Ebay tax reporting drops from $20,000 to $600

[Dandor]

Originally Posted by Johnny630

I hire a tax professional. I just pay I don't care, it's worth my piece of mind to hire one and pay him accordingly.

I know many "tax professionals" that tell people no 1099-K form, don't worry about it. Just because you hire a tax professional, it doesn't stop an audit from happening. From my experience there is a chance that your tax professional just swept this income under the rug and it is nowhere to be found in a Schedule D or Schedule C.

[Johnny630]

Originally Posted by Dandor

I know many "tax professionals" that tell people no 1099-K form, don't worry about it. Just because you hire a tax professional, it doesn't stop an audit from happening. From my experience there is a chance that your tax professional just swept this income under the rug and it is nowhere to be found in a Schedule D or Schedule C.

It didn't get swept under a rug, it's filed as a business.

[Dead-Ball-Hitter]

Bob C., really appreciate your ongoing clarification of the tax law. Something to think about when we go to sell our long-time collections. I think most guys want to be law-abiding, its just tough to figure out when we can net expenses, what forms to fill out, etc.

I always hated that my Paypal 1099-K INCLUDED dollars collected for sales tax that were NEVER PAID to me - ebay collected the tax that the buyer paid, yet it shows up on my 1099!!! Ahhhg! What a mess...

So I should pay income tax or capital gains on the sales tax ebay collected??!!?

[Dandor]

Originally Posted by Johnny630

It didn't get swept under a rug, it's filed as a business.

Schedule C. This is a red flag for the IRS when people use this and declare losses in consecutive years. My advice to people using a Schedule C for card collecting is to always have some type of profit each year, even if you can take more deductions at a loss.

IMO there needs to be a straightforward way to deal with this without a collector needing to be a business or treating cards as a stock with a Schedule D. They need to rework the hobby tax deduction rules and allow card collecting to fall under this umbrella.

Many people will yell and scream that if you sell something online that you should always declare this as income on taxes. Those same people will sell cards at a card show for cash and not declare it as income. They will also purchase items without paying sales tax. The fact is the IRS has made participating in a hobby as a complete nightmare.

[Dandor]

Originally Posted by BobC

Ebay is only the platform for these sales, and the new 1099-K reporting threshold isn't being imposed on Ebay, just those third-party payment services like Paypal, Venmo, or Zelle. Only Ebay sales using payment services like these get included in 1099-K reporting, not sales using checks, MOs, or credit cards. It is all about the government having access to your records if they want/need to go checking you out. It wasn't suddenly saying anyone doing $600 or more in casual sales is now considered to be in a viable, ongoing business.

I agree with everything what you said, besides this paragraph. Some great information BTW with so much misinformation out there.

eBay has a mandatory managed payments program now. Nothing is fed through third-party payment services anymore. So, eBay will be sending out 1099-K forms through these new regulations.

[parkplace33]

Lots of talk about this subject.

Might I suggest that if you are worried about paying taxes on selling cards, the easiest thing is to not sell cards?

[Dandor]

Originally Posted by parkplace33

Lots of talk about this subject.

Might I suggest that if you are worried about paying taxes on selling cards, the easiest thing is to not sell cards?

I wish more people would trade! That is what I have been doing for the past six months. I buy or trade, nothing to worry about.

[G1911]

Originally Posted by parkplace33

Lots of talk about this subject.

Might I suggest that if you are worried about paying taxes on selling cards, the easiest thing is to not sell cards?

REMOVED per policy.

[christopher.herman]

I am very grateful for all this tax information from our knowledgeable and experienced board members.

My personal takeaway is that I will not be selling anything online with a paper trail for the calendar year 2022. I will circle back to this thread in early 2023 when y'all got this figured out. I need less headaches and fighting with the IRS over the value of old and brittle card stock is not the hill I want to die on. My collection is a marathon....

My card buying will definitely be affected (and already has) if I'm not able to unload dupes, cards no longer of interest or cards that have appreciated significantly that I am willing to let go.

In the meantime (shameless plug coming), I am currently buying old and brittle W514 and W515-2 strip cards. Links to my needs lists in my signature.

[insidethewrapper]

The only difference I see in 2022 with the new tax law is that prices will increase by non-dealers ( non- businesses ). If you sold a product for $20 and you didn't pay taxes on it before ( you should have), so now raise the price to $ 23 and pay taxes on it and it won't be different from 2021 to 2022.

[Tabe]

Originally Posted by BobC

Depends! Did you actually file tax returns back in the '80s and '90s reporting capital losses from the sales of all those Score and Donruss sets, and be sure to have had those sets treated and reported as investment assets, and not just as hobby collectibles? Assuming not, the answer would be no. And the statute of limitations to go back now and try to amend those returns passed decades ago. Sorry.

Can you count as expenses the actual cost of an item? Say you buy a jersey for $60 and sell it for $75 ($67 after Ebay fees) - do you count $7 in income or $67 or $75?

[Dandor]

Originally Posted by Tabe

Can you count as expenses the actual cost of an item? Say you buy a jersey for $60 and sell it for $75 ($67 after Ebay fees) - do you count $7 in income or $67 or $75?

There is the ability for deductions on a Schedule C and Schedule D. It gets a bit messy with collected tax, but it is based on profit. The IRS expects this 1099-K income on a Schedule C, but you can do it as short/long term capital gains for collectibles on a schedule D. Losses can be carried forward as well. Believe it is a maximum of $3000 applied to the next tax year.

