new 1099-K rules
 

With the new 1099-K issuing rules (starting 1/1/22) if you receive over $600 on PP, venmo etc in a given calendar year (as opposed to the former 200 sales + $20,000 income) the IRS will issue you a 1099-K and count it as income unless you can prove you took a loss. I make alittle bit yearly from sales. Don't need the money but like to get rid of dupes but the hassle and headaches this will cause will probably make me pull all stuff off ebay. I wonder how others feel about this

question
 

Does this include a total for all "gifts" or is it just for goods and services?

And what's a crypto currency supposed to do?

Edited to add a :) face.

goods and services
https://pages.ebay.com/seller-center...l#m22_tb_a2__4

These new rules, and the effective shifting of the burden of proof, are going to be a major pain in the rear. Tons of people are going to get fleeced by the state, they’ll get their tax bill and pay it without going through all the hoops to show some of it isn’t profit and isn’t taxed. Suckers will get ripped off by the state and everyone else will have to jump through hoops, even if technically nothing is changing in what you truly owe on your taxes.

This is one reason I barely ever sell, it’s simply not worth it because I owe 9.3% of the profit to the state of California and 35% of the profit to the feds. This leaves me with 100% of the risk and only a little over half of the money I get if I sell. At that rate it is much better to trade for other cards I need, even if I’m “losing” in trade value.

To be clear, it isn't the IRS that issues 1099-Ks, it's the payer (or, in this case, the third party payment processor). The information gets reported to the IRS at the same time it gets reported to you.

So if, for example, you sell 5 cards for $200 each and get paid through PP for each, that's $1000 and will be reported. If you sell a single card for $500 through an AH, then they do not need to issue a 1099-K. (They can choose to do so.)

It appears non-commercial transactions will be included; there's no mention of a distinction in the IRS instructions for completing the form. In one way this is going to be a shock to some people. We have a church client that receives most of its monthly contributions through Zelle. On the other hand, if there were a distinction we might see parties such as PP clamping down on the use of F&F. I see the PP page mentioned above, but there's no mention of F&F transactions being exempt. And again, the IRS instructions for the form don't appear to allow for an exemption for non-commercial transactions. I'd really, really like to be wrong about this, but I believe I'm correct.

Bill

I respectfully and strongly disagree. If your tax preparation is done by a competent person--which could be you--then you'll know to subtract your basis and expenses from your revenue. And you won't get a "bill" based on your 1099-K as long as it shows up on your tax return.

Where you will get a "bill" is 18 months after filing if you haven't reported the form. Then you'll get a Letter CP2000 from the IRS saying that they see this item as being reported to them, but it isn't on your return. Based on the information they have available to them (the money in only, not your basis or expenses) they will propose an adjustment to your tax amount. I've seen enough of these CP2000s to know that it's much easier to report everything on the original return than it is to get things straight afterward. If you report it properly, then you won't get any pushback. But if you're responding to the letter, the IRS will want to see documentation.

This coming tax season's gonna be a beast, and next year's even worse.

Bill

Crypto transactions have always been reportable--every time you sell, exchange, or trade virtual currency or use it to pay someone. Until now I've had to rely on screenshots to get the information needed (date, gain or loss). Beginning in 2024 crypto transactions will be reportable the same way stock transactions are: on a 1099-B. There are already services that will produce a 1099-B from your exchange account.

For someone who's been trading in crypto, this change will actually make things easier. But imagine what this will look like for someone who uses Ethereum to buy their Starbucks every day. Right there is 260 reportable transactions. Yikes.

And by the way, unless you can definitely pin your hard wallet or exchange to the US, your crypto will be considered the same as foreign currency. If you have more than $10,000 outside the US at any one time during the year you'll have to file an FBAR (Foreign Bank Account Report, AKA FinCen114) in addition to your tax form. The FBAR doesn't incur any taxation; it's to keep track of money overseas, ostensibly to curb money laundering. But the penalties for not filing are severe--up to 50% of the account balance for every year of non-compliance.

Bad News Bill

From the paypal page
1099-K Threshold Change:
This new Threshold Change is currently only for payments received for goods and services transactions, so this doesn’t include things like paying your family or friends back using PayPal or Venmo for dinner, gifts, shared trips, etc.
So F/F still no limit

Yay! I'm sure PP's legal team has done their homework on this. Two things stand out for me: the "currently" disclaimer, and the lack of an exclusion in the form instructions.

Happy to be wrong,

Bill

1. It will be interesting to see how pay pal and others adjust
2. It will be interesting to see how this impacts new purchases on this forum for collectors
3. It will be interesting to see if trading picks up between collectors.

Does it mean more people starting to pay via checks again?

Only time can tell what this truly holds for the forum

My only concern is how it will affect the amount of items I see for sale. Waiting to see what all the non tax paying ebay "dealers" are going to do.

The real question is will it be cheaper to just pay the tax or pay an accountant to sort it out when just selling a few items you no longer want. My guess is just pay the tax.:D

This isn't new news. I'd mentioned this in posts months ago that touched on things like sales taxes. I got into it with another poster bitchin' about Ebay unfairly collecting sales tax on everyone now. He was claiming things like his wife selling a few things on Ebay every year, and how that was supposedly exempt from sales tax because she wasn't running a business and the sales were nominal. I explained how beginning in 2022, this new 1099-K threshold may suddenly get 1099s sent to her and make it look like she was running a business, albeit a nominal one, after all.

