New Tax Law Hidden In COVID Relief Bill Will Crush eBay/Paypal Sellers (2 Viewers)

[Tommy]

Is venmo or zelle affected?

I don't use Venmo but I thought those were all non-G&S type payments. Zelle is bank account to bank account which cuts out the 3rd party payment processors (ex: PayPal, Stripe) so I wouldn't think so.

 

[FordPickup92]

I don't use Venmo but I thought those were all non-G&S type payments. Zelle is bank account to bank account which cuts out the 3rd party payment processors (ex: PayPal, Stripe) so I wouldn't think so.

Okay thanks! I assumed as much but ya never know. I've always offered both in addition to PayPal, assuming friends and family isn't affected there shouldn't be much issue. But knowing they're watching and keeping tabs is still a bit uncomfortable. Although, they do that now anyways I'm sure

 

[Schmendr1ck]

While I think it was already said, people need to remember that this change in the law does not change the taxes you owe by a single cent. It only changes reporting requirements on sales income processed via third party transaction services like PayPal.

I think a reporting threshold of $600 is unreasonably low, and it's going to be extra paperwork for a lot of people. But $20,000 was too high, and a lot of people took advantage of that to avoid paying taxes that they owed.

Feels like a happy medium would be somewhere in the $2-5K neighborhood. High enough to allow some relief for hobby sellers, low enough that it's much tougher to skirt self-employment taxes.

 

[davin]

Maybe that’s why eBay is forcing you to update your seller account to managed payments which you need to give them your social etc. if you decide to ignore it they block you from selling anything as well as editing your items you have for sell currently.

 

[CraigT78]

Apparently a new tax law was included in the COVID relief bill that was recently passed which lowers the reportable taxable amount of sales through any selling platform (eBay, Paypal, etc). Previously, there was a $20,000 sales threshold on these sales that if crossed, eBay/Payal etc are required by law to send a 1099 to the IRS informing them of your tax burden on these sales. You would then need to account for the sales on your tax return and pay income tax on any tax burden.

This has now been dropped to $600 total in sales annually.

Which means, it will hit anyone that sells a collectable or a few small items that cross this extremely low threshold and they will receive a 1099 for those small sales to pay taxes on. Most small sellers on eBay who use it more as a yard sale are not going to expect a 1099 and have to pay taxes, and surely they are not accounting for their taxable cost basis on the items they sell.

If you sell a $800 baseball card or rack of chips, the IRS is going to require you to pay tax on the full $800 unless you can account for the actual cost basis. All business sellers on eBay do this already because of their volume of sales, but this is going to hit the small sellers that are not businesses. Probably, many of them won't even know what a 1099 is and will ignore the email they get from eBay and then be surprised when the IRS bills them for taxes owed.

Good. Pay your taxes. That is all.

 

[ReallyGoodUsername]

While I think it was already said, people need to remember that this change in the law does not change the taxes you owe by a single cent. It only changes reporting requirements on sales income processed via third party transaction services like PayPal.

I think a reporting threshold of $600 is unreasonably low, and it's going to be extra paperwork for a lot of people. But $20,000 was too high, and a lot of people took advantage of that to avoid paying taxes that they owed.

Feels like a happy medium would be somewhere in the $2-5K neighborhood. High enough to allow some relief for hobby sellers, low enough that it's much tougher to skirt self-employment taxes.

+1000.

$600 is a stupidly low number just as $20k was a stupidly high one. Classic government regulations, sucking equally and in both directions.

 

[byline9]

That is Gross taxation of money that has already been taxed on income and spending already.

^^^This x2. Way too much gov't meddling in our lives, screwing with hobbyists now. And if you sell your old hooptie car through an online auction for $750, does that mean you have to pay federal tax on it now? Deal locally in cash, I guess, or get a bank check. I agree that the threshold should be more like $5K.

If Paypal F&F is not affected, then this could be a positive thing for PCF. More chips being sold in the classifieds here instead of on Feebay might result in new members finding their way here (although those might also include more flippers). Just trying to find a bright side to a cluster f***.

 

[philhut]

F this administration and those in control of congress.

^^^This x2. Way too much gov't meddling in our lives, screwing with hobbyists now. And if you sell your old hooptie car through an online auction for $750, does that mean you have to pay federal tax on it now? Deal locally in cash, I guess, or get a bank check. I agree that the threshold should be more like $5K.

If Paypal F&F is not affected, then this could be a positive thing for PCF. More chips being sold in the classifieds here instead of on Feebay might result in new members finding their way here (although those might also include more flippers). Just trying to find a bright side to a cluster f***.