Just keep detailed records and give it to your CPA. By asking this question, my advice is for you not to attempt to do your own taxes.

[parkplace33]

Originally Posted by G1911

REMOVED per policy.

Sorry, not following. What policy?

[puckpaul]

Originally Posted by G1911

I think you may have replied to the wrong person, as I didn't talk about garage sales at all, or most of what you are talking about. I know how PayPal works...

Garage sales and face to face absolutely are affected though - I don't have proof of what I paid (and thus, to calculate my profit form an eBay sale) from a face to face transaction 20 years ago, or often even memory of what it was myself. As I am taxed on PROFIT, it's going to be a total pain in the ass at best to survive auditing, as I can't prove what I paid at a Card Show 15 years ago to then calculate from an eBay sale next month.

As to your last paragraph, If I have to hire a professional to make sure I don't get !@#$% by the state over a few eBay sales that I wasn't cheating about on my taxes in the first place, well.... That's exactly why this is a problem and ridiculous. It is a shift of the burden of the proof, and creates a ton of headaches. After losing 45%+ of my sale price when I can't show what I originally paid, and then hiring a professional, there's even less reason to sell. Its not much more profitable than burning my duplicates in the fireplace.

+1, this is a nuisance and an unnecessary requirement for small $ transactions for most of us. Hopefully we can vote some people in that can change this.

[BobC]

Originally Posted by Dead-Ball-Hitter

Bob C., really appreciate your ongoing clarification of the tax law. Something to think about when we go to sell our long-time collections. I think most guys want to be law-abiding, its just tough to figure out when we can net expenses, what forms to fill out, etc.

I always hated that my Paypal 1099-K INCLUDED dollars collected for sales tax that were NEVER PAID to me - ebay collected the tax that the buyer paid, yet it shows up on my 1099!!! Ahhhg! What a mess...

So I should pay income tax or capital gains on the sales tax ebay collected??!!?

Quick answer is you get to deduct the sales tax if included on the 1099-K, along with also being able to deduct the Ebay fees you paid, assuming they were included as part of the 1099-K reported income as well. You get to deduct the direct costs related to the sales of your cards, along with your cost basis in the cards sold, regardless of whether or not you report the sales as a dealer, investor, or a collector. You are potentially able to deduct a lot more business related expenses, but only if you file as a dealer operating a business.

[BobC]

Originally Posted by puckpaul

+1, this is a nuisance and an unnecessary requirement for small $ transactions for most of us. Hopefully we can vote some people in that can change this.

Good luck with that, because the alternative is to raise current taxes or create new taxes to bring in the money they need/want. It is a given that for politicians it is better to enforce the tax laws already in place, and seek better compliance. Passing new taxes and/or raising existing taxes rates can lead to political suicide as well.

[sb1]

Bob,

I frequently see you refer to a person as being an "investor" for their taxable status. I have not seen this as an option, one is either in the business of buying and selling OR a collector in the eyes of the IRS. I believe some collectors will believe that by calling themselves investors they believe that their gains will be treated as either short or long-term capital gains and not the higher "collectible" rate. I do know that many collectors use the capital gains rate when figuring their taxes and have never had it questioned.

Can you enlighten us on how one would qualify as an investor in the eyes of the IRS and not fall under the collectible tax rate??

[BobC]

Originally Posted by Dandor

There is the ability for deductions on a Schedule C and Schedule D. It gets a bit messy with collected tax, but it is based on profit. The IRS expects this 1099-K income on a Schedule C, but you can do it as short/long term capital gains for collectibles on a schedule D. Losses can be carried forward as well. Believe it is a maximum of $3000 applied to the next tax year.

Just keep detailed records and give it to your CPA. By asking this question, my advice is for you not to attempt to do your own taxes.

And here again is an example where someone posts something that is only partially true, so that someone else reading it may make a mistake in filing their taxes if they think what they were reading is totally correct. And why, despite maybe an additional cost, I always advise people to at least talk to a qualified tax professional if they're the least little bit unsure of what they're doing. Heck, people using Turbotax can access their online professional staff for questions. You don't have to all go paying someone hundreds, or even thousands, of dollars to have someone else prepare your tax returns for you.

Now to address the partial truth in the statement above. You can generate net capital losses from the sales of cards, which can then be carried forward to future years, but only if you can claim the cards you sold were being held by you as investments, and you consider and can show yourself to be an investor. If instead you treat your cards as hobby collectibles, and yourself as a collector, you cannot deduct any net capital losses from the sales of those collectible cards on your tax return, and there is no capital loss carryover for such hobby losses either. You still get to net your collectible losses against your collectible/hobby and all other types of capital gains first. It is only if you end up with net capital losses attributable to hobby collectibles that they are nondeductible, and cannot be carried over to future tax years. But yes, you are otherwise limited to an overall net capital loss deduction of only $3,000 per year for non-hobby/collectible losses, with any such excess non-hobby/collectible capital losses over that $3,000 limitation amount being carried forward to be used/deducted in future years, or if unused, lost at the taxpayer's passing.

[Kzoo]

Originally Posted by puckpaul

+1, this is a nuisance and an unnecessary requirement for small $ transactions for most of us. Hopefully we can vote some people in that can change this.

At the current rate, this is very likely later this year.

