Ooooh very interesting. That’s good info to know as selling from my own collection surely will exceed $600.
Me too, but what does this mean? What do we need to do?
This was helpful for me. Essentially just keep track of how much we do in G&S payments and report it as income when comes tax season. It will kick in for the 2023 tax reporting it seems. I’m assuming it’ll be taxed as “self-employment.”
Basically, if you accept over $600 total in goods & services in year from digital payment providers you will need to do bookkeeping to show cost of goods, fees, refunds, shipping cost etc. That way you only pay income tax on the profit or possibly deduct it as a business loss if you are in the red. If you don't, the IRS will be sending you a letter expecting you to pay income tax on the full amount if it isn't reflected on your returns.
So this doesn’t apply for the 2021 tax year then?
No, it started with the 2022 year. Previously it was 20K threshold.
So….don’t sell on cogs/Reddit unless you want to be hit by irs?
If you don't want the hassle at tax time, then yes be mindful of what you are selling. You can still sell personal property for a loss, but you will have to document that loss if you exceed $600 in transactions over the year.
Pretty much…or keep track of it and pay the tax.
Yeah, it’s a real shame. Curious what it will do to prices. I would think more people will stop buying new records to flip, but I could also see it just drive up prices to account for the tax. Though the latter assumes the market will move. I’m hoping for the former…
Here's the thing. These were all always taxable events, regardless of the payment method, and should legally be reported as income. No one does, but this has been the law for many, many years. It's just that the government is trying to figure out ways to adapt to this "new economy" and this is their latest attempt to recoup "lost revenue".
I agree. But the 1099 k threshold went from $20k or 200 transactions to $600. Huge leap.
Yeah, my understanding is that unless you actually register as a business, the only way to write off costs and expenses is by itemizing deductions. And since the standard deduction is really high now, that's not usually going to work. So be prepared to lose a percentage of your sales equal to your tax rate. Bummer.
Of course, that is not in dispute. I just wanted to point out that people did not seem to understand that these are all taxable events (just like bartering and trading) and that using a differnet method to transfer goods or a payment method does not absolve one of the legal reporting requirements.
Or eBay. Or Etsy.
