Payment at card shows?

buymycards · #1 04-12-2016, 05:06 PM

OK, let's get down to the nitty gritty. This doesn't have anything to do with comfort levels or lack of technical knowledge or chargebacks. It is plain old tax avoidance. (evasion?) The seller probably doesn't have a sales tax license and doesn't pay sales tax on the sale. The seller also probably doesn't report cash sales, so they are tax free.

If you have a sale of $1000 in cash, you have $1000 bucks to work with. If you accept a check, or paypal, or a credit card then it breaks down like this:

$1000 in sales
-15 % in federal income taxes
-5% in state income taxes
-5% in state sales tax
-15% for the employers share and the employees share of social security and medicare
This leaves the dealer with $600 to work with.

That is why dealers only accept cash.

Rich Klein · #2 04-12-2016, 05:11 PM

Not to nitpick but I thought most people would be in the 27 percent fed range

Rich

buymycards · #3 04-12-2016, 05:12 PM

Hi Rich, that may be true.

It may also have something to do with only being able to earn around 15k if you are under age 66 and on social security. Yes - I am old.

Rick

bnorth · #4 04-12-2016, 05:37 PM

Quote:

Originally Posted by buymycards

OK, let's get down to the nitty gritty. This doesn't have anything to do with comfort levels or lack of technical knowledge or chargebacks. It is plain old tax avoidance. (evasion?) The seller probably doesn't have a sales tax license and doesn't pay sales tax on the sale. The seller also probably doesn't report cash sales, so they are tax free.

If you have a sale of $1000 in cash, you have $1000 bucks to work with. If you accept a check, or paypal, or a credit card then it breaks down like this:

$1000 in sales
-15 % in federal income taxes
-5% in state income taxes
-5% in state sales tax
-15% for the employers share and the employees share of social security and medicare
This leaves the dealer with $600 to work with.

That is why dealers only accept cash.

+1 As a small business owner for most of my life I fricken hate the POS that do not have whatever license is necessary and does not pay their fair share of taxes. For those of us that actually pay taxes and follow the rules it is very hard to compete.

pokerplyr80 · #5 04-12-2016, 05:55 PM

Quote:

Originally Posted by buymycards

OK, let's get down to the nitty gritty. This doesn't have anything to do with comfort levels or lack of technical knowledge or chargebacks. It is plain old tax avoidance. (evasion?) The seller probably doesn't have a sales tax license and doesn't pay sales tax on the sale. The seller also probably doesn't report cash sales, so they are tax free.

If you have a sale of $1000 in cash, you have $1000 bucks to work with. If you accept a check, or paypal, or a credit card then it breaks down like this:

$1000 in sales
-15 % in federal income taxes
-5% in state income taxes
-5% in state sales tax
-15% for the employers share and the employees share of social security and medicare
This leaves the dealer with $600 to work with.

That is why dealers only accept cash.

I would hope that those dealers that are paying income tax are only required to do so on the profit of the sale, not the entire transaction. If the mentioned $1,000 card was purchased for say 800, taxes should only be required on the 200 difference.

steve B · #6 04-12-2016, 06:04 PM

Yep, when I was doing a fair bit of selling on Ebay I always declared a small profit as a hobby business. I wasn't allowed to claim a loss that way, but it made the book keeping nice and simple.
I suppose technically any leftover stuff that I'd gotten cheap and hadn't gotten around to selling was also profit, but determining value would have been a big challenge.

Michael B · #7 04-14-2016, 12:29 PM

Quote:

Originally Posted by pokerplyr80

I would hope that those dealers that are paying income tax are only required to do so on the profit of the sale, not the entire transaction. If the mentioned $1,000 card was purchased for say 800, taxes should only be required on the 200 difference.

It would be less than that. You would get the itemized deductions for the cost of the item, cost of the table/booth, travel to the show including gas and tolls, hotel, food and any other ancillary expenses. It is easy to reduce the net profit by taking every deduction allowed. Most dealers are cash flow businesses. With cash flow you get the deduction when you sell the item. You cannot deduct the cost of the item purchased if it is done in a prior year. Don't forget, the I.R.S. encourages tax avoidance. It is tax evasion they don't like.

I have done one or two shows a year max and usually made just a little. At the same time I was also selling on ebay and did declare ALL of the income every year. It is easier to do that than try to play fast and loose.

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