new 1099-K rules

[BobC]

Originally Posted by h2oya311

Bob - thanks for all of your insight. Very, very informative post and I really appreciate how well you've laid things out.

Thanks, I hope myself, and Bill/birdman42, are able to help someone out. If nothing else, it is info everyone can use to make better decisions for themselves, or at least know what they may now have to start keeping track of to give to their tax preparers.

Hopefully that way no one will have their tax preparers yelling at them when they walk in and drop their tax info off on April 14th. LOL

[ngrow9]

This has been a very helpful discussion, thanks to everyone! One quick question: what type of records must one keep to document purchase prices, etc.? If I maintain a document showing what I paid for the card and what it sold for, is that sufficient? Or do I literally need to print and keep the receipt for every card I ever purchase off eBay, if I want to be completely thorough?

[investinrookies]

Originally Posted by ngrow9

This has been a very helpful discussion, thanks to everyone! One quick question: what type of records must one keep to document purchase prices, etc.? If I maintain a document showing what I paid for the card and what it sold for, is that sufficient? Or do I literally need to print and keep the receipt for every card I ever purchase off eBay, if I want to be completely thorough?

I have wondered this as well. I keep a nice excel document of every purchase noting cost basis, sale price and net proceeds after fees. Also has the purchase and sale dates. Is that sufficient or I do i need receipts of prices paid to prove cost basis?


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[Rich Klein]

"It appears non-commercial transactions will be included; there's no mention of a distinction in the IRS instructions for completing the form. In one way this is going to be a shock to some people. We have a church client that receives most of its monthly contributions through Zelle. On the other hand, if there were a distinction we might see parties such as PP clamping down on the use of F&F. I see the PP page mentioned above, but there's no mention of F&F transactions being exempt. And again, the IRS instructions for the form don't appear to allow for an exemption for non-commercial transactions. I'd really, really like to be wrong about this, but I believe I'm correct."

Just a note, and I don't know if this is true for Zelle, but when I set up pay pal for our synagogue's card show, I set it up with Pay Pal as a non-profit and sent in the 501C form we received when we 1st began. So if the church did not set it up as a non-profit, they need to fix that ASAP.

I also give out donation sheets to our vendors (in the past since our last show thanks to COVID was March 2020) and anyone who donates us cards or prizes who wishes to receive those notes. I have had a couple of major donators need the 501-C form as well for their tax preparers and that has been sufficient for their needs. So I would presume if the prep work by the church was done correctly then there should be no real effect on them

Rich


Bill[/QUOTE]

[BobC]

Originally Posted by ngrow9

This has been a very helpful discussion, thanks to everyone! One quick question: what type of records must one keep to document purchase prices, etc.? If I maintain a document showing what I paid for the card and what it sold for, is that sufficient? Or do I literally need to print and keep the receipt for every card I ever purchase off eBay, if I want to be completely thorough?

You could keep a log, especially when you purchase something like at a show where probably won't get a receipt. But for purchases from say Ebay or AHs I would definitely print out and keep invoices and receipts. If nothing else, it would show an IRS agent you have independent documentation for at least part of your activities, and make it easier for them to maybe then accept you records to the activities you couldn't get receipts for.

[parkplace33]

No tax law change, you will just be getting another piece of paper now.

If folks are concerned with tax implications, recommend you talk to a financial advisor that can help you.

[BobC]

Originally Posted by parkplace33

No tax law change, you will just be getting another piece of paper now.

If folks are concerned with tax implications, recommend you talk to a financial advisor that can help you.

No, not a financial advisor, you want a tax professional. One of my clients for years was a financial advisor AND a CPA to boot, and he knew better than to even try doing his own taxes.

You want to talk to/with someone that has been doing taxes for a while, and not just someone that has a title or degree that sounds like they might know what they are doing. And I don't heartily recommend the walk-in places that are always advertising on radio and TV, and have offices everywhere. There's a reason those people work there and not in a regular tax/accounting/CPA office. They're not all bad, but you never know who you'll get when you just walk in there, and they aren't all that cheap either. They usually charge you on what I call an ala carte basis. They basically charge you for every separate form they fill out, and every piece of paper and tax document they touch.

If you're looking around and start talking to somebody, and they sound a lot like me, you're probably headed in the right direction. LOL

[chriskim]

Saw this on FB.. of course, it could be fake news...