I wonder how this law affects foreigners? as a Canadian if I sell over $600 in goods to the USA would I be subject to taxes as well? This may affect us all.......also being a "world leader" we can expect other Liberal Supremacies to do the same like Canada in the EU.

 

[Dugthefish]

Taxation is theft. That is all.

 

[Highli99]

In the poker game of life, taxes are the rake. Much like any rake, my tolerance for it is directly attributable to the services provided in return.

 

[Silver_Fiend]

While I think it was already said, people need to remember that this change in the law does not change the taxes you owe by a single cent. It only changes reporting requirements on sales income processed via third party transaction services like PayPal.

ITs not about paying your taxes, it about being charged taxes on things that shouldnt be. I dont like paying 500% of taxes on every dollar I make.

taxation is theft

 

[Dugthefish]

 

[dennis63]

Probably, many of them won't even know what a 1099 is and will ignore the email they get from eBay and then be surprised when the IRS bills them for taxes owed.

Sadly, the IRS does not "bill you for taxes owed. They audit you. I've been through that once (before I started the Key West business.) You really, really don't want that.

First, it's not a small thing to say, "Just start a business and declare losses." Setting up the business takes hours of work. Business licenses and fees cost hundreds of dollars. There's daily bookkeeping. Tax reporting requirements take hours of work, monthly or quarterly. Your annual tax reporting? Better hire a professional for several hundred dollars to make sure their done right, or you'll get audited. (I actually met a PCF member in person once who told me he loved Key West but he "couldn't believe I haven't done more with it." He had no idea how many hours are involved in just keeping records and reporting to the governent.)

If you think crypto is the answer, I know the IRS is already requiring you to report (on 2020 taxes) if you bought or sold any crypto currency.

Tax policy changes like this new $600 reporting requirement will greatly hinder, if not kill, this hobby we love, at least among members who don't have a business license already.

Time to consider alternatives within this community. Something similar to Hawala, where trusted brokers exchange the items of value or cash in person.

 

[dajebriza]

Sadly, the IRS does not "bill you for taxes owed. They audit you. I've been through that once (before I started the Key West business.) You really, really don't want that.

This will be such easy money for them to go after. All they will need to do is run a computer search for any tax return that has a 1099 on file which was not claimed on the return and send you a debt letter for taxes on that amount of unclaimed income, plus outstanding interest of course. They will be able to do this to millions of people in 2022. They won't have the capability to audit that many extra people, so they will automate this process because there will be way too much money on the table for them to ignore.

 

[byline9]

Sadly, the IRS does not "bill you for taxes owed. They audit you. I've been through that once (before I started the Key West business.) You really, really don't want that.

First, it's not a small thing to say, "Just start a business and declare losses." Setting up the business takes hours of work. Business licenses and fees cost hundreds of dollars. There's daily bookkeeping. Tax reporting requirements take hours of work, monthly or quarterly. Your annual tax reporting? Better hire a professional for several hundred dollars to make sure their done right, or you'll get audited. (I actually met a PCF member in person once who told me he loved Key West but he "couldn't believe I haven't done more with it." He had no idea how many hours are involved in just keeping records and reporting to the governent.)

When I was married during the 1990s, all I heard was how much money we could make if we started our own business, what great business opportunities were out there that we were missing out on, and about how successful everyone else was at it. My wife had no idea about all the problems that Dennis mentioned - all of them true. About 5 years ago, she started her own health/fitness business. Last year, my ex was audited by the IRS. After going through that process, she closed her business rather than keep dealing with all the red tape BS and the 1% of customers who were a PITA (covid probably didn't help, either). It's no wonder half of all new businesses fail within 5 years.

 

[Budha]

Say I am a car hobbyist and I buy car parts second hand for my car on a Facebook car page. Some parts I buy don't fit or work on my car, so I resell them on the site to then buy the right ones. I now owe taxes on the full cost of the parts I re-sold unless I keep purchase records for a year and itemize the deduction on my taxes. How many small sellers are going to 1) know to do that? 2) be able to do that a year later? The IRS knows it will get to tax a huge amount of revenue that way. They are counting on people being ignorant and just paying whatever taxes owed letter they received from the IRS.

I am a board game enthusiast. I buy board games at retail, play them for a while, then when I am done with them, sell them used on board game facebook pages. I often sell them at a slight loss to what I paid. I probably sell 30 games a year or so, at several thousand dollars to fund my purchase of new games. I'm now going to either have to pay several hundred dollars of taxes on these sales, which I did not profit on, unless I now keep receipts of every game I buy and then itemize them on my taxes for their cost basis or the IRS will tax me on income that is

Good. Pay your taxes. That is all.