[BobC]

Originally Posted by sb1

Bob,

I frequently see you refer to a person as being an "investor" for their taxable status. I have not seen this as an option, one is either in the business of buying and selling OR a collector in the eyes of the IRS. I believe some collectors will believe that by calling themselves investors they believe that their gains will be treated as either short or long-term capital gains and not the higher "collectible" rate. I do know that many collectors use the capital gains rate when figuring their taxes and have never had it questioned.

Can you enlighten us on how one would qualify as an investor in the eyes of the IRS and not fall under the collectible tax rate??

Scott,

Look at all the talk we have nowadays where cards end up being discussed in the Wall Street Journal, investment news shows, and the like. In the past, cards would likely not ever have been considered as investments, but times have recently changed. Though there is no hard and fast rule or measure to definitively say whether your cards are collectibles or investment assets, I don't think the IRS can just ignore anymore that sports cards can in fact be investments.

To show and help prove to an IRS agent that your cards are investment assets, you want to be able to show how you keep track of what you have, how you keep and store things, and if you ever do sell cards, the frequency, volume, and reasons behind such sales, and so on. All of this can be used and combined to help develop and establish a narrative where, if you ever do get questioned by the IRS, you can present what you're doing as an investment activity. In a much more simplistic way of maybe looking at this, an investor is more likely to keep their cards in a bank safe deposit box, or maybe PWCC or Goldin's vaults. A hobby collector is more likely to have their collectible items sitting in a display case, hanging on a wall, or otherwise exhibited in a man cave. You get the drift.

And I believe someone can be more than just one of these types. You can have a dealer, who maintains separate business and inventory records, also have a separate and distinct personal collection he proudly displays in his man cave at home, as well as maybe some '52 Mantles and early Ruth cards he picked up over the years that are sitting in a safe deposit box and are being left to appreciate till sold at some future date. The more records, details, and data you can present to an IRS agent (on the very slim chance you ever did get questioned and audited), the more likely they are to agree with your tax returns and your treatment of the cards you sold.

In the end, an IRS agent could still argue against your claim that your cards are investments, but as long as you don't end up selling them for what could turn out to be a non-deductible capital loss, you pretty much end up with the same tax results regardless of whether you reported them as collectibles or investments. I say this because there isn't a specific statement, determination or claim in the Internal Revenue Code or IRS rulings yet, to my knowledge, that still wouldn't maybe consider the underlying definition of a sports card as a collectible to override whether the card is treated as a collectible or investment for purposes of determining if a gain from its sale is subject to the 28% max collectibles tax rate, as opposed to the max 20% long term capital gains rate on regular investments (ie: stocks and bonds). I'm assuming the IRS will expect the 28% max rate, even if a card is considered as an investment for now. So to me, for now, the main advantage of assuming a card is sold as an investment is the ability to potentially deduct and carry forward any losses generated by its sale. Need more research to be done or info collected.

I hope this helps, and again is maybe a good reason to discuss such things with your personal tax advisors. They may not agree exactly with all my thinking, but they'll know much more of your personal and tax situation, and if there any other issues or considerations for you personally that I certainly am not aware of. Hope this helps.

[BobC]

Originally Posted by Tabe

Can you count as expenses the actual cost of an item? Say you buy a jersey for $60 and sell it for $75 ($67 after Ebay fees) - do you count $7 in income or $67 or $75?

It doesn't matter if you file as a dealer, investor, or collector, you are always able to deduct the actual tax basis cost of an item, plus the direct costs/fees in acquiring it, in determining the net taxable profit or gain from its sale.

[T205 GB]

Originally Posted by conor912

The party's over. My guess is on-line sales plummet. A few BINs I was watching jumped 20% on New Years day. I asked why, and they all said "the IRS". No Thanks. With all the TPG and IRS B.S. going on, it looks like some will be going back to the archaic days of buying raw cards with check or MO. How ironic.

Sad to say but there are a lot of stores and restaurant's here in SE MN that refuse checks and cash. Yes I said cash. Card transactions only. All things will be property of the government eventually. We will just get to hold on to them for a bit.

[bnorth]

Originally Posted by T205 GB

Sad to say but there are a lot of stores and restaurant's here in SE MN that refuse checks and cash. Yes I said cash. Card transactions only. All things will be property of the government eventually. We will just get to hold on to them for a bit.

That is weird with cash because it saves them the service charge. Does stop cash grab robberies and make employees way safer. I can't think of anyplace besides paying utility bills that takes checks anymore. I know some places used to run check instantly like a credit card but not sure of any that still do that.

Almost forgot a lot of remote camping places take checks because there is nobody working there. You put your check into an envelope and put it into a steel box.

[BobC]

Originally Posted by Dandor

I wish more people would trade! That is what I have been doing for the past six months. I buy or trade, nothing to worry about.

Unfortunately, even if you just trade cards, you're still considered to have engaged in a reportable, taxable transaction per the Internal Revenue Code (IRC) and IRS rules. The IRS just hasn't figured out how to catch people doing and not reporting it yet.

And if you were thinking a trade isn't taxable under the old Like-Kind Exchange rules of IRC Section 1031, those only currently apply to real estate transactions, not cards.

[Peter_Spaeth]

Originally Posted by Dandor

There is the ability for deductions on a Schedule C and Schedule D. It gets a bit messy with collected tax, but it is based on profit. The IRS expects this 1099-K income on a Schedule C, but you can do it as short/long term capital gains for collectibles on a schedule D. Losses can be carried forward as well. Believe it is a maximum of $3000 applied to the next tax year.

Just keep detailed records and give it to your CPA. By asking this question, my advice is for you not to attempt to do your own taxes.