A friendly reminder that starting 2022, you’ll be taxed on your cashapp, Venmo, PayPal and Zelle for any transactions totaling up to over $600. That is one $600 or six hundred $1 transactions. So if you have a side hustle…… don’t use those apps. You're probably wondering why I encourage you to move to cash. If I purchase A tv for $700 in January of 2022 and decided to sell it on November of 2022 for $600 through one of those apps, I will be paying taxes for the $700 when I bought it and I’ll get a 1099K from the IRS on 2023 to pay taxes on the $600 I made off the tv I sold. If that does not sound ridiculous then I don’t know what to tell you. If I can’t write off my taxes for the Tv on the initial purchase, I should not have to pay taxes again on it for selling it. But the government has your best interest at hand. Tax the rich right?!? Good luck on your side hustle for all my friends that have it. Instead of “taxing the rich” they are really taxing the middle class more. But hey…. The government is for the people. I’m sure they just want to make sure you do your finances correctly. Tax the taxes to tax the tax. Got it . Of course if you are well off, you wont care but if you care about your friends that are not well off and their side hustle is what puts food on their table, then maybe you should care.#LGBFJB ~reposted from another post~

[Johnny630]

I see a lot on this board from people who say they just love the cards and could care less about the value of the cards most claim they would never sell they’re just going to die with them and pass them on to their heirs. Sounds like none of this would be applicable If you never sell any of your cards.

Why is everyone so worked up over this ? I think it’s smart for the IRS to be more diligent over collecting revenues from cards sales, there must be way more selling them ever. Maybe this is what the supposed FBI investigation over alleged trimming and shilling revealed lol. Make them pay up or at least put the fear of God in them over it, seems to be working based of this post.

[BobC]

Originally Posted by chriskim

Saw this on FB.. of course, it could be fake news...


A friendly reminder that starting 2022, you’ll be taxed on your cashapp, Venmo, PayPal and Zelle for any transactions totaling up to over $600. That is one $600 or six hundred $1 transactions. So if you have a side hustle…… don’t use those apps. You're probably wondering why I encourage you to move to cash. If I purchase A tv for $700 in January of 2022 and decided to sell it on November of 2022 for $600 through one of those apps, I will be paying taxes for the $700 when I bought it and I’ll get a 1099K from the IRS on 2023 to pay taxes on the $600 I made off the tv I sold. If that does not sound ridiculous then I don’t know what to tell you. If I can’t write off my taxes for the Tv on the initial purchase, I should not have to pay taxes again on it for selling it. But the government has your best interest at hand. Tax the rich right?!? Good luck on your side hustle for all my friends that have it. Instead of “taxing the rich” they are really taxing the middle class more. But hey…. The government is for the people. I’m sure they just want to make sure you do your finances correctly. Tax the taxes to tax the tax. Got it . Of course if you are well off, you wont care but if you care about your friends that are not well off and their side hustle is what puts food on their table, then maybe you should care.#LGBFJB ~reposted from another post~

There seems to be something missing from this FB item that you're posting as it mentions paying tax on a $700 purchase, and then again on a subsequent $600 sale of the item you previously bought. Not so sure it is fake news as much as much as it may be misguided thinking (or total ignorance on the part of the FB poster).

You don't pay income tax when you purchase something, so could the tax they're referring to on the $700 TV purchase maybe be sales or use tax? If you purchase a TV like this through Ebay, you'll get dinged for the sales tax, based on where you live, if applicable. But that has nothing to do with using PP, Venmo, or Zelle. That would automatically be charged if you used Ebay for the purchase. And assuming you aren't a formal business buying and selling TVs, any sales tax you paid when you bought the TV technically is deductible, because that sales tax would be added to the $700 cost basis you paid to acquire it, and then offset against what you later sold it for.


And then it mentions owing tax on the entire $600 you get for subsequently selling the same TV you bought earlier that year for $700, and how it gets reported to you on a 1099 now because your sale went through PP, Venmo, or Zelle. If that is the case, you sold something for less than you paid for it, so there's no profit to end up paying income tax on. You'd just need to show on your return that you didn't make money on it. And if the poster was referring to sales tax, it isn't the seller that pays it, it would be on the buyer.

This FB poster is either totally ignorant of the rules, or deliberately trying to be a jerk by giving people bad tax related information. Either way, it just shows how you have to be careful and watch what you read and believe online or wherever anymore, and why it can be extremely critical to have knowledgeable help and guidance in regards to taxes from someone you can trust. Especially over the past few, and coming years, with all the continually changing tax rules, and more to come.

