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If you use third-party payment platforms, like PayPal, Venmo or Cash App, to collect payments for your side gig or business, the Internal Revenue Service (IRS) wants to remind you to report payments of at least $600.
This rule is aimed at individuals who run a side hustle, small business or do part-time work. So if you’re just sending money to friends for a restaurant bill or a vacation, or collecting a one-time payment for selling something online, this won’t apply to you.
Before 2022, third-party transactions for business owners and side hustlers followed different thresholds: individuals needed to report gross payments exceeding $20,000 and report earnings if they had more than 200 such transactions, according to the IRS. But as a result of the American Rescue Plan Act, any transactions made after March 11, 2021 that exceed $600 must be reported to the IRS, regardless of how many of those transactions you’ve had.
This is really is gonna tick off a lot of sellers. And how does Paypal, Venmo, Zelle, etc distinguish between personal payments and money you made from selling something?
FYI this rule has always been in place but you had to self-report if you hit the threshold now these companies have to send out the tax forms to you.
Sounds very burdensome and will probably dissuade people from selling things online.
It's not burdensome. I've done this for years with various side hustles. You have to declare your income whether or not you get a 1099, so if someone has been following the law, it's no problem.
Do not know where you are. $600 has been the number for reporting income as long as I have been working.
lol so you started working this year?
technically, if we go by all the words you are using...*EVERY* dime, down to the penny in fact, must be REPORTED on your 1040.
I would say its voluntary, but its really not, if you got caught you are in trouble.
$600 is the new threshold that payers of digital and otherwise funds must report it on a flavor of 1099 (K I think? hafta check)
What this means is that like the W2 etc, the IRS now KNOWS you got that money.
The tax gap as it were, rich people be damned, really rests in the middle class, self employed who duck out on cash payments reporting them.
So while there are no new TAXES on the 400K bunch, there is more reported income which is more taxes.
I dont feel bad for them/you. I pay appx $40 k in federal taxes each year and get squat for it, for no other reason than I am honest and even if I were not, I work for unca sam (treasury) and as such get audited every year the rest of my life. the badge has a price...
Try running a small business. Before I retired, I paid sales tax when I bought flooring. Collected sales tax when I sold it. Paid sales tax on my labor to install it. And paid income tax on the labor too.
you need a new accountant or a new state to live in. You typically dont pay sales tax on the stuff you buy to resell as part of a business. if you live in a state where they double dip, its time to move.
This is not a new rule. If you are selling goods at a profit, record and subtract your expenses and claim the difference. Luckily you can probably write off most of it by claiming a home office, depreciation of your tools, etc. Business 101.
It makes no difference if you're a rich old codger having fun on ebay or if you invented a hot-selling product that is flying off the shelves and making you a millionaire. Pay your fair share, Democrat.
Most people don't keep 20 year old receipts around in anticipation for when they will sell a 2nd hand item on Ebay.
These vipers won't be happy until we(1) are living under about the same conditions the slaves in the old south were living under.
(1) does NOT apply to the protected classes--liberal elite, illegal aliens, various "minorities," sexual deviants, etc.
Exactly right. In some cases more than double taxed.
Gonna be a nitemare blare. I have had over 300 telescopes since 1976 so i have had it all anyways and with shipping costing so much i stopped just about all buying unless local.
Problem there is that most buyers won't go for that since it offers them zero protection against fraud. Would YOU go for it after you shelled out a couple thousand for an item to a complete stranger?
That makes sense of course for a big transaction.
But this was answered earlier in the thread by WMC:
Quote:
Originally Posted by BoBromhal View Post
you sell a piece of furniture, or a piece of jewelry, or any item for $600 you are supposed to report that income, and now Paypal etal will send you the form.
Quote:
You will get a 1099 for the sale(along with any other sales you make on a given platform), but once the tax forms come out, I bet there will be lines for
1099 MISC(or whatever) reported amount
Less: sale of personal items
Total to add to Adjusted Gross Income
Quote:
Originally Posted by Goofball86 View Post
This doesn't set the case for the Dems that they only go after the 1 percent or wealthy tax cheats. No wonder they need those 80k extra IRS agents.
