IRS delays tax-reporting rule on Venmo, PayPal payments over $600

[mtrot]

This may prevent some of us who tend to go through lots of gear from receiving 1099-K forms next year because of casual sales over $600. The threshold used to be $20,000 but the Democrats changed it to $600 in 2021. Beginning in 2024, that basic reporting threshold will be increased from $600 to $5,000. This is the second straight time the IRS has delayed the reporting threshold.

IRS delays tax-reporting rule on Venmo, PayPal payments over $600

A controversial new tax-reporting policy involving payments over $600 on e-commerce platforms like eBay and Etsy will be delayed by one year, the IRS said.

www.foxbusiness.com

 

[Danzilla31]

This may prevent some of us who tend to go through lots of gear from receiving 1099-K forms next year because of casual sales over $600. The threshold used to be $20,000 but the Democrats changed it to $600 in 2021. Beginning in 2024, that basic reporting threshold will be increased from $600 to $5,000. This is the second straight time the IRS has delayed the reporting threshold.

IRS delays tax-reporting rule on Venmo, PayPal payments over $600

A controversial new tax-reporting policy involving payments over $600 on e-commerce platforms like eBay and Etsy will be delayed by one year, the IRS said.

www.foxbusiness.com

I guarantee you transactions were down. Nobody wants to deal with extra forms and hassles when your selling used items for a loss.

I thought the $600 reporting threshold was absolutely ridiculous. Changing it from 600 to 5,000 is a fair adjustment though. That's great to hear man I always liked PayPal etc as a secure payment nice to know I can use them again if I'm flipping gear

 

[lovinthehd]

The US consumer generally isn't heavily taxed. Why would a tax follow only a particular thing one time only?

 

[Danzilla31]

Like the American consumer hasn't been taxed enough already. Heavy burden paying taxes is astronomical.

Take for instance buy a brand-new vehicle, all the taxes and fees you pay after the sale. Sell that same vehicle again, You pay the same fees and taxes over and over and over until it ends up in the junkyard what a racket huh.

Tax cheats, people that don't even pay taxes, Federal taxes that is IRS you know the usual. use rackets. Ultra rich have loopholes to get around that. So many ways to siphon off money off the books.

Yeah that always kills me you buy something pay taxes on it sell it and then pay taxes again.

Yeah I agree trying to crackdown the rich on taxes would be almost impossible. They already know all the legal ways to skip taxes.

 

[lovinthehd]

Right! I just used the buying of a Vehicle because it covers everything that's mobile. Planes, trains, automobiles so on, you think if a person owns a rocket ship, they have to pay taxes on those reusable rocket ships?.

My point, is a person has a bunch of used Skateboards he sells them on ebay and incurs over $600 in sales he/she has to pay taxes on that point of sale. Then has to report sale to IRS. makes no sense. Federal government wants to tax over an amount so they can collect as income tax. Just add a FED tax on it at point of sale, be done with it. That way no matter, who, what or where, everyone puts into the system.

But No! Once a person makes money off the sale, here comes Uncle Sam with his hand out for some more of your profits. Oh you made all that money, that's income! You have to give US, what ever we say we want. You ask why? Answer will be something like, to pay for all those hand-outs, your Military can't account for $2 trillion so we got to make it up somehow and tag the last one you're it.

Better move to a country that has taxation/spending more to your liking?

 

[Hobbit]

Yeah that always kills me you buy something pay taxes on it sell it and then pay taxes again.

Yeah I agree trying to crackdown the rich on taxes would be almost impossible. They already know all the legal ways to skip taxes.

While $600 may be a little low for the average person who rarely sells something on ebay (or privately and reports it) to have to mess with, $20k was clearly too high. There were/are a lot of people who are making a living on ebay and the like not paying taxes on money earned.

Let's, however, take this in context. It is income reported. It is still treated similar to capital gains. Only goods sold for a profit are taxable. In fact, you have to make over $600 before it is. If you sold your gear on ebay for less than you bought it for, but over $600, ebay will you send you a tax form. When you do your taxes you offset this with what you paid for it. Most likely you won't owe any additional taxes as it's a loss.

It's similar to having two brokerage accounts where one you sold stocks and made capital gains and another you sold stock for a loss. You will receive a form from one account saying you made money and one from another account saying you lost money. When you fill out your taxes you're only taxed on the difference. You can end up with either a loss or gain.

 

[mtrot]

Well, it's not exactly like some of you are saying. Most of the time when we audio guys are selling off used gear, we sell it at a loss. So, in that situation, there is no gain and therefore no taxable income.

So, you could sell way over $600 worth of gear in "casual sales" and it would not necessarily mean there was any taxable income. If you sold some Wilson speakers for $50,000 but you paid $80,000, there's no taxable income on that.

