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

[Ray Jackson]

Originally Posted by ctujackbauer

The short form, 1040EZ, was discontinued by the IRS in tax year 2018: https://www.investopedia.com/terms/1/1040ez.asp You've probably been filing the 1040 through TurboTax free edition and didn't know it.

TurboTax Free edition, from their website:

Those filing in TurboTax Free Edition, TurboTax Live Assisted Basic or TurboTax Live Full Service Basic will be able to file a limited IRS Schedule 1 if they have hobby income or personal property rental income reported on a Form 1099-K, and/or a limited IRS Schedule D if they have personal item sales income reported on Form 1099-K.

https://turbotax.intuit.com/personal...ee-edition.jsp

If you want to document your net income from selling those personal items and don't have an exact record of every shoe you purchased, you can look up your transaction history on ebay (or wherever you sold it) and then just google the shoe you sold: "Nike Airmax" "MSRP"

You have zero net income, zero profit, from your ebay revenue. You pay no additional taxes on this net income.

Hey thanks for your help!

…really appreciate it.🙏

[InuYashaCrusade]

An update from eBay. Curious if this means they will still be sending 1099s regardless of this delay. The second and third lines don't really add up with each other.

"The Internal Revenue Service has announced a one-year delay of the new $600 tax reporting threshold to help ease the transition to the new reporting requirement for taxpayers, tax professionals, and online marketplaces.

As a result, for tax year 2022, only eBay sellers who: 1) exceed the reporting threshold of $20,000 and 200 transactions, 2) had backup withholding applied in 2022, or 3) are residents of states that have a lower reporting threshold will receive a Form 1099-K.

The delay does not change your income tax reporting obligations."

https://community.ebay.com/t5/Announ.../ba-p/33448774

[Bigdog]

Originally Posted by InuYashaCrusade

An update from eBay. Curious if this means they will still be sending 1099s regardless of this delay. The second and third lines don't really add up with each other.

"The Internal Revenue Service has announced a one-year delay of the new $600 tax reporting threshold to help ease the transition to the new reporting requirement for taxpayers, tax professionals, and online marketplaces.

As a result, for tax year 2022, only eBay sellers who: 1) exceed the reporting threshold of $20,000 and 200 transactions, 2) had backup withholding applied in 2022, or 3) are residents of states that have a lower reporting threshold will receive a Form 1099-K.

The delay does not change your income tax reporting obligations."

https://community.ebay.com/t5/Announ.../ba-p/33448774

The video I posted kind of explains this, his advice was to document everything in case of an audit, meaning treat this year like it is still being taxed from what I gather! I know one thing, common sense says Biden didn't hire over 80,000 new IRS agents to clean the bathrooms, so cover you a@@ is best practice imo.

[ctujackbauer]

Originally Posted by InuYashaCrusade

An update from eBay. Curious if this means they will still be sending 1099s regardless of this delay. The second and third lines don't really add up with each other.

"The Internal Revenue Service has announced a one-year delay of the new $600 tax reporting threshold to help ease the transition to the new reporting requirement for taxpayers, tax professionals, and online marketplaces.

As a result, for tax year 2022, only eBay sellers who: 1) exceed the reporting threshold of $20,000 and 200 transactions, 2) had backup withholding applied in 2022, or 3) are residents of states that have a lower reporting threshold will receive a Form 1099-K.

The delay does not change your income tax reporting obligations."

https://community.ebay.com/t5/Announ.../ba-p/33448774

The tax reporting obligation is a not-so-friendly reminder from ebay that you owe the IRS (business income of just $400 net income triggers self-employment taxes is due in 2022, see IRS and technically you should report all business income on a schedule C if it isn't hobby income), even though you're under the ebay reporting threshold for 2022 (ebay is only sending 1099-K forms to those with $20,000 and 200 transactions in 2022)

Bonus round tax advice: there are situations where it is very beneficial to file tax returns on what seems like small amounts of income.

1. tax stimulus: especially the federal/state COVID19 pandemic stimulus in 2020 and 2021. If you filed tax returns for the prior 2 or 3 years before 2020, and sometimes just in 2020, you've created a record for the IRS and state governments to look back and qualify for pandemic stimulus bucks (nearly 3 thousand dollars, so this is not some small amount.) There were quite a few state stimulus dollars too here in California for small businesses/sole proprietors that were shut down and California wanted to look good in the newspapers by giving out various pandemic relief, those almost always required 2 or 3 years of tax returns.

2. qualifying for the Affordable Care Act or Medicaid: It helps to create a record, some states will just look up what you filed on your federal return each year.

[Member-222782]

I surpassed 300 Ebay transactions in 2022 but sold under 10K - am I going to receive a 1099?

Thanks to this, I deleted my remaining Ebay inventory on December 31st, 2022 and am pretty much done with selling. I'll look into other Marketplaces like Facebook perhaps or even the Trading forums here - as long as I won't have to worry about the IRS.

[Ray Jackson]

Regarding the Ebay $600 threshold, does that mean your net profit?

Or the actual amount you sold the items for, before fees were deducted?

Does it include the amount the buyer paid for shipping?

For example, I sold a pair of shoes for $200, then Ebay took $20 for its fee and charged the buyer $15 for shipping.

What's my tax liability?

$200?

$180?

$215?

...it's very confusing.

[beefytwinkie]

Originally Posted by Ray Jackson

Regarding the Ebay $600 threshold, does that mean your net profit?

Or the actual amount you sold the items for, before fees were deducted?

Does it include the amount the buyer paid for shipping?

For example, I sold a pair of shoes for $200, then Ebay took $20 for its fee and charged the buyer $15 for shipping.

What's my tax liability?

$200?

$180?

$215?

...it's very confusing.

The $600 is gross sales. It's up to you to keep track of the expenses related to the sale of each item.

Take a look at the eBay support page:

https://www.ebay.com/help/selling/fe...-1099k?id=4794

[InuYashaCrusade]

$600 1099-K reporting delayed for a second year, raised to $5000 for 2024

https://www.irs.gov/newsroom/irs-ann...implementation

[Member-222782]

Holy sh!t I can sell again

[SlaughterX]

Originally Posted by InuYashaCrusade

$600 1099-K reporting delayed for a second year, raised to $5000 for 2024

https://www.irs.gov/newsroom/irs-ann...implementation

Great news. Now to clear out my extra shoe closet!

[cg1349]

Big Beautiful Bill raises threshold back to $20k.