This new reporting threshold came out and was known early last year. There just wasn't a lot of talk and press about it back then. And what birdman42 is saying is right on the money. If you get one of these 1099-Ks and don't do anything about it, it isn't a question of if you'll hear from the IRS, it is only a matter of when you finally hear from them. And his other statements regarding crypto currencies are all correct as well. The government plans to make it as difficult as possible to hide any activity from them so they can't tax it.

The enforcement of these 1099 rules could have a large impact on the material that sells through auction houses, particularly high dollar items. We could go back to the days when direct sales and trading dominated the landscape.

Bob,

Won't this require most to now file a schedule C as a business in regards to the 1099?

Also for those selling used items on ebay, of which their basis is higher than the price realized(think used clothing or other household goods), do they now have a loss to offset other income? Or... since they sold the items for less than the original cost, has a "taxable event" actually occurred?

And another thought. For those selling collectibles, it appears this 1099 will be lumped in and figured at the filers AGI marginal rate? Otherwise in the past it would/should have been filed as a collectible sale. So going forward those in the lower brackets would be far ahead.


Just more food for thought.

I wonder if card shows will be even more prevalent for sellers ?

Question: doesn't it also apply to your bank account as inflows and outflows? So whether or not PayPal reports F/F or you take cash at a card show, once it gets deposited into your bank account, the IRS will be informed about the overall amounts entering your bank accounts during a year. Then you'll just have to explain where all the income came from, that wasn't from W2 or 1099.

https://www.usatoday.com/story/news/...se/8411799002/

You're still playing the "I hope I don't get audited" lottery. Keep all your receipts from sales to show your expenditures for items you might sell. If you've been skirting the federal tax laws for years, let this be a wake-up call.

Paying taxes it’s a good problem to have it usually means you’ve done well on your cards :-) accept it and pay it. Don’t get wrapped up in trying to avoid taxes.

Not so sure you want to do that.

Say you get a 1099-K for $2,000, and the items you sold cost you $1,000. That means you profited and should be paying income tax on just $1,000. But if you include nothing in your return, the IRS automatically assumes the entire $2,000 reported to them is ALL taxable profit, refigures your taxes with this added income, and bills you for the difference that you didn't pay them when you originally filed your tax return. And of course they will also tack on interest and penalty charges to your tax bill as well.

And since the 1099-K is mainly for reporting transactions from the sales of goods and services, I can also see the IRS assuming this unreported income as coming from a business you run. In which case the IRS may simply assume you are self-employed, and charge you self-employment tax (social security and Medicare tax) on top of the delinquent income taxes as well. And the IRS pretty much shares info with all the states that have income taxes, so depending on where you live, you may end up hearing from your home state as well. And in some locations there can even be city income taxes involved. So there can end up being more than one letter. Lots of fun.

Depending on your situation, you could decide to report such 1099-K activity as a business, and include the reported sales on a Schedule C business reporting form in your tax return. But if you don't want to report your sales as a business, you would probably need to report each individual sale included on the 1099-K you get as a separate item sold on the appropriate Form 8949, that then ties back to Schedule D, and all gets included in your tax return as a type of capital gain or loss then. It may be more work having to list each individual sale as a capital gain/loss through Schedule D, but at least it will keep you from having to also pay self-employment tax on the income you would have otherwise reported as business income on Schedule C.

Bottom line is, you're probably better off reporting the 1099-K activity as you want it treated on your tax return up front, rather than ignoring the 1099-K and maybe having to spend even more time, effort, and money straightening things out withe IRS (and possibly others) later on.

AVOIDING taxes is perfectly legal.
EVADING taxes is illegal.
There is a difference.

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Based on the post you responded to, I think bnorth was questioning whether or not to take deductions on the $2000 (in your example) or just pay the full tax owed on it. He wasn't talking about not claiming it at all.

Edit: thought it was originally posted by someone else.

wtf????

Thank you Judge Landis.

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That's how I read it too. Still, a lot of good information in BobC's post.

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One of the lessons I remember most from my graduate accounting classes.

Quote:
Originally Posted by johnny630
paying taxes it’s a good problem to have it usually means you’ve done well on your cards :-) accept it and pay it. Don’t get wrapped up in trying to avoid taxes.

Tomato, tomahto.
Avoiding taxes--> perfectly legal, and encouraged (in some cases, even required)
Evading taxes--> criminal activity

Keep track of your costs, and report everything completely. Be a Boy Scout.

Not to play the scare card, but the conventional view is that you need to keep tax records for three years. That's how long the IRS has to begin an examination, But if they see a continuing pattern, they can go back farther--almost certainly farther than you've kept records.

I know there are quite a few people on this forum who are thinking, "Criminal? Whatchu talkin' 'bout, Willis?" The question is, how big a fish are they going to have to catch for you to get religion? The IRS knows that if they catch a whale everyone from the sharks down to the minnows is paying attention.

Full disclosure, my status as an enrolled agent, and so my livelihood, depends on being squeaky clean with my taxes. I even report the cash tips I get as a volunteer bartender at my local town theater.

Bill

Maybe!!!