I am confused because in 49 you said that if you bought a card for 500 and sold it for 400, you still had to pay tax on the 400. But here you are saying what you owe is based on profit, which I assume would also include loss if that's what you have and indeed you mention a loss carryforward.

[BobC]

Originally Posted by Dandor

I agree with everything what you said, besides this paragraph. Some great information BTW with so much misinformation out there.

eBay has a mandatory managed payments program now. Nothing is fed through third-party payment services anymore. So, eBay will be sending out 1099-K forms through these new regulations.

Yes, I know. I already addressed and went into more detail about this back in Post #22 in this thread. I was originally speaking in more general terms about third-party payment platforms, and expanded what I had been saying to include Ebay's managed payment system as well in that later Post#22. Just goes to show how confusing and complicated this can all be.

[BobC]

Originally Posted by Dandor

Schedule C. This is a red flag for the IRS when people use this and declare losses in consecutive years. My advice to people using a Schedule C for card collecting is to always have some type of profit each year, even if you can take more deductions at a loss.

IMO there needs to be a straightforward way to deal with this without a collector needing to be a business or treating cards as a stock with a Schedule D. They need to rework the hobby tax deduction rules and allow card collecting to fall under this umbrella.

Many people will yell and scream that if you sell something online that you should always declare this as income on taxes. Those same people will sell cards at a card show for cash and not declare it as income. They will also purchase items without paying sales tax. The fact is the IRS has made participating in a hobby as a complete nightmare.

What you are referring to is commonly known as the "Hobby Loss Rule". If someone filing as a Schedule C business on their tax return does not report a profit from the business in at least 3 years out of any 5 consecutive year period, the IRS can come in and question if you are truly running a business or just trying to get a tax deduct for your hobby. If you fall under this, the burden of proof is now on the taxpayer to prove they are in a legit, for profit business. Failure to do so will result in net losses from that supposed business no longer being tax deductible.

As for some of the other points you mentioned.....no comment, you are entitled to your opinions. But the thing is, this "hobby" has grown way beyond what a bunch of simple collectors would normally do, and has cards worth hundreds of thousands, if not millions of dollars, coming out everywhere it seems. As an old-fashioned collector myself, I'm not necessarily happy about it, but just have to accept that our hobby is a big business now. And the government and the IRS have no choice but to treat all the people and enterprises involved in it, as such.

Interesting FYI point maybe. I'd always heard the "Hobby Loss Rule". originally came about from the IRS going after horse farms, where the rich owners never showed any profits and just kept generating big tax loss write-offs year after year.

[BobC]

Originally Posted by Dandor

I know many "tax professionals" that tell people no 1099-K form, don't worry about it. Just because you hire a tax professional, it doesn't stop an audit from happening. From my experience there is a chance that your tax professional just swept this income under the rug and it is nowhere to be found in a Schedule D or Schedule C.

If they do that (ignore and sweep a 1099-K form you did receive, under the rug) without discussing it with you and/or explaining why, you may need to start looking for a new tax professional.

On the other hand, if someone didn't get a 1099-K form, I'd need to know more info before criticizing a tax profession for telling them not to worry about it. For example, what if the tax professional was told by the taxpayer that they really didn't make any money on the cards they sold, or that they lost money. If that is the case, adding the info onto the return likely isn't going to result in any more tax due. But not putting it into the return could save them some tax prep fees. And since the preparer was told there was no 1099-K received, the government probably didn't get one either, and therefore wouldn't be be looking for it on the return. I can see a tax professional telling someone not to worry about not getting a 1099-K form in that case.

[BobC]

Originally Posted by Dandor

Of course, this is what you are supposed to do. How did you do this though? Did you file a Schedule D or Schedule C with the IRS? If you did this as a "hobby" you probably did it wrong. There are absolutely no deductions for a hobby, even though people take them. If you bought a card for $500 and sold it for $400, you would need to pay taxes on the $400 even though you sold it at a loss. For people that don't believe me, just wait until 2023 and you get a 1099-K form. Good luck trying make any deductions with the hobby form.

I don't even know where to start on this one, as there is much wrong, and I'm tired of typing and missing out on some Call of Duty MWII. Go back and read through my other posts in this thread, and/or do a search for other posts of mine in different threads talking about taxes and implications for people in our hobby. There are many, and they are often detailed and very long. But they are pretty much accurate and informative, at least until they change the laws again, which they are constantly doing.

[BobC]

Originally Posted by bnorth

You guys are looking at this all wrong. This is a government program to get more business for those poor underpaid tax professionals. Just wait till you don't pay a tax professional a few thousand for that $125 of profit you made selling $1000 worth of old no longer wanted junk on eBay and get audited.

It is a win win for everyone.

Actually no. Back during the start of Reagan's second term in office they proposed a major tax bill called the Tax Reform Act of 1986. The first time Reagan appeared on TV to talk about it they had a copy of the proposed new law sitting on a small table next the podium, and the damn thing was well over 1,000 pages thick. It was ultimately passed into law as the Tax Reform Act of 1986. They actually had to create and pass this new law to try and correct and make up for some earlier stupid tax legislation that had gotten passed back in '80-'81, not long after Reagan took office. And typical government way of doing things, they went way too far in the other direction to try and fix their earlier screw-ups, and ended up making things possibly more convoluted and worse than before, and literally ravaged the commercial real estate market nationwide for the next four years or so, and directly led to the downfall of numerous savings and loans businesses and other lendors across the country.

