IRS Tax Law for Online Sellers - 1099k tax year 2022

[Chris_MD]

Have you guys heard about this? If you sell stuff online or receive electronic payments, this news is for you:

https://www.eseller365.com/new-feder...place-sellers/

[Chris_MD]

Hello?

[meremortal]

It's nothing new other than the third-party payment companies being required to report at a lower monetary amount than before. For individuals, the $600 number has been the same for years. If anything, this will probably make it easier for people since they'll send out forms to people and thus it'll be tougher to forget to do it yourself.

[IndyMLVC]

Originally Posted by SantanaJade

It was $20,000 until this year. Only certain websites reported at lower thresholds, or they had to because of 200 transactions.

It was the combo of both. It wasn't either.

[meremortal]

Originally Posted by SantanaJade

It was $20,000 until this year. Only certain websites reported at lower thresholds, or they had to because of 200 transactions.

I mean at $400+ income individuals have been required for years to report on their own. Being under $20k/200 was never some kind of magical exemption from having to file/report.

[Chris_MD]

Originally Posted by meremortal

I mean at $400+ income individuals have been required for years to report on their own. Being under $20k/200 was never some kind of magical exemption from having to file/report.

It is estimated that about 63% of people who receive money where there is no 1099-k generated, never report that income. And if you take into account, all the cash transactions, I bet that number is closer to 90%. This is who they are going after, instead of the billionaires hiding money offshore.

[RustinCohle]

It's also only "goods and services" payments and doesn't include "friends and family." So you can still venmo your partner half rent, or your friends for dinner, or whatever and it won't count.

[jacks2start]

Originally Posted by RustinCohle

It's also only "goods and services" payments and doesn't include "friends and family." So you can still venmo your partner half rent, or your friends for dinner, or whatever and it won't count.

There's a bill being written/presented and moved up through the process in the congress and departments that is going to include the "family and friends" side of all payment processors, it want be long until there is no way around it.

[RustinCohle]

Originally Posted by jacks2start

There's a bill being written/presented and moved up through the process in the congress and departments that is going to include the "family and friends" side of all payment processors, it want be long until there is no way around it.

Well that’s insane. Not every friends and family payment is trying to cheat the system. Could just be paying someone back $10 or $20 for movie tickets or dinner. Even if it’s more expensive like $500, it could just be half a rent payment.

[Chris_MD]

So the people in this forum, selling stuff, receiving payments electronically....when they hit $600 next year, they are getting a 1099-k form.

[meremortal]

Originally Posted by Chris_MD

So the people in this forum, selling stuff, receiving payments electronically....when they hit $600 next year, they are getting a 1099-k form.

Yes.

[Chris_MD]

Originally Posted by meremortal

Yes.

And people in this forum, are ok with that?

[meremortal]

Originally Posted by Chris_MD

And people in this forum, are ok with that?

I have no idea. I was just saying that not much has changed other than the form being submitted. Otherwise, people have been expected to do this on their own at the same amounts for years now.

[Gretiem]

Originally Posted by Chris_MD

So the people in this forum, selling stuff, receiving payments electronically....when they hit $600 next year, they are getting a 1099-k form.

I believe ebay and paypal are doing it this year.

[Chris_MD]

Originally Posted by Gretiem

I believe ebay and paypal are doing it this year.

No, eBay made an announcement. Only sales in 2022 are applied to the new threshold. But some states, may already have adopted a lower threshold in 2021.

[Ray Jackson]

Originally Posted by Chris_MD

No, eBay made an announcement. Only sales in 2022 are applied to the new threshold. But some states, may already have adopted a lower threshold in 2021.

What if I only sold sneakers that I bought on eBay and then resold for less than what I paid for them?

Is the IRS still going to expect a cut, even though I lost money?

…or is there a way around it?

[ctujackbauer]

Originally Posted by Ray Jackson

What if I only sold sneakers that I bought on eBay and then resold for less than what I paid for them?

Is the IRS still going to expect a cut, even though I lost money?

…or is there a way around it?

If it sold for over $600, or if all of your sales in 2022 totaled more than $600, then you will get a 1099-K in 2023. If the item sold for less than what you paid, you'd want to keep some kind of transaction record: screenshot, note in a spreadsheet, credit card statement, ebay transaction record (in this case) - because there's no tax due for selling a personal item at a loss, but there will be a 1099-K sent.

[ctujackbauer]

Track your cost basis if you're considering selling a blu or digital copy, especially if you are near the $600 limit or the quantity limit.

You may have marked a payment as friends and family in Paypal/Venmo, but Paypal/Venmo might not have done the same on their side. With the IRS, you have to prove it if they question it.

Google Sheets is free.

[wkerdy]

What? Is that even serious? That's stupid, I would understand a new law that would affect the big sellers, but the small ones, that's stupid. So, what if I sell some items online from time to time? Because of that, I'll have to pay such an insane tax? That's not normal. I just checked my eBay and Amazon accounts, and it seems like I had 178 transactions during the past year. I'll try to insert that data on the paystubs from https://www.paystubcreator.net/ and then calculate the tax I would have to pay. I'm sure I won't be happy.

[InuYashaCrusade]

Originally Posted by wkerdy

What? Is that even serious? That's stupid, I would understand a new law that would affect the big sellers, but the small ones, that's stupid. So, what if I sell some items online from time to time? Because of that, I'll have to pay such an insane tax?

If you sell over $600 during the entire year then yes.