johnsj12
Two Pair
Sales of collectibles technically already quality as taxable on the gains but starting in 2022 they will be accompanied by a 1099 once over $600. So the IRS will now be aware of it.
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New Tax Law Hidden In COVID Relief Bill Will Crush eBay/Paypal Sellers (3 Viewers)
- Thread starter dajebriza
- Start date
pokerpig
Flush
Dirty....
DrStrange
4 of a Kind
There is a fair amount of misunderstanding in this thread and a chunk of bad advice.
1. If you get a 1099 or other information return, report it on your tax return. Ignoring the 1099 attracts attention and will normally result in action by the taxing authorities.
2. For most of us, this is a trivial burden. Sold a set of chips for $900. Bought those chips for $700. So you report $900 of income and match that to a $700 cost basis. Net $200 in taxable income. Don't remember what you paid or exactly when you bought the chips? Just make a reasonable estimate. Remember that collectables are not eligible for special capital gains treatment. They are ordinary income.
3. Don't create some silly company or partnership like several people have suggested. Report your misc 1099 on your personal tax return unless you really are "in the business of" what ever created the income. Entities have on-going costs. They have their own tax return compliance rules. You might even be needing to send out your own 1099 forms as a company / partnership where as individuals mostly do not need to do these things. You can easily pay a fortune to deal with a trivial 1099 information return.
4. Don't make silly deductions on your taxes. Sure, you are pretty likely to avoid detection. But if somehow the tax man comes calling, the consequences can be severe.
5. 10X this advice if you are in non-compliance vis-a-vis a significant amount of money involved with crypto securities. The Bitcoin crap has a high risk of getting you into an audit, with some risk the audit will turn criminal. You don't want to add another layer of tax "mistakes" to the problems of non-reported income from crypto sources.
This 1099 reporting thing isn't new for traditional business activity. Businesses have had a $600 1099 reporting threshold for a really long time. Paypal, eBay and similar folks got a sweet deal and allowed many, many people to evade paying their owed taxes. This is going to come to an end for almost everyone.
These new tax reporting requirements will have a learning curve. Yes, some folks will have to pay a little bit in taxes. People managing group buys will need to be extra careful to report the transactions - even if you just breakeven, the income and expenses need to be reported.
DrStrange
1. If you get a 1099 or other information return, report it on your tax return. Ignoring the 1099 attracts attention and will normally result in action by the taxing authorities.
2. For most of us, this is a trivial burden. Sold a set of chips for $900. Bought those chips for $700. So you report $900 of income and match that to a $700 cost basis. Net $200 in taxable income. Don't remember what you paid or exactly when you bought the chips? Just make a reasonable estimate. Remember that collectables are not eligible for special capital gains treatment. They are ordinary income.
3. Don't create some silly company or partnership like several people have suggested. Report your misc 1099 on your personal tax return unless you really are "in the business of" what ever created the income. Entities have on-going costs. They have their own tax return compliance rules. You might even be needing to send out your own 1099 forms as a company / partnership where as individuals mostly do not need to do these things. You can easily pay a fortune to deal with a trivial 1099 information return.
4. Don't make silly deductions on your taxes. Sure, you are pretty likely to avoid detection. But if somehow the tax man comes calling, the consequences can be severe.
5. 10X this advice if you are in non-compliance vis-a-vis a significant amount of money involved with crypto securities. The Bitcoin crap has a high risk of getting you into an audit, with some risk the audit will turn criminal. You don't want to add another layer of tax "mistakes" to the problems of non-reported income from crypto sources.
This 1099 reporting thing isn't new for traditional business activity. Businesses have had a $600 1099 reporting threshold for a really long time. Paypal, eBay and similar folks got a sweet deal and allowed many, many people to evade paying their owed taxes. This is going to come to an end for almost everyone.
These new tax reporting requirements will have a learning curve. Yes, some folks will have to pay a little bit in taxes. People managing group buys will need to be extra careful to report the transactions - even if you just breakeven, the income and expenses need to be reported.
DrStrange
FDLmold
Royal Flush
So let's say I get a 1099 for $1500, and the items cost $1600. The IRS is expecting me to report 1500 income, but instead I'm subtracting 100 from it?