After all that, friends and colleagues I knew in the industry, including myself, all started referring to the newly passed law as the All Employment Act for Accountants and Attorneys of 1986. Now that was a government program that created way more work than anyone ever expected! This new crap will be a pain, but not like that was back in the late '80s.

[BobC]

Originally Posted by Yoda

With the IRS in seeming disarray and brutally short-staffed, I wonder how much attention will be paid to capital gains on the sale of baseball cards. I have to believe the IRS with be looking hard at Covid relief funds fraud and where that money went. Who knows.

John, you're probably more on point with this than you may think. The trick is to not ignore these 1099-K forms people are going to get, and make sure they are properly being reported on their tax returns so that they match up with IRS info, and don't run afoul and get bounced by the IRS' automated system. It likely won't be triggering tons of audits. And for long time collectors who don't have complete and perfect cost basis data, I suggest using your best and most reasonable estimates for costs and basis, and just be sure to start keeping better records going forward.

Now as for specifically looking hardest for covid relief fraud, I think their biggest problem and concern currently is exactly the same as it is for PSA, trying to catch up on their backlog of work. LOL

[FrankWakefield]

My recollection of the 1986 legislation was that it was called The Tax Reform Act of 1986. I think the simplification act was when President Clinton was in office. BobC, does that sound right, or were there multiple 1986 acts, or what??

[BobC]

Originally Posted by FrankWakefield

My recollection of the 1986 legislation was that it was called The Tax Reform Act of 1986. I think the simplification act was when President Clinton was in office. BobC, does that sound right, or were there multiple 1986 acts, or what??

Ha ha, you might be right Frank, it's getting late and I'm getting old. My point was still valid regarding all the work it created and what we were calling it. I may have to go back and amend my post. Thanks.

[FrankWakefield]

I had a tax professor who left the classroom for a couple of weeks to go to DC to help with the Tax Reform Act of 1986. And when that Act became law it set things in motion that culminated in the greatest loss of life of Americans ever, occurring on April 15, 1987.

Just over 5 million Americans vanished. Before the Tax Reform Act of 1986, someone filing a 1040 just listed a number for minor children in the household. But the TRA of 86 placed a requirement of listing a minor child's SS# on the new returns. Taking into consideration that 17 year olds from the previous year would have turned 18, and subtracting out newborn children for that tax year, the returns filed in 1987 showed that there were just over 5 million kids who were claimed as dependents the previous year and who should be showing up on the 1987 returns for tax year 1986, but no one claimed them. Those kids vanished.

In the old days newborns didn't get a SS# application sent in as part of being in the hospital. I didn't. A few years after my (younger) brother was born, I recall Dad showing me that a SS card had arrived in the mail for me. Mom and Dad applied for both of us. Dad kept up with the cards, I was maybe 8 or 9, and if I'd gotten it then I'd have lost it. My brother and I have consecutive SS#s. About 30 years later my twins are born, the hospital is getting info for SS applications, and when their cards arrive their numbers are quite different. My old card has a line on it on the front, "not to be used for identification purposes," which greatly amuses me because that's exactly how it's used and they no longer put that on the cards.

[BobC]

Originally Posted by FrankWakefield

I had a tax professor who left the classroom for a couple of weeks to go to DC to help with the Tax Reform Act of 1986. And when that Act became law it set things in motion that culminated in the greatest loss of life of Americans ever, occurring on April 15, 1987.

Just over 5 million Americans vanished. Before the Tax Reform Act of 1986, someone filing a 1040 just listed a number for minor children in the household. But the TRA of 86 placed a requirement of listing a minor child's SS# on the new returns. Taking into consideration that 17 year olds from the previous year would have turned 18, and subtracting out newborn children for that tax year, the returns filed in 1987 showed that there were just over 5 million kids who were claimed as dependents the previous year and who should be showing up on the 1987 returns for tax year 1986, but no one claimed them. Those kids vanished.

In the old days newborns didn't get a SS# application sent in as part of being in the hospital. I didn't. A few years after my (younger) brother was born, I recall Dad showing me that a SS card had arrived in the mail for me. Mom and Dad applied for both of us. Dad kept up with the cards, I was maybe 8 or 9, and if I'd gotten it then I'd have lost it. My brother and I have consecutive SS#s. About 30 years later my twins are born, the hospital is getting info for SS applications, and when their cards arrive their numbers are quite different. My old card has a line on it on the front, "not to be used for identification purposes," which greatly amuses me because that's exactly how it's used and they no longer put that on the cards.

I remember those days Frank, forgot about that sudden loss of kids being claimed as dependents. That was another crazy result from that 1986 tax act being passed. Nowadays a baby doesn't leave the hospital without a social security number at least being applied for.

Do you remember the phase-in/phase-out of certain deductions created by the Reform Act, or the impact the brand new Passive Loss Rule had on the nation's economy? Ugh!!! People often look back at how after the 2008 mortgage loan debacle the government stepped in to save businesses and our economy, and may think of that as the first time our government has had to cross the line and directly take over and deal with private businesses like that, at least since the Great Depression. They may have forgotten what happened after the Tax Reform Act of 1986 was passed and the feds had to form the Resolution Trust Corporation to deal with the aftermath of that legislation.

[frankbmd]

Originally Posted by BobC

I remember those days Frank, forgot about that sudden loss of kids being claimed as dependents. That was another crazy result from that 1986 tax act being passed. Nowadays a baby doesn't leave the hospital without a social security number at least being applied for.

.........

