Quote:
Originally Posted by tschock
And that's likely ties in with, and is not surprising that, ebay sent out emails titled "Tell Congress their new 1099-K rules are confusing and unnecessary" with details like:
"Companies like eBay are required to report sales to the IRS using a tax form called a 1099-K. Until recently, you would only get a 1099-K if you sold over $20,000, or more than 200 items. Starting this year, new legislation has lowered that threshold to just $600, even if that was from a single sale all year. Where it gets complicated is you’ll get this form even if you don’t owe anything, because not all sales are taxable–for example, if you sell something for less than you paid for it. That means millions of sellers will now get unnecessary tax forms, creating confusion and pointless paperwork–both for the IRS, and for small-time sellers who aren’t set up to deal with it.
Imagine selling an old bike for $800 that cost you $1,500 a few years ago. Since you didn’t make a profit, the IRS doesn’t consider that taxable income. But under this new law, you’re still going to get a 1099-K. And now you’ll have to prove to the IRS that you don’t actually owe any taxes on that sale, which makes for complicated accounting work."
Contrary to some opinions here, there are a lot of people selling stuff that are not a business on ebay, nor will likely become one.
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Exactly, makes the landscape for many on Ebay and other platforms totally confusing.
And don't think this reduced 1099 sales reporting threshold makes the IRS happy at all either. Just like the people who now get these 1099s, it is going to mean a ton more work for the IRS as well, which is already severely underfunded and understaffed. And a lot of that work, at least initially, is going to be dealing with people who really shouldn't be paying any taxes on used things they are selling, but now have to bother reporting. And all this additional paperwork creates more opportunities for mistakes and errors, even by the IRS. Trust me, the IRS, and every other tax authority out there are not infallible and do make mistakes and errors.
Why do you think you often hear those commercials for all those different outfits that will come to your aid if you owe the IRS thousands of dollars, and don't know what to do? They exist for just these kinds of tax issues and situations, to help (and also take advantage of) the taxpayers that didn't know better.