Can someone explain to me what this new tax code change means

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Danzilla31

Audioholic Spartan

I'm trying to understand how this new change in the tax laws passed as part of the Inflation Reduction Act actually helps reduce inflation.

Also how does this impact me or you I sell my old audio equipment as a loss when I want to try other things so am I going to be taxed again on items I sold for a loss that I was already taxed on in the first place?

Any info much appreciated.
 
highfigh

highfigh

Audioholic Slumlord
Pay no attention to the man behind the screen.

Sales tax is local/state- this is a Federal tax change, although I would be checking my state to see how/if it follows the new changes.

If you're not in business to sell this stuff, what does your state show for taxable income from selling personal property?

IMO, the states should keep their damned nose out of our lives when we sell personal property. I don't know about all, but some want to tax garage sale proceeds and for that, they can KMA.

Oooh! $8.4 billion dollars! That's significant, WRT Federal spending and waste.

Cash is king. We need to barter more.
 
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D

Danzilla31

Audioholic Spartan
Pay no attention to the man behind the screen.

Sales tax is local/state- this is a Federal tax change, although I would be checking my state to see how/if it follows the new changes.

If you're not in business to sell this stuff, what does your state show for taxable income from selling personal property?

IMO, the states should keep their damned nose out of our lives when we sell personal property. I don't know about all, but some want to tax garage sale proceeds and for that, they can KMA.

Oooh! $8.4 billion dollars! That's significant, WRT Federal spending and waste.

Cash is king. We need to barter more.
I'll check on my local state laws thank you for the info
 
ryanosaur

ryanosaur

Audioholic Overlord
Who the hell is this dude anyway?

If you are processing a sale through a source that generates a 1099 of any sort, you will need to report it. With that, try to pick ways to sell your gear that won't trigger a 1099 automatically... like CASH, if possible. :)

In general, I agree with @highfigh above.

Also, I know previously you were choosing to target local sales/pick-up to avoid shipping. Since this isn't a business, and you aren't making money on it, as long as you are smart about the transaction I'd think you will end up being OK.
 
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Danzilla31

Audioholic Spartan
Oo
Who the hell is this dude anyway?

If you are processing a sale through a source that generates a 1099 of any sort, you will need to report it. With that, try to pick ways to sell your gear that won't trigger a 1099 automatically... like CASH, if possible. :)

In general, I agree with @highfigh above.

Also, I know previously you were choosing to target local sales/pick-up to avoid shipping. Since this isn't a business, and you aren't making money on it, as long as you are smart about the transaction I'd think you will end up being OK.
OK cool all I need to know.

He's not the only one plenty of income advisors and articles talking about this. Basically from what I'm understanding if you use Venmo PayPal or other types of vendors to recieve cash from a transaction and it is $600 or over it automatically hits a 1099 and the IRS is notified. I know it's a fact. Because when I sold my PC 2000 pro this summer for 600 flat and took a PayPal payment they notified me of this. This confused me I sold it for a 600 loss local and I'd already payed taxes on it. But I was like oh well

So I asked them for the form but they said they would need my tax ID # to generate the form I was not comfortable with that and will just ask the person who has done my taxes what I should do about it.

Oh and cash only from now on for sure :D
 
D

Danzilla31

Audioholic Spartan
Who the hell is this dude anyway?

If you are processing a sale through a source that generates a 1099 of any sort, you will need to report it. With that, try to pick ways to sell your gear that won't trigger a 1099 automatically... like CASH, if possible. :)

In general, I agree with @highfigh above.

Also, I know previously you were choosing to target local sales/pick-up to avoid shipping. Since this isn't a business, and you aren't making money on it, as long as you are smart about the transaction I'd think you will end up being OK.
The reason I think so many people are talking about this from what I understand is they doubled the IRS and just lowered the ceiling on transactions like this it only takes a 600 dollar transaction for a 1099 form to be generated and them to be notified when it was much higher before like 20 transactions of 600 or more or $20,000 in revenue that's a huge shift.

What they are saying is it will generate more audits and squeeze the middle class and the poor. Anyone with a small side hustle on the side to get by things like that. What they are claiming is the rich really can't get taxed anymore due to the they're knowledge of tax laws and loopholes and the fed and gov have to make money

They took a massive amount of loss first due to the pandemic and second with student loan relief and other things that are being passed. The fed makes money off of interest on loans primarily one of the biggest ones is student loans.

So investors like this guy are stating that with that loss of ability to generate revenue the fed is going to have to generate it one way or the other.

Now I'm no tax expert or financial guru so how applicable it is I don't know. But PayPal did hit me up with this so it is actually happening.
 
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highfigh

highfigh

Audioholic Slumlord
Who the hell is this dude anyway?

If you are processing a sale through a source that generates a 1099 of any sort, you will need to report it. With that, try to pick ways to sell your gear that won't trigger a 1099 automatically... like CASH, if possible. :)

In general, I agree with @highfigh above.