Unless there is a business entity set up, I'm not aware of the "cost basis deduction for sold things" space on my 1040. There are plenty of places for me to report the 1500 from the 1099 (Wages perhaps, or Schedule 1), and nowhere to deduct the cost basis. This is not a capital gain or loss, is it?
Before I can agree with you that this is a trivial burden, I need more information. I'd love for somebody to take a 2020 tax return, and tell me exactly how if I got a 1099 for $1500 sales of poker chips, and I have documented $1600 acquisition costs, how do I record that information.
Schedule C
johnjohn
Full House
schedule c baby!
gopherblue
Straight Flush
Schedule Dee! 
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gopherblue
Straight Flush
I'll show myself out.
FDLmold
Royal Flush
Also, use Schedule C to report (a) wages and expenses you had as a statutory employee, (b) income and deductions of certain qualified joint ventures, and (c) certain amounts shown on a Form 1099, such as Form 1099-MISC, Form 1099-NEC, and Form 1099-K."
So we classify selling poker chips as part (c) from the last paragraph? OK I'll buy it. For now. I hope the IRS is prepared to get about 1,000,000 more Schedule C returns for the 2022 tax year. The Democrats will get lucky, too, because people will be getting these surprise 1099s and doing their taxes AFTER the midterm elections. People will be going to their tax preparers and saying a whole lot of "what the fuck?"s when they can't produce documentation of what things cost, yet still have to put the 1099-MISC income from paypal or eBay on their return.
Edited for incorrectness.
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DrStrange
4 of a Kind
< sigh > Not schedule C. Unless you are "in the business" - say someone like the chip room, or someone similar. If you aren't a vendor on PCF you probably are not in the business.
For most of us, poker chips are collectables. You report the sale of your poker chips on schedule D. Long term gains if held more than a year, short term gains for something held less than a year.
Collectables get screwed in the tax code. You owe taxes on gains. You can't offset gains with collectable losses. < i.e. heads you lose, tails you get nothing > Worse, collectables get taxed at 28% if owned more than a year no matter what tax bracket you are in.
Yes, it sucks. But in practice, hardly worth getting mad about. For most of us the difference is unlikely to exceed a hundred bucks in extra taxes in any given year. Unless you are liquidating all you chips at once, and you have a closet full.
Oh, if you are dead, the pent up taxes vanish. Let your estate sell the chips.
Or . . . . you could just give the chips away. Who knows? I might someday take that advice. -=- DrStrange
PS If we are looking at big bucks, get the advice of a tax accountant. If not big bucks, ask google how to pay taxes on collectables.
For most of us, poker chips are collectables. You report the sale of your poker chips on schedule D. Long term gains if held more than a year, short term gains for something held less than a year.
Collectables get screwed in the tax code. You owe taxes on gains. You can't offset gains with collectable losses. < i.e. heads you lose, tails you get nothing > Worse, collectables get taxed at 28% if owned more than a year no matter what tax bracket you are in.
Yes, it sucks. But in practice, hardly worth getting mad about. For most of us the difference is unlikely to exceed a hundred bucks in extra taxes in any given year. Unless you are liquidating all you chips at once, and you have a closet full.
Oh, if you are dead, the pent up taxes vanish. Let your estate sell the chips.
Or . . . . you could just give the chips away. Who knows? I might someday take that advice. -=- DrStrange
PS If we are looking at big bucks, get the advice of a tax accountant. If not big bucks, ask google how to pay taxes on collectables.
FDLmold
Royal Flush
Aaaaaaaaaaand there is the answer. Schedule D.
"Line 18
If you checked “Yes” on line 17, complete the 28% Rate Gain Worksheet in these instructions if either of the follow-ing applies for 2020.
blah blah blah, or
You reported in Part II of Form 8949 a collectibles gain or (loss). A collectibles gain or (loss) is any long-term gain or deductible long-term loss from the sale or exchange of a collectible that is a capital asset. Collectibles include works of art, rugs, antiques, metals (such as gold, silver, and platinum bullion), gems, stamps, coins, alcoholic beverages, and certain other tangible property."
