every penny of sales from eBay (although I am way below the $20k/200 threshold). Last edited by tazdmb; 02-15-2021 at 07:02 AM. |
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