Possible new tax law?

[Tabe]

Originally Posted by h2oya311

To clarify, I simply won’t sell on Net54 using PayPal goods again. PayPal f/f is fine. And the guy asking for the refund did everything right. I thought I did everything right. PayPal just wouldn’t refund the PayPal fees from using goods when I made the refund. I was dumbfounded.

What? I've refunded several times things that were paid by goods and never got charged fees. You have to use the "refund" option inside the original transaction to do it but the fees are always removed. Unless the buyer paid by F&F, in which case you'd have to send F&F back to do the refund with no fees.

[ajjohnsonsoxfan]

Originally Posted by Tabe

What? I've refunded several times things that were paid by goods and never got charged fees. You have to use the "refund" option inside the original transaction to do it but the fees are always removed. Unless the buyer paid by F&F, in which case you'd have to send F&F back to do the refund with no fees.

That's a new Paypal policy within the last year or so. They don't refund the paypal fees (roughly 3%) on refunds

[thatkidfromjerrymaguire]

I do have a serious question about this that I've seen asked on other threads and other boards but never I've seen a clear and concise answer...and usually it turns in to arguments.

Precursor: I have a very simple tax situation currently and I file my taxes with the Standard Deduction (i.e. I don't itemize).

Question: If I buy a baseball card for $1000, then I sell that card for $1500, should I report and pay tax on the $1500 transaction, or do I just report and pay tax on the $500 profit (and ensure I have documentation for my purchase price).

Remember, my taxes are simple and I have no interest in filing as business, incorporating, etc. I just want to comply with the tax laws in the easiest way possible.

[sb1]

You would pay 28% on the gain($500) as a collectible sale. You may also pay 3.8% more as part of the Obama Care Act depending on your AGI.

[thatkidfromjerrymaguire]

Originally Posted by sb1

You would pay 28% on the gain($500) as a collectible sale. You may also pay 3.8% more as part of the Obama Care Act depending on your AGI.

Appreciate the answer, thanks!

[birdman42]

Originally Posted by sb1

You would pay 28% on the gain($500) as a collectible sale. You may also pay 3.8% more as part of the Obama Care Act depending on your AGI.

No, collectibles are taxed *at most* at 28% (if you've had the item for more than a year). Anything you hold for less than a year is taxed at ordinary income rates. Whatever your marginal bracket is, that's the tax rate on the gain.

Collectibles have their own special treatment. Ordinary capital gains get taxed at 0, 15, or 20% depending on the rest of your tax situation. Gains on collectibles are taxed as ordinary income, with a cap of 28%. So if your total situation leaves you in the 12% tax bracket, your tax on the gain is 12%. If you're in the 32% marginal bracket or higher, then your tax is 28%.

Pre-1987 the max rate on all capital gains was 28%. The Taxpayer Relief Act of 1997 reduced the max rate on most capital gains to 20%, but left the top rate on collectibles at 28%.

Another way in which collectible gains are different is that typically you can't net your gains against your losses. (You usually can if you're actively buying and selling.) You sell two blocks of stock, one with a gain of $500 and one with a loss of $500, you net the two and no tax is due. But if you sell a card for a $500 gain and another for a $500 loss, you still owe tax on the $500 gain.

Disclaimer--I don't see many collectible sales in my tax work. But I am a total tax nerd, and I enjoy wandering off into the weeds of the tax code.

Bill

[68Hawk]

Originally Posted by birdman42

No, collectibles are taxed *at most* at 28% (if you've had the item for more than a year). Anything you hold for less than a year is taxed at ordinary income rates. Whatever your marginal bracket is, that's the tax rate on the gain.

Collectibles have their own special treatment. Ordinary capital gains get taxed at 0, 15, or 20% depending on the rest of your tax situation. Gains on collectibles are taxed as ordinary income, with a cap of 28%. So if your total situation leaves you in the 12% tax bracket, your tax on the gain is 12%. If you're in the 32% marginal bracket or higher, then your tax is 28%.

Pre-1987 the max rate on all capital gains was 28%. The Taxpayer Relief Act of 1997 reduced the max rate on most capital gains to 20%, but left the top rate on collectibles at 28%.

Another way in which collectible gains are different is that typically you can't net your gains against your losses. (You usually can if you're actively buying and selling.) You sell two blocks of stock, one with a gain of $500 and one with a loss of $500, you net the two and no tax is due. But if you sell a card for a $500 gain and another for a $500 loss, you still owe tax on the $500 gain.

Disclaimer--I don't see many collectible sales in my tax work. But I am a total tax nerd, and I enjoy wandering off into the weeds of the tax code.

Bill

Appreciate your response, that's the clearest I've ever had the tax on collectables explained.

[Gusturd]

Originally Posted by birdman42

No, collectibles are taxed *at most* at 28% (if you've had the item for more than a year). Anything you hold for less than a year is taxed at ordinary income rates. Whatever your marginal bracket is, that's the tax rate on the gain.

Collectibles have their own special treatment. Ordinary capital gains get taxed at 0, 15, or 20% depending on the rest of your tax situation. Gains on collectibles are taxed as ordinary income, with a cap of 28%. So if your total situation leaves you in the 12% tax bracket, your tax on the gain is 12%. If you're in the 32% marginal bracket or higher, then your tax is 28%.

Pre-1987 the max rate on all capital gains was 28%. The Taxpayer Relief Act of 1997 reduced the max rate on most capital gains to 20%, but left the top rate on collectibles at 28%.

Another way in which collectible gains are different is that typically you can't net your gains against your losses. (You usually can if you're actively buying and selling.) You sell two blocks of stock, one with a gain of $500 and one with a loss of $500, you net the two and no tax is due. But if you sell a card for a $500 gain and another for a $500 loss, you still owe tax on the $500 gain.

Disclaimer--I don't see many collectible sales in my tax work. But I am a total tax nerd, and I enjoy wandering off into the weeds of the tax code.

Bill

This is helpful but what does this mean for the collector? Should all collectors become businesses so they can deduct expenses/losses on the cards they sell?

[mmier118]

Originally Posted by birdman42

No, collectibles are taxed *at most* at 28% (if you've had the item for more than a year). Anything you hold for less than a year is taxed at ordinary income rates. Whatever your marginal bracket is, that's the tax rate on the gain.

Collectibles have their own special treatment. Ordinary capital gains get taxed at 0, 15, or 20% depending on the rest of your tax situation. Gains on collectibles are taxed as ordinary income, with a cap of 28%. So if your total situation leaves you in the 12% tax bracket, your tax on the gain is 12%. If you're in the 32% marginal bracket or higher, then your tax is 28%.

Pre-1987 the max rate on all capital gains was 28%. The Taxpayer Relief Act of 1997 reduced the max rate on most capital gains to 20%, but left the top rate on collectibles at 28%.

Another way in which collectible gains are different is that typically you can't net your gains against your losses. (You usually can if you're actively buying and selling.) You sell two blocks of stock, one with a gain of $500 and one with a loss of $500, you net the two and no tax is due. But if you sell a card for a $500 gain and another for a $500 loss, you still owe tax on the $500 gain.

Disclaimer--I don't see many collectible sales in my tax work. But I am a total tax nerd, and I enjoy wandering off into the weeds of the tax code.

Bill

Can I deduct the cost of goods sold, eBay fees, sales tax collected, shipping etc. if I just take the standard deduction and don’t itemize? To me it seems like eBay will send me a 1099 with all those included and I will owe income tax on the whole amount since I am a hobbyist not a business. Is that correct?