Look at what I said in post #19 about maybe reporting such sales as a business through Schedule C, or otherwise as a type of capital/loss through Schedule D. Having sales reported on a 1099-K doesn't automatically make you a business, even though that may be the initial assumption of others, like the IRS. Another good reason to file and be sure to report your 1099-K activity yourself, the way you want and should be treated. Not leave it up to the IRS to initially treat you how they think you a should be.

I've mentioned multiple times on this forum how someone can be a dealer/seller/flipper in business to make money now, an investor ultimately looking to cash in on items acquired at some point down the road, or a true collector/hobbyist who never really got into cards to make money at all. And I would argue that it is potentially possible for someone to be all three at the exact same time. Would depend on how well they segregate and keep records for different parts of the card inventory/collection they own.

And each one of these three different options has a different tax outcome and/or treatment. For simplicity, a dealer would likely use Schedule C to report their sales activity (unless the set up a formal business to run it through, like an LLC or corporation), while an investor or a collector would normally report their sales through Schedule D of their personal tax returns (with the individual sales details reported on the applicable Forms 8949).

Regardless of whichever way they decide to report it, someone now getting a 1099-K for sales will definitely have more work to do in preparing their taxes if they never reported anything for such sales before.

As for your second question regarding selling items for a loss, if they report as a dealer in business using Schedule C, they can offset the ordinary loss against all other income on their current year return, and potentially carry over, or back, any excess current year loss, depending on the rules and their actual situation. If they report the loss as an investor on Schedule D, it is a capital loss and is first netted against any capital gains on their return. If they end up with a net capital loss after offsetting the current year capital losses (and any capital losses carried forward from prior years) against their current year capital gains, they can deduct up to $3,000 of that excess net capital loss against all other taxable income on their current year return, with any remaining excess net capital loss then carried forward to future years (with no time limit). However, if they report the loss as a collector on Schedule D, they actually just report the result of such capital loss sale as $0, with no current year offset against capital gains or other income, and certainly no carry forward capital loss to future tax years.

You still want to report any loss sales on your tax return that were included on a 1099-K form you receive. Remember if you don't those sales, the IRS will assume 100% of what you did receive was taxable income to you, even if the sale was for a loss.

Now I'm not exactly sure what you're asking about in your third question in the second to last paragraph of your post. If you sell a collectible you still get to deduct your tax basis in the item sold, along with direct costs to sell it, from the sales price, and you should only pay tax on the net amount you ended up profiting on from that sale. You don't just include the entire amount on your 1099-K as taxable income. Plus, AGI stands for Adjusted Gross Income, and basically includes all the income you're reporting on your return, but this isn't what you pay taxes on. You still have other deductions you take off your AGI, like the Standard Deduction or your Itemized Deductions, to come up with your Net Taxable Income amount, which is what you do end up paying your income taxes on then. And the tax you actually end up paying is then based on the tax rate schedule for your particular filing status (married filing jointly, single, etc.)

Anything you sell as a dealer, or that results in a short term capital gain (owned and held less than 12 months) that is sold by an investor or a collector, is treated like all other ordinary income (wages, interest, etc.) and is subject to being taxed at up to the highest marginal rate you end up at based on whatever tax rate schedule is applicable for you. However, if you sell an item at a profit as either an investor or a collector, and you owned and held that item for one year or more before selling it, that profit is considered as a long term capital gain. And because baseball cards and memorabilia are considered collectibles, the long term capital gain tax on the profits from such sales is capped at 28%. So basically you add the net income from the sales of such collectible LTCGs in with all your other taxable income to be able to determine what the highest marginal income tax bracket is that you end up being in. As long as it doesn't exceed 28%, you pretty much just pay whatever the tax comes out to be. But if you end up in a top bracket over 28%, you go back and refigure your taxes so the amount on the LTCG from just the collectible sales doesn't end up being taxed at over a 28% rate. Don't know if this exactly answers your last question, but is a simplistic overview of how LTCGs on collectibles is supposed to work and how they get taxed.

I believe since AH pay by check or ACH they aren't effected yet. Someone please correct me if wrong

Paypal has issued these in my state for a few years (MA has greater reporting requirements). Its a pain at tax time. This resulted in me no longer selling as I don’t want the tax hassle and I do want to file an honest return.

Wondering, do auction houses also issue 1099’s? Do other large consignors? Or is just an ebay/pp requirement?

Wasn't exactly sure what he meant either, as he mentioned just paying the tax, or getting an accountant to help. I thought he may have been referring back to what Bill/birdman42 had said earlier about the IRS sending a letter and tax bill to people who wouldn't properly be reporting their 1099-K info on their returns, and just paying that IRS tax bill as opposed to hiring an accountant/tax preparer to prepare and file their return correctly to begin with.

Even if my interpretation of his question was wrong, my post is still relevant to show people they are probably better off getting an accountant/tax preparer to help them properly file if they can't do so themselves. At least for the first year they get a 1099-K.

I've always told clients I wouldn't mind paying a million dollars in income taxes every year, because they haven't figured out how to take 100% of my income yet, and that means I'd also made a helluva lot more money than what I had to pay. :)

Al, I don't think Landis had anything to do with taxes. :)

Not sure either, see post #30.

Exactamundo!

