new 1099-K rules

[Fred]

And what's a crypto currency supposed to do?

Edited to add a face.

[theshleps]

goods and services
https://pages.ebay.com/seller-center...l#m22_tb_a2__4

[G1911]

These new rules, and the effective shifting of the burden of proof, are going to be a major pain in the rear. Tons of people are going to get fleeced by the state, they’ll get their tax bill and pay it without going through all the hoops to show some of it isn’t profit and isn’t taxed. Suckers will get ripped off by the state and everyone else will have to jump through hoops, even if technically nothing is changing in what you truly owe on your taxes.

This is one reason I barely ever sell, it’s simply not worth it because I owe 9.3% of the profit to the state of California and 35% of the profit to the feds. This leaves me with 100% of the risk and only a little over half of the money I get if I sell. At that rate it is much better to trade for other cards I need, even if I’m “losing” in trade value.

[birdman42]

Originally Posted by G1911

Tons of people are going to get fleeced by the state, they’ll get their tax bill and pay it without going through all the hoops to show some of it isn’t profit and isn’t taxed. Suckers will get ripped off by the state and everyone else will have to jump through hoops, even if technically nothing is changing in what you truly owe on your taxes.

I respectfully and strongly disagree. If your tax preparation is done by a competent person--which could be you--then you'll know to subtract your basis and expenses from your revenue. And you won't get a "bill" based on your 1099-K as long as it shows up on your tax return.

Where you will get a "bill" is 18 months after filing if you haven't reported the form. Then you'll get a Letter CP2000 from the IRS saying that they see this item as being reported to them, but it isn't on your return. Based on the information they have available to them (the money in only, not your basis or expenses) they will propose an adjustment to your tax amount. I've seen enough of these CP2000s to know that it's much easier to report everything on the original return than it is to get things straight afterward. If you report it properly, then you won't get any pushback. But if you're responding to the letter, the IRS will want to see documentation.

This coming tax season's gonna be a beast, and next year's even worse.

Bill

[birdman42]

Originally Posted by Fred

And what's a crypto currency supposed to do?

Edited to add a face.

Crypto transactions have always been reportable--every time you sell, exchange, or trade virtual currency or use it to pay someone. Until now I've had to rely on screenshots to get the information needed (date, gain or loss). Beginning in 2024 crypto transactions will be reportable the same way stock transactions are: on a 1099-B. There are already services that will produce a 1099-B from your exchange account.

For someone who's been trading in crypto, this change will actually make things easier. But imagine what this will look like for someone who uses Ethereum to buy their Starbucks every day. Right there is 260 reportable transactions. Yikes.

And by the way, unless you can definitely pin your hard wallet or exchange to the US, your crypto will be considered the same as foreign currency. If you have more than $10,000 outside the US at any one time during the year you'll have to file an FBAR (Foreign Bank Account Report, AKA FinCen114) in addition to your tax form. The FBAR doesn't incur any taxation; it's to keep track of money overseas, ostensibly to curb money laundering. But the penalties for not filing are severe--up to 50% of the account balance for every year of non-compliance.

Bad News Bill