Sadly, the IRS does not "bill you for taxes owed. They audit you. I've been through that once (before I started the Key West business.) You really, really don't want that.

First, it's not a small thing to say, "Just start a business and declare losses." Setting up the business takes hours of work. Business licenses and fees cost hundreds of dollars. There's daily bookkeeping. Tax reporting requirements take hours of work, monthly or quarterly. Your annual tax reporting? Better hire a professional for several hundred dollars to make sure their done right, or you'll get audited. (I actually met a PCF member in person once who told me he loved Key West but he "couldn't believe I haven't done more with it." He had no idea how many hours are involved in just keeping records and reporting to the governent.)

If you think crypto is the answer, I know the IRS is already requiring you to report (on 2020 taxes) if you bought or sold any crypto currency.

Tax policy changes like this new $600 reporting requirement will greatly hinder, if not kill, this hobby we love, at least among members who don't have a business license already.

Time to consider alternatives within this community. Something similar to Hawala, where trusted brokers exchange the items of value or cash in

Good. Pay your taxes. That is all.

Good. Pay your taxes. That is all.

Yes because history has shown higher taxes on both business and consumers is great for the economy - lol. Corporate tax rates are next - I am so looking forward to all the higher wages, new jobs, and increased consumer spending these new, better, and moar taxes will bring - LMFAO.

 

[Tommy]

And if you sell your old hooptie car through an online auction for $750, does that mean you have to pay federal tax on it now?

Cars might be different in a different category, but for used goods, if it is less than the original cost, then no.

Sold goods aren't taxable as income if you are selling a used personal item for less than the original value. If selling it for more than the original cost, you have to pay taxes on the surplus as capital gains.

 

[Schmendr1ck]

taxation is theft

So then I guess you don't need public roads, public schools, armed forces to protect the country, government agencies to make sure that the drugs you buy are effective and the food you buy isn't poisonous, infrastructure to deliver water and electricity to your home, unemployment and health insurance to cover your when you're between jobs, etc.

Our government provides a lot of services to all of us, and they've gotta pay for it somehow.

 

[ReallyGoodUsername]

Helloooo politics forum

 

[Schmendr1ck]

Helloooo politics forum

 

[HaRDHouSeiNC]

Hey great
They put up a bill for 2T plus when 10% was covid and fuked the little guy too
Color me shocked

It just keeps getting better I love paying unnecessary taxes as they need to now fund that 2T and then some

exactly why I lived tax free overseas for over 10 years their mismanagement does not deserve my tax money

 

[ovo]

so is there a loophole we can find, so we can continue to pay for and trade chips ?

 

[johnjohn]

Getting this thread back on the rails

 

[FDLmold]

First, it's not a small thing to say, "Just start a business and declare losses." Setting up the business takes hours of work. Business licenses and fees cost hundreds of dollars.

I can set up an LLC in Indiana for under $100, plus have a state tax ID and federal tax ID (requested at the very least), all in under an hour.
The day after I get all of that, I can set up an email, then use those tax IDs to get an online bank account, all in under an hour.
Once that's done, I can get a credit card in the name of the business, then route my personal internet and cell phone bills through that.
Business up and running.

 

[johnjohn]

I can set up an LLC in Indiana for under $100, plus have a state tax ID and federal tax ID (requested at the very least), all in under an hour.
The day after I get all of that, I can set up an email, then use those tax IDs to get an online bank account, all in under an hour.
Once that's done, I can get a credit card in the name of the business, then route my personal internet and cell phone bills through that.
Business up and running.

 

[CLKin]

2) Buy more chips than you sell.

Number 2 shouldn't be a problem, hold on let me look around....yep check!

 

[Budha]

So then I guess you don't need public roads, public schools, armed forces to protect the country, government agencies to make sure that the drugs you buy are effective and the food you buy isn't poisonous, infrastructure to deliver water and electricity to your home, unemployment and health insurance to cover your when you're between jobs, etc.

Our government provides a lot of services to all of us, and they've gotta pay for it somehow.

Of course we do - but that is not what this about....

 

[Schmendr1ck]

My mistake for engaging here, I'll be glad to talk about the utility of taxes in the Politics sub, but not here.

 

[Budha]

My mistake for engaging here, I'll be glad to talk about the utility of taxes in the Politics sub, but not here.

Sorry - I wasn’t trying to be snippy about the topic, that really and truly was not my intent - lol.

My comment was a bad attempt at calling out the “intended” utility of taxes (as you described) - vs the current narrative.

Anyway - I was trying not to get too political or deep and probably came off a little snarky. Apologies- lol.

Aaaand with that... back to chips - who’s got the Saturday night candy - lol.

 

[DMack]

More rake is better...