What I've always told my clients:


Tax evasion is a crime,
but tax avoidance is your Constitutional and God given right!!!

Question!!!!!
Alert- i saw this on the other platform(PSA) saying its not 600 dollars, but now 10K. according to a link someone there posted. I have not gathered the details on this yet.
Or maybe its about the inflow to your bank account. I'm at a lost in this stuff. Maybe its a different/separate thing.
Thread:https://forums.collectors.com/discus...es-down#latest
Link: https://abcnews.go.com/Politics/bide...ry?id=80665505

That is the banking inflows and outflows on an annual basis and neither have been adopted at this point as the bill has never gone thru. It was not in the past few versions but could be reinserted into the bill again, if and when they try to pass it.

All I am saying is if you have a easy tax form and can do it yourself it would be cheaper to just pay the extra tax on all your sales than hire a accountant to pay the amount you really need to. Accountants doing taxes with many different forms are very expensive in my many years of experience

I am in no way saying cheat on your taxes. I have been audited by everyone state level and the IRS. It sucks but I had an amazingly honest accountant and I never owed anybody anything when they were done with me. I have done some sketchy stuff in life but cheating on taxes isn't one of them.

Bob - thanks for all of your insight. Very, very informative post and I really appreciate how well you've laid things out.

Great advice by Bill/birdma42. I'll just embellish what he's saying a little bit.

Every person has the ability to go back and amend a tax return they've filed. You have until three years after the later of the date the return was originally due (usually April 15th of the following year) or the date it was actually filed. The IRS has the exact same time period in which your return is considered "open" and they can go back to review and audit it. Its commonly referred to by some as a statute of limitations. So as Bill/birdman42 said, that's why you tell people to hold onto their tax records for at least three years.

I actually tell my clients to hold onto their tax info for at least for four years, because I'm always afraid they'll mess up and throw things away too early, based on their return not being due till the following year. For example, your 2021 tax return isn't due yet till 4/15/22, and three years from then takes you till 4/15/25, which would be earliest that the statute of limitations would possibly be up, and beyond which the IRS can no longer audit your 2021 return. I can easily see someone thinking they'll hold onto their tax info for three years after 2021, so to them that means 2022-2023-2024, and come January, 2025 they clean house and throw their 2021 tax data out. Unfortunately, their 2021 tax year is still open to the IRS, but now their records are gone.

And I really more often tell clients to hold onto their tax info for a return they are filing for at least seven years. As Bill/birdman42 had said, there are occasions when the statute of limitations can extend beyond the normal three year period after a return was originally filed or due. This primarily occurs when the IRS discovers that the taxable income on a return was under reported by 25% or more on a previously filed return. In that case the statute of limitations for the IRS going back on a return gets doubled from three to six years, after the later of the returns original due date, or the date it was filed. And thus the reason I more likely tell people to hold on to their tax return info for at least seven years.

And by the way, the info we're talking about throwing away is to support what is reported on the tax returns. You should try to keep copies of all your actual tax returns and W-2s indefinitely. You never know when you might have to prove something to the Social Security Administration, or maybe domestic relations court for a marriage gone bad, as just a couple possible examples for why you want to keep them.

All I'm picturing in my head are two people meeting at an undisclosed location, in the middle of the night, exchanging a bag of cash for some high priced card and both driving away afterwards.

Exactly right. And just shows how the government is trying to clamp down even more on cash and currently other non-reported transaction activity. In case you haven't heard, they are still trying to figure out how to pay for the BBB program, and it has been talked about significantly increasing the IRS' budget so that among everything else they need to do, they can hire more auditors to go after the insane amount of taxes they estimate aren't currently being paid, but that should be.

Goes along with everything else the government seems to be doing to discourage the use of cash anymore, like the asset forfeiture rules. I remember back to when Rosen (Mr. Mint) used to have those adds showing a suitcase full of money he had to pay for your cards you were looking to sell. I could just see the cops today waiting for him outside a major show, or the National, with a drug sniffing dog that detects the smell of marijuana coming from his suitcase, so they could just ytake it. I've read somewhere that virtually all currency that has been in circulation for even just a short period of time has likely come into contact with someone using marijuana, or even worse drugs, and that once that happens, the scent stays on the currency so the drug sniffing dogs can still detect it.

Don't respond on this public forum here if you still do, but I've often wondered if things like these asset forfeiture incidences and proposed changes to cash activity in our bank accounts being reported to the government has got some people thinking twice, or even three times, about taking out large sums of cash to take to shows to buy/sell cards anymore, or depositing large sums of cash into their account from something they sold. The opportunities have been way down because of the pandemic, but as time goes by and things hopefully keep opening further up, I can see that maybe being a concern for some, if not many, people going forward.

Ben, My bad then as I wasn't quite sure what you meant. But what I (and birdman42) was saying is still pertinent and should be useful to everybody, so its all good. Just be careful, and even if you do your return yourself, you may still want to try running a question or two that you may have by someone that knows better. While it may cost you more to have an accountant/tax preparer help you by preparing and initially filing your tax return, I can almost guarantee you it would likely cost you even more to then bring somebody in to help straighten things out with the IRS after the fact if you prepare and file it yourself, but unfortunately mess something up. Good luck.