"Line 18
If you checked “Yes” on line 17, complete the 28% Rate Gain Worksheet in these instructions if either of the follow-ing applies for 2020.
blah blah blah, or
You reported in Part II of Form 8949 a collectibles gain or (loss). A collectibles gain or (loss) is any long-term gain or deductible long-term loss from the sale or exchange of a collectible that is a capital asset. Collectibles include works of art, rugs, antiques, metals (such as gold, silver, and platinum bullion), gems, stamps, coins, alcoholic beverages, and certain other tangible property."
Changster
Full House
America is broke.
FTFY.
Our tax code has needed a serious overhaul for decades. It's literally impossible for any single human being to know or understand all of it, there are special cases and loopholes everywhere, and the people and organizations who should be paying the most are the ones who benefit from the chaos.
Unfortunately, that overhaul is unlikely to ever happen.
philhut
Flush
Not only are some of the organizations benefitting from certain tax laws you may not even be aware about....many of these organizations have even influenced or written the legislation that now exists in many nations. A massive Delete all and flat percentage tax would be so much more efficient....everyone could likely pay significantly less while maintaining revenue by avoiding govt overspending on bureaucracy. By offering deductions and government favoritism to groups, persons or organizations for hundreds of years longer lived nations have created a burdensome overwhelming tax system that really could do with a reboot. In Canada many people pay more than half of their incomes in taxes/fees to one level of government or another. I have come to accept however that until the nations citizens toss the puppets that are lining their pockets off of the public dime while consolidating power instead of honest responsible governance there will be no brave leader to challenge the tax system and force a review, simplification and re-write.
Agree, but the point is waste. We could prob do more with less once we strip the waste and mismanagement...
I'll agree that there is wasteful spending in the government for sure. I've been a government contractor for many years, and I've seen it firsthand. That said, I was responding to a comment that said "taxation is theft," which is patently ridiculous. Taxation pays for a lot of stuff that we need, much of which is just not suitable to be provided by private business. So the answer to wasteful spending in the government is not "eliminate taxes" - that's silly.
Also, there's a great article here that addresses the myth of the $600 hammer from back in the 90s, and the article your meme pointed to is likely a similar situation: https://www.govexec.com/federal-news/1998/12/the-myth-of-the-600-hammer/5271/
We're in agreement, we need taxes. But taking more while not addressing waste is prob what bugs most people
ekricket
Royal Flush
As long as the “waste” goes back into the economy it works out I think. Somebody spends it somewhere on something
If that's the case, I rather pump money back into the economy by spending my own money! lol
OP
OP
dajebriza
Two Pair
Looks like eBay has finally woken up and realized this new Tax law is a big problem so they are looking out for our best interests...
Oh wait, could it just be that they realize this is going to cause them a shit-ton of tax accounting and once sellers receive their eBay tax burdens, they will lose a lot of income from small sellers no longer selling on eBay because it caused them such a hassle on their income tax filing. I particularly like how they are playing the fear of privacy card to motivate people.
Just received from eBay:
Hello eBay Seller,
A problematic tax reporting provision jammed into legislation passed earlier this year will force millions of Americans to receive confusing and burdensome IRS forms. These additional income tax forms (1099-K) will be issued for the sale of virtually all goods, even used or pre-owned goods, where no income tax is owed. This new change will mean even people selling only a few things a year online will receive confusing tax forms intended for businesses. On top of that, millions of Americans will have to disclose additional and unnecessary personal information to both the IRS and online platforms.
We need your help to change this law immediately.
Oh wait, could it just be that they realize this is going to cause them a shit-ton of tax accounting and once sellers receive their eBay tax burdens, they will lose a lot of income from small sellers no longer selling on eBay because it caused them such a hassle on their income tax filing. I particularly like how they are playing the fear of privacy card to motivate people.
Just received from eBay:
Hello eBay Seller,
A problematic tax reporting provision jammed into legislation passed earlier this year will force millions of Americans to receive confusing and burdensome IRS forms. These additional income tax forms (1099-K) will be issued for the sale of virtually all goods, even used or pre-owned goods, where no income tax is owed. This new change will mean even people selling only a few things a year online will receive confusing tax forms intended for businesses. On top of that, millions of Americans will have to disclose additional and unnecessary personal information to both the IRS and online platforms.
We need your help to change this law immediately.