Are social security applications available on the Rio Grande?

[BobC]

Originally Posted by frankbmd

Are social security applications available on the Rio Grande?

That's a good one Frank! LOL

That brings up the law giving anyone born on US soil automatic citizenship, jus soli. That thinking/law exists in only about 33 countries in the world, almost all exclusively in the American continents.

So are you for or against "anchor babies"?

[Republicaninmass]

Originally Posted by bnorth

That is weird with cash because it saves them the service charge.

Hi Ben! You haven't heard about the "national coin shortage" ? Old people arent leaving the house an using their change purse, and people recieved so much stimulus they have no need to hit the coin star machine in exchange for an Amazon gift card.

[Snowman]

Originally Posted by frankbmd

Are social security applications available on the Rio Grande?

Originally Posted by BobC

That's a good one Frank! LOL

That brings up the law giving anyone born on US soil automatic citizenship, jus soli. That thinking/law exists in only about 33 countries in the world, almost all exclusively in the American continents.

So are you for or against "anchor babies"?

I see the racists showed up to the party. Good to know.

[Dandor]

I am really confused on what to do now for taxes. In the past I just kept spreadsheets and paid taxes on net profits. However, eBay accidentally sending out 1099-K forms has me a little worried.

eBay assured all California people that got 1099-K forms in the mail that this was a mistake and that they didn't send the forms to the IRS/California Franchise Tax Board. I for one can't trust eBay and I have no idea if they are telling the truth here.

If I use the 1099-K form that eBay gave me and the IRS/CFTB didn't get it, would this raise red flags? Or would they not care?

I am leaning towards using this 1099-K form, even if eBay says to disregard it. I have a feeling that I will do my taxes as usual and if I don't use the 1099-K form and eBay actually sent it, that I would get a bill for the 1099-K and have to amend my taxes to deal with this nonsense.

For people in California who got the 1099-K form we are supposed to throw out because it was a mistake, what are you going to do? Are you going to ignore it or use it?

[KCRfan1]

I received my tax form from eBay last week.

What the form does not indicate is the amount I PAID for the cards I sold.

The dollars on the tax form assume this is pure profit, when I could have actually LOST money. In any case, it is not pure profit because I had to purchase the cards.

[BobC]

Originally Posted by Dandor

I am really confused on what to do now for taxes. In the past I just kept spreadsheets and paid taxes on net profits. However, eBay accidentally sending out 1099-K forms has me a little worried.

eBay assured all California people that got 1099-K forms in the mail that this was a mistake and that they didn't send the forms to the IRS/California Franchise Tax Board. I for one can't trust eBay and I have no idea if they are telling the truth here.

If I use the 1099-K form that eBay gave me and the IRS/CFTB didn't get it, would this raise red flags? Or would they not care?

I am leaning towards using this 1099-K form, even if eBay says to disregard it. I have a feeling that I will do my taxes as usual and if I don't use the 1099-K form and eBay actually sent it, that I would get a bill for the 1099-K and have to amend my taxes to deal with this nonsense.

For people in California who got the 1099-K form we are supposed to throw out because it was a mistake, what are you going to do? Are you going to ignore it or use it?

Dandor,

What EXACTLY did Ebay say in their communication to you? Sending you a 1099-K form if you had not yet met the required threshold for 2021 in and of itself is technically not a mistake. The rule simply mandates that someone like Ebay must prepare and send you a 1099-K form when your sales (and number of transactions in 2021) reach a certain amount. If you didn't reach those threshold amounts, there's no law or rule that says Ebay (or whomever) still can't send you a 1099-K reporting your 2021 sales, regardless of what they were.

So when you said they told you it was sent in error, could they possibly mean the sales amount being reported on the 1099-K form they sent was wrong, and that is why you should disregard the 1099-K form, and also why they didn't go ahead and send copies of the form to the IRS and CFTB?

So, does your record of Ebay sales agree with what is on the 1099-K form you got? If not, see if you can reconcile it and figure out what the difference is. At least start there.

From what you're saying, it sounds like you've been reporting your past Ebay sales on your tax returns all along. If that is the case, reporting your sales on your 2021 tax returns shouldn't raise any red flags with tax authorities, even if Ebay sent no 1099-K forms in to them regarding your 2021 sales. The only red flag that would potentially be raised is if Ebay did send in a 1099-K form to the IRS/CFTB for your 2021 sales, and you did not also report AT LEAST the same amount of taxable sales on your returns as was reported on the 1099-K form(s) you got for last year.

Hope this helps at least a bit, but again, let me know exactly what Ebay actually said to you. Seeing the actual correspondence would probably be the best way to do that. For privacy purposes though, might be better to PM me, unless you can redact/hide your personal info.

NEVER SEND PERSONAL DATA ONLINE UNLESS YOU CAN HIDE/REDACT THE PERSONAL INFO, OR SEND IT IN AN ENCRYPTED FORMAT OR AS A PASSWORD PROTECTED DOCUMENT!

Thanks,

BobC

[Dandor]

Originally Posted by BobC

Dandor,

What EXACTLY did Ebay say in their communication to you? Sending you a 1099-K form if you had not yet met the required threshold for 2021 in and of itself is technically not a mistake. The rule simply mandates that someone like Ebay must prepare and send you a 1099-K form when your sales (and number of transactions in 2021) reach a certain amount. If you didn't reach those threshold amounts, there's no law or rule that says Ebay (or whomever) still can't send you a 1099-K reporting your 2021 sales, regardless of what they were.