Thanks, I hope myself, and Bill/birdman42, are able to help someone out. If nothing else, it is info everyone can use to make better decisions for themselves, or at least know what they may now have to start keeping track of to give to their tax preparers.

Hopefully that way no one will have their tax preparers yelling at them when they walk in and drop their tax info off on April 14th. LOL :eek:

This has been a very helpful discussion, thanks to everyone! One quick question: what type of records must one keep to document purchase prices, etc.? If I maintain a document showing what I paid for the card and what it sold for, is that sufficient? Or do I literally need to print and keep the receipt for every card I ever purchase off eBay, if I want to be completely thorough?

But he had a lot to do with baseball ;):D

Related question: I received a payment via Paypal on Dec 27th 2021, but because I have not sold in a couple years, the payment is on hold until Jan 2022.

Should this sale be reported on my 2021 or 2022 return? I had no access to these funds in 2021, and know I will not receive a 2021 1099.

Thanks for the discussion.
 

I have tried to talk with my taxman about all this several times the last few months and have not received the courtesy of a return call. Leave it to Net54 to clarify.

Peace out.

I have wondered this as well. I keep a nice excel document of every purchase noting cost basis, sale price and net proceeds after fees. Also has the purchase and sale dates. Is that sufficient or I do i need receipts of prices paid to prove cost basis?


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"It appears non-commercial transactions will be included; there's no mention of a distinction in the IRS instructions for completing the form. In one way this is going to be a shock to some people. We have a church client that receives most of its monthly contributions through Zelle. On the other hand, if there were a distinction we might see parties such as PP clamping down on the use of F&F. I see the PP page mentioned above, but there's no mention of F&F transactions being exempt. And again, the IRS instructions for the form don't appear to allow for an exemption for non-commercial transactions. I'd really, really like to be wrong about this, but I believe I'm correct."

Just a note, and I don't know if this is true for Zelle, but when I set up pay pal for our synagogue's card show, I set it up with Pay Pal as a non-profit and sent in the 501C form we received when we 1st began. So if the church did not set it up as a non-profit, they need to fix that ASAP.

I also give out donation sheets to our vendors (in the past since our last show thanks to COVID was March 2020) and anyone who donates us cards or prizes who wishes to receive those notes. I have had a couple of major donators need the 501-C form as well for their tax preparers and that has been sufficient for their needs. So I would presume if the prep work by the church was done correctly then there should be no real effect on them

Rich


Bill[/QUOTE]

You could keep a log, especially when you purchase something like at a show where probably won't get a receipt. But for purchases from say Ebay or AHs I would definitely print out and keep invoices and receipts. If nothing else, it would show an IRS agent you have independent documentation for at least part of your activities, and make it easier for them to maybe then accept you records to the activities you couldn't get receipts for.

Yes he did! LOL

No tax law change, you will just be getting another piece of paper now.

If folks are concerned with tax implications, recommend you talk to a financial advisor that can help you.

Thanks Bob. Easiest thing moving forward is probably just to download all of my purchase history from eBay each year. Appreciate the help!

[QUOTE=swarmee;2181144]Question: doesn't it also apply to your bank account as inflows and outflows? So whether or not PayPal reports F/F or you take cash at a card show, once it gets deposited into your bank account, the IRS will be informed about the overall amounts entering your bank accounts during a year. Then you'll just have to explain where all the income came from, that wasn't from W2 or 1099.

https://www.usatoday.com/story/news/...se/8411799002/

Pretty sure the "every banking" transaction over $600 being reported by the banks was upped to $10,000 as there was too much pushback from the banks, the people and the opposition party. It was part of the BBB bill which thankfully has been dumped...

You're right, I believe it was in a different bill that hasn't passed... yet. But they have been known to make some changes retroactive, and if they need to close the loopholes to pay for the bill, expect it to be revisited.

That is actually a great question, but not sure I'll be able to give you a definitive answer without more info.

First, am I correct to assume you, or the business you use the PayPal account for, are a cash basis taxpayer? If not and you report as an accrual basis taxpayer for tax purposes, I'd say you pick up the sale/income on your 2021 return. But if you are a cash basis taxpayer, you are supposed to pick up the sale/income in the year you actually receive the.cash, or it is at least made available for you to do what you want with it.

In your case it sounds like PayPal shows they received your money and credited your account for it in 2021, which initially sounds like you should then pick it up on your 2021 return. But because they're holding it and not letting you have access to it till 2022, it ends up sounding like you a shouldn't pick it up till your 2022 tax return. The problem is we don't know how PayPal internally looks at this, and whether they consider this your money for 1099 reporting purposes when they first receive it, or when they later remove the hold on it. So in this case, here's what I would do.

First off, see if you can get a phone number or email address you can contact PayPal at. Then contact them and simply ask them, for 1099 reporting purposes do they consider money received on your account one year, but put on hold and not actually released to you till the following year, reported on your 1099 in the year they received the money for you, or the year they actually released it to you. And then just report it in 2021 or 2022 based on what they tell you. And if they tell you they report it in the following year, which will be 2022 for you, you should be able to double check that by looking to see that questionable sales amount gets included on your 1099 for 2022, along with any other sales you have during the balance of 2022.