HaRDHouSeiNC
Straight Flush
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Do you like that in the new budget bill they want to spy on your bank accounts if you spend over $600
Anyone loving all the free money yet
Then a mileage tax likely in the future
And try for a digital dollar so they can monetize the debt Even easier and run negative interest rates. No where to take your cash out it will no longer exist. Also appointing a crypto “tzar” likely so they can find a way to crush it.
Let’s Go Brandon omfg
RainmanTrail
Straight Flush
Yes, eBay is of course doing this because it will greatly affect their business. However, they're not wrong in calling this out as the bullshit it is. I'm beyond pissed off at the current administration for this decision. Let's go after the 50 million people who resell their used camera on eBay to get that tax revenue instead of just asking Apple and Amazon to pay, oh I don't know, at least 1% of their revenue in taxes? Really? Go fuck yourself Uncle Sam.
HaRDHouSeiNC
Straight Flush
- Joined
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It’s because if you up the tax on ALL the middle class you make way way way more.
It’s all in the numbers bottom line.
You could tax all the billionaires at 50% and not fund the budget for a year.
However if you get the far far majority to pay a few percent more along with trying to tax them at their death as well you are making buko bucks.
Oh and then they can use this excuse to grow the IRS as well did you catch that part they wana add tens of thousands of new agents.
Let’s think about this just basic math.
If you are saying you want to monitor the billionaire and mega millionaire tax cheats which they say is their reasoning, then why do you need thousands of new agents to monitor 700 sales on eBay or bank transactions. It’s a bold face lie.
If they get their digital dollar they will come after you for your $900 yard sale in the front lawn as well. But hey it’s to catch those wealthy tax cheats. They aren’t cheating for the most part why risk prison when all you need is a high price accountant and use the tax avoidance laws in the books.
Go to a flat fair tax across the board
DrStrange
4 of a Kind
People seriously misunderstand how the rich avoid taxes. Yes, they do have very good accountants and make use of every legal loophole. Yes, they make large donations to Congress for the very best tax cuts. And no, the rich don't get tired of winning.
But is that enough? Hell no. There is plenty of brazen fraud. Not to name names, but there likely were very good reasons why a billionaire wouldn't release his entire tax return history and allow a deep search for criminal activity by a motivated, skilled set of accountants / lawyers.
It is hard to appreciate how out gunned the IRS is vs a huge financial interest. The Treasury pays very poorly. Very, very poorly. When the agent gets their skills from a few years service, then they get paid far better to work on the client side of IRS actions. This means the government has weak advocates and short timers at that. It is easy for the government to get bogged down by a well funded ultra wealthy taxpayer.
On the other hand, going for that family with the yard sale is trivial. Send a demand letter. If that doesn't work, levy the wages and put a lien on the house. Poor sucker can't afford to hire good defense against a $1,000 tax + penalty bill. So they just pay up. Or the IRS just grabs the paycheck and laughs.
I do think the IRS would need an army of skilled professionals to contest the tax returns of the top 1/1,000. And I would be in favor of that. But they aren't hiring very skilled people because - - - the IRS pays so poorly relative to the market for skilled tax accountants. < to be fair, $55,000 - $105,000 for a MBA educated accountant is not minimum wage. But it is a fraction of what a major name tax firm pays it's staff>
Not sure who is kidding whom, but a $600 or even $10,000 annual threshold on bank reporting basically means reporting everyone's bank account. Make it $1,000,000+ and I would be more inclined to agree that it might be a good idea.
But is that enough? Hell no. There is plenty of brazen fraud. Not to name names, but there likely were very good reasons why a billionaire wouldn't release his entire tax return history and allow a deep search for criminal activity by a motivated, skilled set of accountants / lawyers.
It is hard to appreciate how out gunned the IRS is vs a huge financial interest. The Treasury pays very poorly. Very, very poorly. When the agent gets their skills from a few years service, then they get paid far better to work on the client side of IRS actions. This means the government has weak advocates and short timers at that. It is easy for the government to get bogged down by a well funded ultra wealthy taxpayer.
On the other hand, going for that family with the yard sale is trivial. Send a demand letter. If that doesn't work, levy the wages and put a lien on the house. Poor sucker can't afford to hire good defense against a $1,000 tax + penalty bill. So they just pay up. Or the IRS just grabs the paycheck and laughs.