They screwed up with everyone in California. I had less than $4000 in sales and less than 150 transactions. This is exactly what we were told. I received my 1099-K form in the mail today. Part of me is on the fence about if eBay truly didn't send the form to the IRS/CFTB. I guess I could take their word, but the mailed 1099-K form has me concerned.

A recent technical issue resulted in a 1099-K form being incorrectly provided to you. Please disregard the incorrect 1099-K form. The incorrect 1099-K form was not sent to the IRS or California Franchise Tax Board.

We’re working to resolve the issue and ensure that it will not happen again. Unless you had more than $20,000 in gross sales and 200 transactions in 2021, we will not submit a 1099-K form to the IRS or the California Franchise Tax Board.

We sincerely apologize for the error and any inconvenience this may have caused.

As always, thanks for selling on eBay, and for being part of the eBay community.

The eBay Selling Team

[BobC]

Originally Posted by KCRfan1

I received my tax form from eBay last week.

What the form does not indicate is the amount I PAID for the cards I sold.

The dollars on the tax form assume this is pure profit, when I could have actually LOST money. In any case, it is not pure profit because I had to purchase the cards.

The sales amount reported on the 1099-K form is not assumed to be all profit, it is just the reportable gross taxable sales you had for the year. It is up to the recipient to report this gross taxable sales amount in the proper place on their tax return, and then also to list and report the allowable expense deductions on their return and then subtract those from the sales to arrive at their net taxable income/profit/gain (or loss). You want to be sure to report your gross taxable sales in the appropriate place(s) on your tax return so the IRS can easily match any 1099-K income reported to them on your behalf to the gross sales amount reported on your tax return.

Please note, the reported gross sales on your tax return doesn't have to tie exactly to the amount of gross sales you got reported to you on 1099-K forms you received for that same year, but you want that gross taxable sales amount reported on your return to at least be the same, if not more, than what was reported on the 1099-K form(s) you got. If the gross taxable sales amount reported on your return is less than what was reported on the 1099-K form(s) you got, and copies of which were sent the IRS, when the IRS tries to match the 1099-K form(s) sales to your return, they'll come up short and you will get a correspondence from the IRS questioning what they think may be un-reported income, along with an estimate of what they think you may owe them on that unreported income. If you fail to report anything at all about your 1099-K reported income on your tax return, the IRS figures you have no expenses to offset against those sales because you didn't report any. They don't just assume the sales are 100% profit.

[BobC]

Originally Posted by Dandor

They screwed up with everyone in California. I had less than $4000 in sales and less than 150 transactions. This is exactly what we were told. I received my 1099-K form in the mail today. Part of me is on the fence about if eBay truly didn't send the form to the IRS/CFTB. I guess I could take their word, but the mailed 1099-K form has me concerned.

A recent technical issue resulted in a 1099-K form being incorrectly provided to you. Please disregard the incorrect 1099-K form. The incorrect 1099-K form was not sent to the IRS or California Franchise Tax Board.

We’re working to resolve the issue and ensure that it will not happen again. Unless you had more than $20,000 in gross sales and 200 transactions in 2021, we will not submit a 1099-K form to the IRS or the California Franchise Tax Board.

We sincerely apologize for the error and any inconvenience this may have caused.

As always, thanks for selling on eBay, and for being part of the eBay community.

The eBay Selling Team

Like I said, this is technically not an error. They (Ebay) can still send everyone the 1099-K forms and they've done nothing wrong, except maybe make more work and expense for themselves by doing something they didn't have to. In this case I think the "error" they are referring to is the one they created by sending these 1099-K forms out to people who weren't expecting to get these till next year, and are now pissed as hell at Ebay thinking they're going to have to start reporting these sales on this year's (2021) returns instead of starting on next year's (2022) tax returns. And i'll also bet a few people had already filed their 2021 tax returns not expecting a 1099-K this year, and then this "present" from Ebay showed up. I'm sure that made a lot of people happy!

I'm thinking Ebay is doing a lot of damage control because of all their sellers they've pissed off due to this. And as a result, I don't think they'd make an even greater monumental error by telling everyone not to worry because they didn't actually send any 2021 1099-K forms that did not meet the reporting threshold in to the IRS/CFTB, but then sending them in anyway. I can't believe even Ebay could be that effing stupid! So though I can't guarantee it, I think you'll be okay to assume your 2021 form 1099-K did not get sent in to any tax authorities. Good luck.

[Dandor]

Originally Posted by BobC

I'm thinking Ebay is doing a lot of damage control because of all their sellers they've pissed off due to this. And as a result, I don't think they'd make an even greater monumental error by telling everyone not to worry because they didn't actually send any 2021 1099-K forms that did not meet the reporting threshold in to the IRS/CFTB, but then sending them in anyway. I can't believe even Ebay could be that effing stupid! So though I can't guarantee it, I think you'll be okay to assume your 2021 form 1099-K did not get sent in to any tax authorities. Good luck.

I have talked to some upper management people there. I believe that they can be that stupid!

If I did use the 1099-K form for my taxes, would the IRS/CFTB question me using a form they never got? I know the run reports and can find out immediately if you didn't use the 1099-K to file. However, would they run a report the reverse way to see if you used a 1099-K form that they never received. I guess they wouldn't care since reported income means more money for them.