Now if you can't get through to PayPal, or you can, but no one can then answer your question, I'd just include that sale on your 2022 tax return. And again, you should be able to then double check it to see that they included the sale on your 1099 form for 2022 as well. If it ends up that they didn't include that sale on the 2022 form 1099, that means they must have considered that sale as being received by you in your 2021 tax year after all. But since you didn't include it on your 2021 tax return, go ahead and just add the sale on to what they did report on your 2022 form 1099, and include it all on your 2022 tax return. The IRS won't question you for reporting more sales than what is reported on the 1099(s) you get for a particular year. And since you really didn't have the ability to access the money from that sale till 2022, I don't think an IRS agent would fault you for waiting till then to pick it up on your 2022 tax return, even if PayPal didn't put it on your 1099 for 2022.

One more point going back to you, or anyone else, that is an accrual basis taxpayer. Regardless of whether or not you are an accrual or cash basis taxpayer, the people/entities that are preparing and sending these 1099-K forms to you, and the IRS, are doing so based strictly on the cash basis. So if you are on the accrual basis, chances are the sales income you are reporting on your return will not agree to what is being reported to you on the 1099-K form(s) that you receive. As long as the sales you report on the tax return are equal to or greater than sales reported on the 1099-K form(s) you received for that year, you should be fine. But if the accrual basis sales you report on your return turn out to be less than the total sales reported to you on the 1099-K form(s) you received for that year, you may want to make some adjustment, or at least a notation, on your tax return so the IRS doesn't ended up contacting you about some under reported income.

Sorry for the long answer, but if if you want it to be right, and so you know what to do................

Yup! I always used to use Gavelsnipe myself for all my Ebay activity, until Ebay basically locked Gavelsnipe out a couple years ago. When I heard the Gavelsnipe site was going to be permanently shut down effective 6/1/2021, I started a thread on here back in April, 2021 warning people about the pending move so that if they had sales data they wanted to save from the site, that they better go on and save or grab it somehow before the shutdown. I personally had set up over 18,000 snipes on Ebay through Gavelsnipe, that resulted in approximately 3,000 auctions I had won on Ebay over the years. (I was stunned when I saw how the numbers had added up over the years) Was very glad I printed off and saved all the successful Ebay auction sales data from Gavelsnipe. I never usually did BINs on Ebay, so the Gavelsnipe data should cover almost all my Ebay activity through today. After they shut down Gavelsnipe, I really haven't been on Ebay much at all. Printed off a looooootttttttt of pages of sales data though. LOL

And I'm pretty sure the Gavelsnipe site is down, so you can't access records through them anymore. Good luck with your recordkeeping.

No, not a financial advisor, you want a tax professional. One of my clients for years was a financial advisor AND a CPA to boot, and he knew better than to even try doing his own taxes.

You want to talk to/with someone that has been doing taxes for a while, and not just someone that has a title or degree that sounds like they might know what they are doing. And I don't heartily recommend the walk-in places that are always advertising on radio and TV, and have offices everywhere. There's a reason those people work there and not in a regular tax/accounting/CPA office. They're not all bad, but you never know who you'll get when you just walk in there, and they aren't all that cheap either. They usually charge you on what I call an ala carte basis. They basically charge you for every separate form they fill out, and every piece of paper and tax document they touch.

If you're looking around and start talking to somebody, and they sound a lot like me, you're probably headed in the right direction. LOL

Saw this on FB.. of course, it could be fake news...


A friendly reminder that starting 2022, you’ll be taxed on your cashapp, Venmo, PayPal and Zelle for any transactions totaling up to over $600. That is one $600 or six hundred $1 transactions. So if you have a side hustle…… don’t use those apps. You're probably wondering why I encourage you to move to cash. If I purchase A tv for $700 in January of 2022 and decided to sell it on November of 2022 for $600 through one of those apps, I will be paying taxes for the $700 when I bought it and I’ll get a 1099K from the IRS on 2023 to pay taxes on the $600 I made off the tv I sold. If that does not sound ridiculous then I don’t know what to tell you. If I can’t write off my taxes for the Tv on the initial purchase, I should not have to pay taxes again on it for selling it. But the government has your best interest at hand. Tax the rich right?!? Good luck on your side hustle for all my friends that have it. Instead of “taxing the rich” they are really taxing the middle class more. But hey…. The government is for the people. I’m sure they just want to make sure you do your finances correctly. Tax the taxes to tax the tax. Got it . Of course if you are well off, you wont care but if you care about your friends that are not well off and their side hustle is what puts food on their table, then maybe you should care.#LGBFJB ~reposted from another post~

I see a lot on this board from people who say they just love the cards and could care less about the value of the cards most claim they would never sell they’re just going to die with them and pass them on to their heirs. Sounds like none of this would be applicable If you never sell any of your cards.

Why is everyone so worked up over this ? I think it’s smart for the IRS to be more diligent over collecting revenues from cards sales, there must be way more selling them ever. Maybe this is what the supposed FBI investigation over alleged trimming and shilling revealed lol. Make them pay up or at least put the fear of God in them over it, seems to be working based of this post.

Agreed!


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I agreed not to avoid paying tax.. but what about double taxed?