My problem with the $600 threshold is that it's just a big hassle to get a 1099-K form from Paypal, Ebay, Venmo, etc. for casual sales of personal gear, and having to explain each sale on your tax return. So, with this $600 threshold, you should keep all your original receipts from all gear you buy, even relatively inexpensive items, and then be able to include the original receipts on your return so as to demonstrate that you did not have a gain from when you resell items.

While the old $20,000 threshold made selling gear nice and easy, the new $5,000 threshold will be an improvement over the $600 one.

 

[lovinthehd]

Better move to a country that has taxation/spending more to your liking?
I heard Australia's pretty cool

They have fairly high standards to approve immigration, gotta have some $$ or some skill they're very short on....

 

[mtrot]

You guys are going to get my thread locked. Let's stick to the tax reporting threshold topic.

 

[lovinthehd]

"approve immigration",

sounded by water on all sides could an issue sneaking in.

Does make it harder OTOH I knew of many in the US back in the day, particularly from europe, who would simply overstay on a vistor's visa.....just depends what you can wangle and get away with I suppose.

 

[Danzilla31]

While $600 may be a little low for the average person who rarely sells something on ebay (or privately and reports it) to have to mess with, $20k was clearly too high. There were/are a lot of people who are making a living on ebay and the like not paying taxes on money earned.

Let's, however, take this in context. It is income reported. It is still treated similar to capital gains. Only goods sold for a profit are taxable. In fact, you have to make over $600 before it is. If you sold your gear on ebay for less than you bought it for, but over $600, ebay will you send you a tax form. When you do your taxes you offset this with what you paid for it. Most likely you won't owe any additional taxes as it's a loss.

It's similar to having two brokerage accounts where one you sold stocks and made capital gains and another you sold stock for a loss. You will receive a form from one account saying you made money and one from another account saying you lost money. When you fill out your taxes you're only taxed on the difference. You can end up with either a loss or gain.

(While $600 may be a little low for the average person who rarely sells something on ebay (or privately and reports it) to have to mess with, $20k was clearly too high)

Which is why I said 5000 was ok.

What I think we can all agree with is yes you won't pay taxes BUT

1 You have to do the forms
2 You have to provide receipts of original sale to show it's a loss
3 And it's time consuming and an incredible pain in the a$$

And as other previous posters mentioned pointless. Nobody is skirting the government through pay pal for 600, 1000, even 5000 at a time. Theirs better ways to hide your money if your going to try to cheat.

But the proof that it's not necessary for a 600 cap is that the IRS changed it. They didnt do that because us little guys complained. They did that because Venmo, E-Bay, PayPal and other companies did. Because it was affecting their bottom line. What do they care about what Uncle Sam takes? They did it because it was affecting their bottom line. Because the average person will just avoid all of this and only accept payments in cash.

 

[Hobbit]

There were/are a lot of people who are making a living on ebay and the like not paying taxes on money earned.

So, an added FED, IRS added income tax, wouldn't work at the point of sale? Just guessing here, anyone posting up a product for sale, would an income tax at the point-of-sale work?

Again, it's treated more like buying and selling stocks. If they added it to your income and made you pay taxes at the time it would probably create more work for everyone. One issue that does arise is if at the end of the year you made too much money that you didn't pay tax on. Then the IRS wants you to fill out a form explaining this was a one off and that next year you won't be making this extra money. If not, they want you to make a regular tax payment for this money. It's the AMT, alternative minimum tax. You mail this in on your own.

It's also an issue most of us will have dealing with taking 401k/IRA withdrawals.

 

[Trebdp83]

The bigger issue is the $20,000 AND over 200 transactions scenario. It is not being dealt with, again, for another year. Businesses not having BOTH $20,000 and 200 or more transactions will NOT, like 2022, receive a 1099-K for 2023 in most States.

Manage your Form 1099-K | Square Support Center - US

squareup.com

So, without a 1099-K sent to the IRS from an outfit such as Square, some have been and will continue to under report their gross income

Once the 1099-K is required under the new rules, the IRS may begin looking into those businesses that have very different numbers reported for non 1099-K years compared to the first one with the new 1099-K.

Some folks got into a mess with Pandemic unemployment claims after they over reported their earnings to the unemployment department for a larger payment amount and then were asked to support those claims with tax returns that actually showed under reported income.

 

[Hobbit]

They did that because Venmo, E-Bay, PayPal and other companies did. Because it was affecting their bottom line.

I'm not following? Ebay's fees are: 14.95% on total amount of the sale up to $7,500 calculated per item · 2.35% on the portion of the sale over $7,500. I assumed they were taxed on this and money's made through advertisement etc, which has nothing to do with whether the seller pay taxes or not.

I get plenty of forms each year. I use TT and download most of them, enter a couple manually, and let TT figure it out. @Tankini you don't need your original receipts. You can use the fair market value from when you purchased it. The IRS pretty much know that most of us are taking a loss selling our own stuff. If you're a business, you better track all your purchases and sales.

Honestly, as I'm getting ready to retire early, there are tax laws that bother me a whole lot more, both in time and dollars, than worrying about having to put this form and value of the item in TT if I sell something expensive on ebay.