Also, I know previously you were choosing to target local sales/pick-up to avoid shipping. Since this isn't a business, and you aren't making money on it, as long as you are smart about the transaction I'd think you will end up being OK.
True, but many people use buying and selling things of all kinds as a major source of income. It may take a long time to recoup the original cost, but it can bring in a lot of cash. Now, people who want to retire from jobs that required a buttload of tools, machinery and other equipment will be forced to file a 1099 at a time when they could really use ALL of the money. If they own a business, it's different but people working in the trades will be screwed by this because the tools they needed are expensive. People who have collected things over the years/decades will have to pay, too- they didn't necessarily buy their collected items with the intention of making a lot of money, but many do- old radios, AV equipment and musical instruments (guitars & amplifiers) are some examples and some of these have appreciated wildly over the last few decades.
 
highfigh

highfigh

Audioholic Slumlord
The reason I think so many people are talking about this from what I understand is they doubled the IRS and just lowered the ceiling on transactions like this it only takes a 600 dollar transaction for a 1099 form to be generated and them to be notified when it was much higher before like 20 transactions of 600 or more or $20,000 in revenue that's a huge shift.

What they are saying is it will generate more audits and squeeze the middle class and the poor. Anyone with a small side hustle on the side to get by things like that. What they are claiming is the rich really can't get taxed anymore due to the they're knowledge of tax laws and loopholes and the fed and gov have to make money

They took a massive amount of loss first due to the pandemic and second with student loan relief and other things that are being passed. The fed makes money off of interest on loans primarily one of the biggest ones is student loans.

So investors like this guy are stating that with that loss of ability to generate revenue the fed is going to have to generate it one way or the other.

Now I'm no tax expert or financial guru so how applicable it is I don't know. But PayPal did hit me up with this so it is actually happening.
$600 of incidental income has been the threshold for 1099 for a long time, but it hasn't been enforced for selling personal items as it's about to be- I have a serious problem with the fact that they're enforcing it for 2022 didn't make much noise about it sooner. Maybe they did, but it slipped past us.

The rich are the favorite target for too many people but anyone who hates their use of the tax code should direct their anger toward Congress since that's who writes the code. You say they know the tax laws and loopholes, but most don't do their own taxes, nor would they pore over the tens of thousands of pages of the tax code- they pay people to handle this and if errors are made, the preparer pays the penalties. OTOH, some people don't want someone else to know anything about their finances because of their lack of trust. Most people don't want to know what's in the tax code- they hate the thought of doing their own taxes because it's a royal PITA, help isn't usually easy to find now (used to be- I had called the IRS ON tax day and they were very helpful) and knowing which forms are needed in their entirety can be confusing.

BTW- many of the 'loopholes' are available to everyone unless said loopholes only kick in at high income/expense levels. The rest are very accessible and people who do the 1040EZ should think about taking a bit more time, rather than doing their taxes while watching TV.

BTW- with the average IRS making over $76K/year + benefits and the government's FICA contribution, their goal of a bit more than $8 billion makes this almost pointless. The number of additional agents has been stated as 87K, right? At the $76K income, the additional FICA cost raises that to more than $81K and the simple calculated total payout will be more than $7 billion, so they make a cool billion dollars for all of the pain they're causing. According to the link, the US money supply grew by 13.1% in 2021- that adds to inflation and it seems that someone in DC hasn't considered that. THEY'RE causing a lot of the inflation, but as usual, want to blame anyone but themselves.

 
highfigh

highfigh

Audioholic Slumlord
Who the hell is this dude anyway?

If you are processing a sale through a source that generates a 1099 of any sort, you will need to report it. With that, try to pick ways to sell your gear that won't trigger a 1099 automatically... like CASH, if possible. :)

In general, I agree with @highfigh above.

Also, I know previously you were choosing to target local sales/pick-up to avoid shipping. Since this isn't a business, and you aren't making money on it, as long as you are smart about the transaction I'd think you will end up being OK.
After a recent debacle that involved PayPal, I think I'm done with them. I used their invoice template because it was easy, but didn't accept payments because I prefer checks or cash and all of the transactions for my business are local. I haven't sold much that needed to be shipped lately and most of what I have been selling wouldn't be easy to ship anyway,. because it's either large & bulky or the buyer would want to try it out/see it work. I'll buy on ebay, but I'm done selling there because the last few transactions were a real PITA, a few cost me a lot of money because their policies conflict with each other and their support people actually agreed, but wouldn't take my side on the issue.
 
T

Trebdp83

Audioholic Ninja
With very few exceptions, Square did not issue 1099-K forms for businesses that did not gross more than $20,000 AND ALSO have more than 200 transactions. So, a small business in certain states would not have received a 1099-K if they had $17,000 of income from 230 transactions or $23,000 of income from 190 transactions in 2021. That is no longer the case going forward in any State. It may be of no concern for those that reported the income and related expenses without a 1099-K in the past. It may be of some concern for those that did not do so.

Anyone exchanging money with “friends” or “family” should be mindful to click that option if available in their selected service to avoid charges and reporting related to the sale of goods and services.
 
mtrycrafts

mtrycrafts

Seriously, I have no life.
But if one keeps purchase receipts and resell at a lower price, you lost money. Perhaps you can deduct that loss? ;)Or, show you didn't make a profit if you get a 1099?
 
D

Danzilla31

Audioholic Spartan
But if one keeps purchase receipts and resell at a lower price, you lost money. Perhaps you can deduct that loss? ;)Or, show you didn't make a profit if you get a 1099?
That's what I'm planning on doing when I talk to my tax guy. I'd rather go that route I'm just going to go with what he recommends. He has done my taxes for a long time and has been great I'm sure he'll know what I should do.
 
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