I do think the IRS would need an army of skilled professionals to contest the tax returns of the top 1/1,000. And I would be in favor of that. But they aren't hiring very skilled people because - - - the IRS pays so poorly relative to the market for skilled tax accountants. < to be fair, $55,000 - $105,000 for a MBA educated accountant is not minimum wage. But it is a fraction of what a major name tax firm pays it's staff>
Not sure who is kidding whom, but a $600 or even $10,000 annual threshold on bank reporting basically means reporting everyone's bank account. Make it $1,000,000+ and I would be more inclined to agree that it might be a good idea.
Kyle
Full House
Lets go Brandon!
I’d prefer we really try and solve the problem - simplify the tax code(s), etc. But alas - no one really wants that either - lol.
Opening up bank account monitoring/reporting is simply a bridge too far.
Also, it’s very important to separate the rhetoric from reality. Even with all the high dollar accountants and loopholes, these billionaires individually are still paying a shit ton more in taxes then probably everyone on this forum combined. Sure, there are exceptions, but on average, billionaires pay more in taxes annually then most would earn in 2 lifetimes (or more).
As for releasing returns, I could give a number of reasons of why a certain individual wouldn’t release their return. He would have been a total fool to do so. Why would you feed the beast - lol.
Opening up bank account monitoring/reporting is simply a bridge too far.
Also, it’s very important to separate the rhetoric from reality. Even with all the high dollar accountants and loopholes, these billionaires individually are still paying a shit ton more in taxes then probably everyone on this forum combined. Sure, there are exceptions, but on average, billionaires pay more in taxes annually then most would earn in 2 lifetimes (or more).
As for releasing returns, I could give a number of reasons of why a certain individual wouldn’t release their return. He would have been a total fool to do so. Why would you feed the beast - lol.
OP
OP
dajebriza
Two Pair
Dr. Strange is 100% correct. The IRS has no choice at this point but to target the lower and middle classes because, as they have stated themselves, they do not have enough personnel of proper skill to target/audit the wealthy because the wealthy hide behind lawyers who tie the IRS best/limited tax attorneys up in court for years (example: Trump) so the IRS is outgunned and cannot try to audit the wealthy en masse, they can only try to fight the most obvious and egregious cases of wealthy tax fraud. Their lower skilled average employees can go after the middle class because we don't usually lawyer up for an audit or taxes due, we just pay what they say is owed. They can run computer searches on our tax records and send out form letters for taxes due al day long.
The IRS budget/manpower has been gutted over the last 10 years by every Presidential administration, which has cut their budget so that the IRS cannot hire or retain skilled tax accountants that are needed to target wealthy tax audits, leaving them only left with all of us to go after. All the skilled personnel they have are being hired away for more pay by corporations to help them avoid the tax laws.
It has been shown that by funding the IRS and increasing their numbers of skilled auditors to conduct audits on the 1%, there would be huge revenue gains. The numbers were something like $10 billion in funding to the IRS over 10 years would yield $40 billion in tax revenue.
I don't think it's coincidence that all previous administrations that rely on campaign donations from corporations and the 1% (who don't want to face IRS audits of their tax loophole activity) have continually de-funded the IRS. It seems like a deliberate multi-administration agenda of the wealthy elite to compel their bought politicians to pass legislation to de-claw the IRS against the wealthy.
The IRS budget/manpower has been gutted over the last 10 years by every Presidential administration, which has cut their budget so that the IRS cannot hire or retain skilled tax accountants that are needed to target wealthy tax audits, leaving them only left with all of us to go after. All the skilled personnel they have are being hired away for more pay by corporations to help them avoid the tax laws.
It has been shown that by funding the IRS and increasing their numbers of skilled auditors to conduct audits on the 1%, there would be huge revenue gains. The numbers were something like $10 billion in funding to the IRS over 10 years would yield $40 billion in tax revenue.
I don't think it's coincidence that all previous administrations that rely on campaign donations from corporations and the 1% (who don't want to face IRS audits of their tax loophole activity) have continually de-funded the IRS. It seems like a deliberate multi-administration agenda of the wealthy elite to compel their bought politicians to pass legislation to de-claw the IRS against the wealthy.
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