[Lucas00]

I was going back through a few sellers I enjoy who sell more unique ephemera/photography type items looking to get a few nice things. And their entire stores were completely removed. Not a single listing. Not to mention a few of my watches are now completely gone (they are not under completed listings).
How do people expect true hobby sellers, and by hobby I'm talking a few sales a month maximum type hobbyist. To be able to sell for any kind of profit?

I personally fall in this category and have removed my 60 or so listings. Between the 28% tax on collectables and ebay's 12% I would be losing money on 90% of my listings and doing 10x more work at the same time.
And I keep hearing "just set up as a business and do this and that" no. I'm doing it as a hobby not as a business.

How, in any world are the real collectors punished the most? It is very sad.

eBay will see record losses, if not this year then next. And they know it, they sent letters to Congress asking for the change to be reversed or a much higher threshold to be imposed.

What are hobbyist and small sellers doing with these small profits you might ask that warrants this change? Stimulating the economy with purchases at stores and supporting restaurants and tons of other taxed businesses? Impossible. They are funding terrorists and buying drugs with that money!

So now they lose that stimulation and people stop selling so they lose the taxes on buyers too. Very smart and well thought out government decision.

[BobC]

Originally Posted by Dandor

I have talked to some upper management people there. I believe that they can be that stupid!

If I did use the 1099-K form for my taxes, would the IRS/CFTB question me using a form they never got? I know the run reports and can find out immediately if you didn't use the 1099-K to file. However, would they run a report the reverse way to see if you used a 1099-K form that they never received. I guess they wouldn't care since reported income means more money for them.

You got it exactly right, what isn't reported to them, they don't know about and they don't really care. They get concerned when they see a taxpayer isn't paying tax on something they do know about. They assume most all taxpayers are generally honest and voluntarily report all sales on their tax returns (And you thought Ebay was stupid?). So if anything, the IRS probably expects to see more returns with higher reported taxable sales than what was being reported on those same taxpayer's 1099-K form(s) than not.

Sounds like you'll be okay filing your 2021 returns as you had in earlier years. Good luck.

And as for Ebay's intelligence, I was trying to be nice and give them the benefit of the doubt. LOL

[BobC]

Originally Posted by Lucas00

I was going back through a few sellers I enjoy who sell more unique ephemera/photography type items looking to get a few nice things. And their entire stores were completely removed. Not a single listing. Not to mention a few of my watches are now completely gone (they are not under completed listings).
How do people expect true hobby sellers, and by hobby I'm talking a few sales a month maximum type hobbyist. To be able to sell for any kind of profit?

I personally fall in this category and have removed my 60 or so listings. Between the 28% tax on collectables and ebay's 12% I would be losing money on 90% of my listings and doing 10x more work at the same time.
And I keep hearing "just set up as a business and do this and that" no. I'm doing it as a hobby not as a business.

How, in any world are the real collectors punished the most? It is very sad.

eBay will see record losses, if not this year then next. And they know it, they sent letters to Congress asking for the change to be reversed or a much higher threshold to be imposed.

What are hobbyist and small sellers doing with these small profits you might ask that warrants this change? Stimulating the economy with purchases at stores and supporting restaurants and tons of other taxed businesses? Impossible. They are funding terrorists and buying drugs with that money!

So now they lose that stimulation and people stop selling so they lose the taxes on buyers too. Very smart and well thought out government decision.

No comment regarding the political aspects, I'll leave that to others.

As for the tax side of things, how can taxes suddenly be causing you to lose money on 90% of your sales? You do know you only pay taxes on NET capital gains from collectibles sales, after deducting the cost of the items sold, plus the direct transaction costs to acquire and sell you items (which includes Ebay's fees)? And the 28% tax is only a MAXIMUM tax rate on your net long term gains from collectible's sales. Depending on what other income is being reported on your return, the tax rate on your long term collectible gains can be much lower than that. The only way you'd be losing money on collectible's sales if you just sell something for less than what you paid for it, plus the Ebay fees.

[Lucas00]

Originally Posted by BobC

No comment regarding the political aspects, I'll leave that to others.

As for the tax side of things, how can taxes suddenly be causing you to lose money on 90% of your sales? You do know you only pay taxes on NET capital gains from collectibles sales, after deducting the cost of the items sold, plus the direct transaction costs to acquire and sell you items (which includes Ebay's fees)? And the 28% tax is only a MAXIMUM tax rate on your net long term gains from collectible's sales. Depending on what other income is being reported on your return, the tax rate on your long term collectible gains can be much lower than that. The only way you'd be losing money on collectible's sales if you just sell something for less than what you paid for it, plus the Ebay fees.

I'm definitely new to this, I don't play with stocks or really any investments. Mainly Just cash and cards as much as possible (I know cards are an investment but I guess I never looked at them that way, especially when selling on eBay to purchase another card or whatnot). I honestly don't know the ins and outs at all. Just from simple research headlines that I guess didn't explain it very well to me. I was under the impression the deductions were only possible if you were set-up as a business. I'm pretty sure the eBay fee part at least? Maybe not, I have no idea.
I have only based my possible losses on the information I had which added up to the 40% of the total sale which is clearly wrong. I almost always sell on smaller margins so this implied say I got a card for $100, sold it for $150 I would be taxed 40% of $150 being $60. I wasn't aware it was only on the net gain. I Actually feel foolish now knowing that. I also couldn't find anything not flashing a 28% tax rate until I dug far deeper. Seems clickbait and scare tactics definitely worked on me this time.

Thanks for the rundown.

I want to make it clear though, I still think it is unnecessary and terribly egregious for a small time seller. And should be reversed asap.