Quote:
The 80k staffers are need to replace staffers that are retiring over the next 10 years
Quote:
Originally Posted by bluesjuke View Post
The rule also penalizes people when selling their personal possessions.
Holy tyrannical revenuers Batman!
Quote:
No, it doesn't. You might get a 1099 for selling personal possessions, but there will likely be a line to subtract those amounts from the total.
Quote:
Originally Posted by ChrisC View Post
I sold a guitar during the year for $1100. That guitar was purchased NEW by me in the past for $1800. Tell me how this is considered "income"?
If the IRS thinks I'm going to pay income tax on it, they can kiss off. All they get from me is the middle finger in that case. It is NOT income. I LOST money on it. And the money I used to buy it in the first place was ALREADY TAXED. Jesus, the feds make some STUPID rules.
Exactly right.
In the above case, I didn't have much choice--it's the only time I've used Paypal all year. And when the dems ban cash, I'll use gold. And when the dems ban gold, I'll barter. And when the dems ban barter, they can just come after me, execute me and burn my home down. I'm NOT paying income tax on non-income.
Quote:
You won't owe any taxes on that sale, since you didn't make a profit, and it was sale of a personal possession
Quote:
Originally Posted by FrankNSense View Post
And what if they no longer have the original receipt showing they actually took a loss? What if this was something they bought 10-15 years ago? Do you really think that the IRS will "trust" you that the loss is being reported correctly?
So I guess I don't have a problem with businesses who work selling products like the example above that they pay taxes on the income they are earning. What's the problem, unless of course, you disagree with income taxes in general.
Why should someone who works in a regular job with reportable income done legally have to pay taxes, but the person who has a home-based business earning $70,000 a year selling items or services to individuals and using an app for payment be exempt from paying taxes? The cutoff has just been lowered from $20,000 annually or 200 transactions, to $600 with no limit on transactions. The person that sold 100 masks last year on Etsy will now have to report that income.
Not exactly. They were always required to report transactions over $600 but no records were kept of smaller transactions so some people didn't report them.
But this was answered earlier in the thread by WMC:
Quote:
Originally Posted by BoBromhal View Post
you sell a piece of furniture, or a piece of jewelry, or any item for $600 you are supposed to report that income, and now Paypal etal will send you the form.
Quote:
Originally Posted by Goofball86 View Post
This doesn't set the case for the Dems that they only go after the 1 percent or wealthy tax cheats. No wonder they need those 80k extra IRS agents.
Quote:
Originally Posted by bluesjuke View Post
The rule also penalizes people when selling their personal possessions.
Holy tyrannical revenuers Batman!
Quote:
Originally Posted by ChrisC View Post
I sold a guitar during the year for $1100. That guitar was purchased NEW by me in the past for $1800. Tell me how this is considered "income"?
If the IRS thinks I'm going to pay income tax on it, they can kiss off. All they get from me is the middle finger in that case. It is NOT income. I LOST money on it. And the money I used to buy it in the first place was ALREADY TAXED. Jesus, the feds make some STUPID rules.
Exactly right.
In the above case, I didn't have much choice--it's the only time I've used Paypal all year. And when the dems ban cash, I'll use gold. And when the dems ban gold, I'll barter. And when the dems ban barter, they can just come after me, execute me and burn my home down. I'm NOT paying income tax on non-income.
Quote:
Originally Posted by FrankNSense View Post
And what if they no longer have the original receipt showing they actually took a loss? What if this was something they bought 10-15 years ago? Do you really think that the IRS will "trust" you that the loss is being reported correctly?
Everybody ok now? Feeling better?
Not at all. It's a scam sam to screw us out of money.
Most people don't keep 20 year old receipts around in anticipation for when they will sell a 2nd hand item on Ebay.
I was referring to the poster who said he buys and repairs items and sells them for a profit. He is a fool not to track his business expenses (purchase, equipment costs marketing, workspace). Unless he is a tax cheat which I think he said he was.
The IRS doesn't want or need your 20-year-old receipts.
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