 

[lovinthehd]

Back in the day,

Has overstaying on an expired visa ever stopped anyone from overstaying.
Having a ton of money still wouldn't help either they'll throw you out once the gig is up.

One group might be getting more attention....

 

[Trebdp83]

What's stopping the IRS from going after all the ones that are not paying taxes properly. Seems the lower threshold to 600 gives IRS a Legal arm of the law to go after all those who don't report 1099 .muscle.

The $600 1099 is not a new concept. It has been around a very long time. What stops the IRS from looking into anything is what’s stops so many outfits from doing anything about an issue, not enough man power, money or time.

As far as any 1099 goes, if it isn’t issued, then there isn’t anything to go on. If the reported income on a tax return based on the filer’s word seems suspect, it may result in the IRS looking into it and prior year returns. But, again, it isn’t worth the resources needed to look into every single return. If a 1099 is issued to an individual, the IRS will have a copy of it as well even if a filer leaves it off of their return.

 

[mtrot]

The $600 1099 is not a new concept. It has been around a very long time. What stops the IRS from looking into anything is what’s stops so many outfits from doing anything about an issue, not enough man power, money or time.

As far as any 1099 goes, if it isn’t issued, then there isn’t anything to go on. If the reported income on a tax return based on the filer’s word seems suspect, it may result in the IRS looking into it and prior year returns. But, again, it isn’t worth the resources needed to look into every single return. If a 1099 is issued to an individual, the IRS will have a copy of it as well even if a filer leaves it off of their return.

The $600 reporting threshold IS new. It came in with the American Rescue Act of 2021. Prior to that, the threshold was $20,000.

 

[Trebdp83]

I meant a $600 threshold for a 1099 in general. That is nothing new. I don’t care to get into the specifics of the Act or taxation too deeply on this forum. It was put off for another year, not to benefit taxpaying individuals, but to spare companies the time and money involved in sending out millions of 1099s.

 

[Danzilla31]

I'm not following? Ebay's fees are: 14.95% on total amount of the sale up to $7,500 calculated per item · 2.35% on the portion of the sale over $7,500. I assumed they were taxed on this and money's made through advertisement etc, which has nothing to do with whether the seller pay taxes or not.

I get plenty of forms each year. I use TT and download most of them, enter a couple manually, and let TT figure it out. @Tankini you don't need your original receipts. You can use the fair market value from when you purchased it. The IRS pretty much know that most of us are taking a loss selling our own stuff. If you're a business, you better track all your purchases and sales.

Honestly, as I'm getting ready to retire early, there are tax laws that bother me a whole lot more, both in time and dollars, than worrying about having to put this form and value of the item in TT if I sell something expensive on ebay.

Venmo eBay and other sellers sent out an email I remember receiving it about this specific matter asking us to contact our Congress representative to not allow the IRS to do this

Why would they do that if this wasn't affecting them? It's not hard to figure out why

1 It costs them more to implement both in time and money

2 And these companies only make money if they use our money and transactions when we do business

If more people will just go to private sale both sellers and buyers that's less money for them. That's exactly what I did after PayPal started trying this. Why would I sell my SVS PB 2000 pro (at a very generous loss mind you) only to be hit with a form that I would need to then dig up my receipt for and then bring in to my tax assesor on every single item I sold to make sure I don't get taxed on stuff I've already been taxed on that I'm selling for a loss?

The answer is I'm not going to I'm only going to take cash. The less I'm using their business to sell or purchase the less customers on the site for vendors to sell to.

So it costs them more to implement plus it costs them foot traffic on their site

I'm not surprised the IRS are holding off on it. I guarantee you behind the scenes these companies are lobbying and pushing back on this

Someone mentioned companies that received grants during the pandemic and then had major underreporting on their returns.

Your not going to catch them doing 1099s for 600 dollars. Theyre not hiding the profit on EBay or Venmo. Their are better ways to go after cheats like that then penalizing and coomplicatimg things for the rest of us with that ridiculous trigger $600 threshold.

I do agree $20,000 is a bit much which is why I think $5000 is better and I hope they stick with it. $5000 allows the little guy and the little sellers who aren't cheating anybody to do what they do. And anything above that limit that looks suspicious the IRS can target it's resources and go after

It's just a case of overregulation in an area not needed that will cause less profit and less business as people react to it. Underregulation is damaging but so is overregulation

I think if the IRS goes and stays with the $5000 limit it's the right call. Not under regulating nor over regulating. Just right in the middle where it should be. I think it's the right call. I'm just a regular Joe what do I know? But in my opinion I think it's the right call

 

[highfigh]

$600 has been the threshold for 1099 filing as income, but it wasn't for sales like these. Cap gains was $20K, but since it's their game, play it to your advantage- document everything and claim as many expenses as possible. If they want to tax individuals as a business, run it like a business and show them that you have verifiable expenses, in order to reduce the profit.