"If I purchase A tv for $700 in January of 2022 and decided to sell it on November of 2022 for $600 through one of those apps, I will be paying taxes for the $700 when I bought it and I’ll get a 1099K from the IRS on 2023 to pay taxes on the $600 I made off the tv I sold. "

There seems to be something missing from this FB item that you're posting as it mentions paying tax on a $700 purchase, and then again on a subsequent $600 sale of the item you previously bought. Not so sure it is fake news as much as much as it may be misguided thinking (or total ignorance on the part of the FB poster).

You don't pay income tax when you purchase something, so could the tax they're referring to on the $700 TV purchase maybe be sales or use tax? If you purchase a TV like this through Ebay, you'll get dinged for the sales tax, based on where you live, if applicable. But that has nothing to do with using PP, Venmo, or Zelle. That would automatically be charged if you used Ebay for the purchase. And assuming you aren't a formal business buying and selling TVs, any sales tax you paid when you bought the TV technically is deductible, because that sales tax would be added to the $700 cost basis you paid to acquire it, and then offset against what you later sold it for.


And then it mentions owing tax on the entire $600 you get for subsequently selling the same TV you bought earlier that year for $700, and how it gets reported to you on a 1099 now because your sale went through PP, Venmo, or Zelle. If that is the case, you sold something for less than you paid for it, so there's no profit to end up paying income tax on. You'd just need to show on your return that you didn't make money on it. And if the poster was referring to sales tax, it isn't the seller that pays it, it would be on the buyer.

This FB poster is either totally ignorant of the rules, or deliberately trying to be a jerk by giving people bad tax related information. Either way, it just shows how you have to be careful and watch what you read and believe online or wherever anymore, and why it can be extremely critical to have knowledgeable help and guidance in regards to taxes from someone you can trust. Especially over the past few, and coming years, with all the continually changing tax rules, and more to come.

And this new 1099-K reporting threshold just highlights some of the biggest problems the government and we the taxpayers face. The government is trying to get the taxes due and owed from all the operating businesses (legal and illegal) out there, but realizes much of it isn't being reported. Now the government doesn't really look at people having a garage sale or selling some miscellaneous clutter at a flea market once in a while as being in business, and truly doesn't care (or really want) to bother and tax them on any such activities. But in trying to get people actually running ongoing businesses, or even side hustles, that aren't being properly reported, the government ends up doing things, like lowering reporting thresholds for sales on third-party platforms like PP, Venmo, and Zelle to just $600. It will definitely get a lot of previously non-reported businesses to start reporting, or force them to find new ways to transact business that the government isn't already closely monitoring. Unfortunately, these lowered reporting thresholds also grab and affect tons of everyday people that really aren't running ongoing businesses, but now have to go through all the work and hassle these new reporting requirements are putting them, and their tax preparers, through. It is going to be a PITA for a lot of people that get these 1099-Ks next year, that didn't know they were coming.

You could be right about the FBI thing. As for people getting worked up so much about all this, I think it may be due to many people not knowing what or how to properly report their card collecting activities, or what records and details they need to keep, as much as them just not wanting to pay taxes they may owe on cards they're selling. No one is trying to put the fear of God in anyone, at least I know I'm not.

When it comes to topics and areas like this, ignorance is not bliss, in fact in many cases it can turn out to be the polar opposite. Warning people of this change in tax reporting laws at the start of the first tax year it takes effect, as opposed to them initially learning about it at the end of the tax year, will allow them to be much more proactive in how they decide to handle the new change. This is in contrast to the more limited, reactionary responses they would have, had they learned of changes so much later.

Not surprised at all about the potentially expanded reporting requirements and closer monitoring of businesses and people when it comes to taxes. Just look at the costs and record amount of national debt we have now assumed, primarily as a direct result of the pandemic. Add on the additional costs of finally looking to address the long overdue needs of our country's infrastructure, and any fool can see the government needs cash, which they get via taxes. And in these critical and vulnerable economic times, with the pandemic still raging and inflation breaking down the door, one of the last things politicians would ever want to do is raise taxes to potentially further damage the economy. Not to mention the political suicide it can turn into for politicians voting for such tax increases. So instead, people turn to the actual truth and often ask, rather than raise and pile new taxes on me Mr. Politician, why don't you do a better of job of enforcing the tax laws already in place, and getting the people and businesses that aren't properly paying their taxes now to start doing so? And now the politicians are............

Thx for your detail explanation! Appreciated your time. It make more sense to me now. I think you are correct, they were referring that $700 tv needed to pay SALES tax. But they probably think if eBay send them a 1099-K, then they have to file the whole amount on that 1099-k without adjustment what portions of the sell were a lost, and what portions were gains. Anyways, things get so complicated and people need to have detail track records of buy/sell and make all those accountants so busy during tax time. I just hope Turbotax will catch up with all these messes.

These changes - and yes they've been coming for some time... for me are the kick in the butt I needed to finally just stop selling. For too long, many card purchase propositions for me have been sell X to get Y...and in the end this results in wishing that I had not sold stuff. So my pace going forward may be slower, but... no more.

