Ebay tax reporting drops from $20,000 to $600

[BobC]

Originally Posted by CTDean

All eBay sales will show up on your 1099K's. I'm in Maryland and it is one of the states that use the $600 figure this year. I just printed my Paypal 1099K for January thru June 2021. In June I went to eBay managed payments and will be getting an eBay 1099K for June thru December 2021 sales. The 1099K's will include all eBay sales for the year no matter the payment method used by the buyer through paypal or eBay's managed payments. Here the $600 in a year is the only factor, the number of sales has no meaning.

Sorry for any misunderstanding, I believe Ebay's managed payment plan/system is considered somewhat on par with other payment platforms like Paypall, Zelle, etc. And therefore they'll report on all sales through that platform. I do not sell on Ebay and only know they are in the middle of eventually getting all Ebay sellers to adopt and be on their managed payment program. My understanding was that not all Ebay sellers had been forced to switch yet, and for those that hadn't, Paypal was still the primary payment venue/option being used, and that only payments through Paypal would be included in their 1099-K reporting (not including F&F payments).

This just highlights how confusing and complicated, as well as how inaccurate this reporting may be. As you mentioned, your 1099-K only included all Ebay sales starting in June through the year end, after you had switched to Ebay's managed payment system. Before that switch though, I'm assuming that any payments you had received that did not come through Paypal, are not showing up on a 1099-K.

And this also points out how tax laws and reporting can vary greatly by state.

[Jewish-collector]

fyi - They did change some states thresholds recently. These nine states have lower 1099-K threshold limits different from federal requirements. They will produce 1099-K if you conduct business in these nine states.

State Threshold Effective
AR $2500.00 2020
DC $600.00 2020
IL 4 CC Trans + $1,000.00 2020
MA $600.00 2018
MD $600.00 2020
MS $1,000.00 2020
NJ $1,000.00 2020
VT $600.00 2018
VA $600.00 2020

[BobC]

Originally Posted by Jewish-collector

fyi - They did change some states thresholds recently. These nine states have lower 1099-K threshold limits different from federal requirements. They will produce 1099-K if you conduct business in these nine states.

State Threshold Effective
AR $2500.00 2020
DC $600.00 2020
IL 4 CC Trans + $1,000.00 2020
MA $600.00 2018
MD $600.00 2020
MS $1,000.00 2020
NJ $1,000.00 2020
VT $600.00 2018
VA $600.00 2020

Yup, I usually try to remind people that state laws can (and do) vary from federal laws, and can be all over the place. So you always have to pay particular attention to whatever state(s) you are in when it comes to taxes as well.

[Dead-Ball-Hitter]

Bob C., really appreciate your ongoing clarification of the tax law. Something to think about when we go to sell our long-time collections. I think most guys want to be law-abiding, its just tough to figure out when we can net expenses, what forms to fill out, etc.

I always hated that my Paypal 1099-K INCLUDED dollars collected for sales tax that were NEVER PAID to me - ebay collected the tax that the buyer paid, yet it shows up on my 1099!!! Ahhhg! What a mess...

So I should pay income tax or capital gains on the sales tax ebay collected??!!?

[BobC]

Originally Posted by Dead-Ball-Hitter

Bob C., really appreciate your ongoing clarification of the tax law. Something to think about when we go to sell our long-time collections. I think most guys want to be law-abiding, its just tough to figure out when we can net expenses, what forms to fill out, etc.

I always hated that my Paypal 1099-K INCLUDED dollars collected for sales tax that were NEVER PAID to me - ebay collected the tax that the buyer paid, yet it shows up on my 1099!!! Ahhhg! What a mess...

So I should pay income tax or capital gains on the sales tax ebay collected??!!?

Quick answer is you get to deduct the sales tax if included on the 1099-K, along with also being able to deduct the Ebay fees you paid, assuming they were included as part of the 1099-K reported income as well. You get to deduct the direct costs related to the sales of your cards, along with your cost basis in the cards sold, regardless of whether or not you report the sales as a dealer, investor, or a collector. You are potentially able to deduct a lot more business related expenses, but only if you file as a dealer operating a business.