I’m guessing anyone using paypal got this email and if so, then we will get taxed on sales over 600 through paypal? If so, wow, you try to recoup some loss only with uncle sam and his hand out…
It seems like if you’re selling something you bought and paying taxes on the sale, you should be able to write off the original cost of the item. Caveat: I am not an accountant or a tax lawyer and this isn’t legal advice, you should talk to your actual accountant, etc. This is just my supposition.
from a very top level view and maybe I’m over thinking it but in the email is shows the following
if needed based on the amounts you’ve received, we will use the information you’ve provided to send you a Form-1099-K in January and share this information with the IRS
okay, found the answer:
PayPal tracks the total payment volume on your account to determine whether it meets the IRS threshold in a calendar year:
$20,000 USD in total payment volume from sales of goods or services in a single calendar year and, 200 payments for goods or services in the same year.
Guess I need to quit flipping gear…
I expect it depends on what state you’re in, as I’ve gotten no emails from PayPal about this.
Are you talking about PayPal actually deducting sales tax on your behalf on a per-transaction basis, or them issuing a 1099-K?
If it’s the latter, that’s done if you exceed $20K in sales (the IRS threshold) for most states, with a $600 limit instead for Vermont, Massachusetts, Virigina and Maryland, and a $1000 limit (and 4-transaction minimum) for Illinois.
Yes, that’s the one, not sure how Oregon handles it. Hopefully I don’t hit 20k mark…
yes, cost of goods sold would be deducted from your income, whichh would effect your income tax bill.
Automatic sales tax deductions on the other hand, would be a real sonofabitch, becuase in my area (and most) it’s calculated as a percentage of the total sale. So if you bought my GSX-Mini, regardless of what I paid for it, I now owe 10.2 percent of the total sale price to various jurisdictions.
When you flip gear you are not making money as you show evidence of initial cost and I assume you mostly sell the gear at cost or less. So you actually are selling at a loss but yes if it’s over 20k you might need to add that at the end of the year and show how you are not making money but just selling stuff with a hobby and NOT a business. They only care if you make money
Definitely selling at a loss. Oregon does not have sales tax but that is made up in property tax and property in Oregon is going through the roof but that’s another off subject topic.
Can you actually do that as an individual? I doubt that, but I’m not an accountant.
If you registered a business (sole proprietorship) you’d be able to deduct any business loss from your personal income. This would include the loss associated with flipping gear. But I think after some time without showing a profit, the tax man will get cranky and take a look at your “business”. This seems worth avoiding.
Before panicking, I think it would be prudent to get advice from an actual tax accountant or lawyer. There may be some process for recording a private sale that avoids the tax implications of funnelling the money through PayPal.
What bothers me more about this is that the IRS via PayPal requires me to register my business and provide my personal information simply because I have the audacity to use PayPal. My business is not located in the US, so why does the IRS need to be involved in it?! #whatever
That was my point and more on the side of why my hobby through paypal is being taxed or potential to be taxed. I got into it once upon a time with ebay and then it evolved into the monster it is and have yet to move away from it. It’s a service that I still use regularly regardless of how annoying it can be. (and fees continue to increase)
This seems to be old news…2021 COVID bill:
First I’ve heard of it but I avoid the news like the plague, just got the email today.
I skimmed through the article, go figure the bill was meant to hit the wealthy but hit the lower tax bracket.
But on the other side of the coin, I agree, nothing should be for free. Wages through paypal is one thing but taxing payments for non business related items is a little much even though we treat these items as “billable” just for security for the buyer and seller, wonderful grey area.
Like the old saying goes, nothing for sure except death and taxes.
For private individuals who trade a lot it’s almost worth setting up an account with an eCommerce platform. Then you can charge by credit card and such at a pretty reasonable rate (typ. 2.9%). If you trade quite a bit it may be lower cost than PayPal. That’s especially true for international sellers who get screwed by PayPal on the fees and then again on the exchange rate. This after their international customers have already paid an exchange fee both to PayPal and to their credit card company.
Last time I did the math on a paypal 3% charge is was actually 3.5 and some change. Not sure when that changed or if it didn’t change, why 3.5. I’ll look into eCommerce or just grin and bare it.
I received a 1099k last year. You just file it as other income, I think scheduled C? And then you can write it off because it’s actually a loss due to you selling the item for a loss.
Some states or counties may say you need a “business license” because you’re selling more than $600. I’d tell them no and it’s not a business due to always taking a loss.
Either way it’s bullshit. Just another example of government in your personal business.
You got that right, if they can figure out ways to take your money, the government will do it.