If you use Turbotax yourself, I believe you can access online tax help through them. They hire tax preparers, CPAs, etc. to be available for online guidance and help as kind of like independent consultants. I don't know what the charge/cost is for using them. My understanding is they don't actually prepare the return for you, just help and answers questions so you can file yourself. It is like walking into one of the big national tax prep franchises though, like H&R Block or Jackson Hewitt, where you don't know who you'll get to help you or how good they and their qualifications are. For whatever reason though, I feel you would more likely be getting better quality and maybe more knowledgeable people to help you through Turbotax, but it will still just be luck of the draw as to who you get. Reason for my saying that is I know someone who's worked as one of these part-time, online consultants for Turbtax in the last few years. He's very knowledgeable and he'd even been the Controller for a very large, well known mid-West brewery for a number of years, so he's no slouch. And from what he was telling me, it seems Turbotax does pay attention to who they hire to act as consultants for them. Good luck.

I heard about this today from a member and reading this post has not only been informative, but confusing and frustrating. It is going to be a nightmare to do this. Is IRS really so desperate for funding that they need to create a system that will sweep up millions and millions of ordinary folks who manage to sell $600 or more in a year in an online marketplace? Can the $600 threshold be raised to a more reasonable amount? What would it take to do that?

I am refining and downsizing my collection. Most of the items I'm selling were acquired at a cost, although I have no written sales records of what I paid for 99+% of those items. I understand paying taxes on sales at the capital gains rate, but how do I establish a price paid for something I sell so that I don't have to pay taxes on the gross amount? Will the IRS just take my word for what I paid? I imagine many of you are in the same boat. How are you going to handle it?

Not long ago I sold a Jim Rice signed baseball for $25, which is what I paid for it, when I bought a few from Sure Shot Promotions. After ebay fees, I lost money on this baseball, but under the new law ebay would show this as a $30 income ($25 + $5 postage), when in reality it was a net loss to me. Having to pay tax on a net loss is salt in the wound. Many of you probably have clear memories of what you paid for certain things but would be at a loss if IRS asked you to prove it. Some of the things I am selling, I purchased 20- 40 years ago. No sales receipts and memory would not be reliable. Some items were acquired in trades. How do we deal with these issues?

If I bought a card in 1990 for $500 and sold it in 2022 for $1000, and have no documentation of my buy price, how can I avoid paying tax on the entire $1000? This has been fun as a 'hobby' and if I made money selling an item, it has been my means of funding other purchases for my collection.

It seems that this may push many hobbyists into creating "businesses" and all of the headaches that will bring just to avoid overpaying taxes. I don't want to look at my hobby as a business. Am I wrong? Am I making any sense?

I greatly appreciate the detailed response!

Finally got a response from Paypal on this. They said it is reportable on the 2021 term since that is when the buyer sent the funds, even if they are not yet available to me.

The parcel is still en route, thus the hold until it is delivered. However, the buyer completed the transaction on their end in 2021, so that’s how they said it will be viewed.

Watch me claim it for 2021 and then get a 1099 for the 2022 tax year anyway (assuming no other sales for the year). That’s a mess I don’t want.

You make a lot of sense and I can understand your confusion, but don't think you're alone. If you're thinking you have to form a business now, you don't. If you look at and read my posts, in this thread and back in others from prior months/years, I've talked and written about the various ways people in this hobby can end up reporting their sales activity, and at least some of the pros and cons of each way to possibly report what they're doing. As I've been saying for quite a while now, people buying and then selling sports cards, like many of us do, will basically fall into and end up reporting their card sales activity as either a dealer/seller/flipper that is actually in business and treating what they do as such, or as an investor, and also finally as a true collector/hobbyist. And I've also said you can probably be reporting as any of these three different sales types (dealer/investor/collector) all at the same time, depending on your unique set of circumstances.

I'm merely passing along information so fellow collectors will at least have and know the basics of what they should be doing, so they are better informed and able to best decide how to handle and report things for their own unique situations and circumstances. And I'm a big proponent of advising people to seek out good, qualified professional help with tax reporting and preparation when they need it. If you start going back and reading through my posts, you'll soon see I keep saying the same things over and over again, and I'm really getting tired of all this typing. LOL

Anywy, to specifically answer your question about costs and records, even if you don't have an actual receipt or other specific documentation to support every single thing you've ever bought, I would not go and just report the cost of such an item as $0 then if I sold it. Instead, I would give it my best effort to recreate what the cost was, and failing that, would give it my best educated guesstimate as to what I paid for something, and use that to report on a return. You could even create or maintain some type of log, notes, spreadsheets, or other written records to keep track of such undocumented acquisitions, like cash purchases you had from a show you attended years ago. It may not be perfect, but you do the best you can to be reasonable and as accurate as possible. Hope this hopes. Good luck.

Well good, glad they answered you. Keep the copy of the email they answered with, or at least the name of the person you talked to. And if you do report the sale in 2021, and then find they stick it on your 2022 1099-K form after all, I wouldn't panic. I'd be sure sure to report the full amount of the sales on your 2022 1099-K form on your 2022 tax return. And then if you report your 2022 sales as a dealer in business, I'd deduct the sales amount you had already reported on your 2021 return as some type of other expense of the dealer business being reported on your 2022 return. But if you report your sales activity on your 2022 return as an investor or collector, go ahead and list the sales amount you already reported on your 2021 return as a sale on your 2022 return as well. But for the cost basis, report the same amount you reported for the sale so the net profit comes out to $0. Either way, you still end up fully reporting the sales shown on your 2022 1099-K form, but don't pay tax on the sales income you already reported on your 2021 tax return.

Hope this helps, good luck.