And this new 1099-K reporting threshold just highlights some of the biggest problems the government and we the taxpayers face. The government is trying to get the taxes due and owed from all the operating businesses (legal and illegal) out there, but realizes much of it isn't being reported. Now the government doesn't really look at people having a garage sale or selling some miscellaneous clutter at a flea market once in a while as being in business, and truly doesn't care (or really want) to bother and tax them on any such activities. But in trying to get people actually running ongoing businesses, or even side hustles, that aren't being properly reported, the government ends up doing things, like lowering reporting thresholds for sales on third-party platforms like PP, Venmo, and Zelle to just $600. It will definitely get a lot of previously non-reported businesses to start reporting, or force them to find new ways to transact business that the government isn't already closely monitoring. Unfortunately, these lowered reporting thresholds also grab and affect tons of everyday people that really aren't running ongoing businesses, but now have to go through all the work and hassle these new reporting requirements are putting them, and their tax preparers, through. It is going to be a PITA for a lot of people that get these 1099-Ks next year, that didn't know they were coming.

[ngrow9]

Originally Posted by BobC

You could keep a log, especially when you purchase something like at a show where probably won't get a receipt. But for purchases from say Ebay or AHs I would definitely print out and keep invoices and receipts. If nothing else, it would show an IRS agent you have independent documentation for at least part of your activities, and make it easier for them to maybe then accept you records to the activities you couldn't get receipts for.

Thanks Bob. Easiest thing moving forward is probably just to download all of my purchase history from eBay each year. Appreciate the help!

[BobC]

Originally Posted by ngrow9

Thanks Bob. Easiest thing moving forward is probably just to download all of my purchase history from eBay each year. Appreciate the help!

Yup! I always used to use Gavelsnipe myself for all my Ebay activity, until Ebay basically locked Gavelsnipe out a couple years ago. When I heard the Gavelsnipe site was going to be permanently shut down effective 6/1/2021, I started a thread on here back in April, 2021 warning people about the pending move so that if they had sales data they wanted to save from the site, that they better go on and save or grab it somehow before the shutdown. I personally had set up over 18,000 snipes on Ebay through Gavelsnipe, that resulted in approximately 3,000 auctions I had won on Ebay over the years. (I was stunned when I saw how the numbers had added up over the years) Was very glad I printed off and saved all the successful Ebay auction sales data from Gavelsnipe. I never usually did BINs on Ebay, so the Gavelsnipe data should cover almost all my Ebay activity through today. After they shut down Gavelsnipe, I really haven't been on Ebay much at all. Printed off a looooootttttttt of pages of sales data though. LOL

And I'm pretty sure the Gavelsnipe site is down, so you can't access records through them anymore. Good luck with your recordkeeping.

[jchcollins]

These changes - and yes they've been coming for some time... for me are the kick in the butt I needed to finally just stop selling. For too long, many card purchase propositions for me have been sell X to get Y...and in the end this results in wishing that I had not sold stuff. So my pace going forward may be slower, but... no more.

[tha-rock]

I heard about this today from a member and reading this post has not only been informative, but confusing and frustrating. It is going to be a nightmare to do this. Is IRS really so desperate for funding that they need to create a system that will sweep up millions and millions of ordinary folks who manage to sell $600 or more in a year in an online marketplace? Can the $600 threshold be raised to a more reasonable amount? What would it take to do that?

I am refining and downsizing my collection. Most of the items I'm selling were acquired at a cost, although I have no written sales records of what I paid for 99+% of those items. I understand paying taxes on sales at the capital gains rate, but how do I establish a price paid for something I sell so that I don't have to pay taxes on the gross amount? Will the IRS just take my word for what I paid? I imagine many of you are in the same boat. How are you going to handle it?

Not long ago I sold a Jim Rice signed baseball for $25, which is what I paid for it, when I bought a few from Sure Shot Promotions. After ebay fees, I lost money on this baseball, but under the new law ebay would show this as a $30 income ($25 + $5 postage), when in reality it was a net loss to me. Having to pay tax on a net loss is salt in the wound. Many of you probably have clear memories of what you paid for certain things but would be at a loss if IRS asked you to prove it. Some of the things I am selling, I purchased 20- 40 years ago. No sales receipts and memory would not be reliable. Some items were acquired in trades. How do we deal with these issues?

If I bought a card in 1990 for $500 and sold it in 2022 for $1000, and have no documentation of my buy price, how can I avoid paying tax on the entire $1000? This has been fun as a 'hobby' and if I made money selling an item, it has been my means of funding other purchases for my collection.

It seems that this may push many hobbyists into creating "businesses" and all of the headaches that will bring just to avoid overpaying taxes. I don't want to look at my hobby as a business. Am I wrong? Am I making any sense?

[BobC]

Originally Posted by tha-rock

I heard about this today from a member and reading this post has not only been informative, but confusing and frustrating. It is going to be a nightmare to do this. Is IRS really so desperate for funding that they need to create a system that will sweep up millions and millions of ordinary folks who manage to sell $600 or more in a year in an online marketplace? Can the $600 threshold be raised to a more reasonable amount? What would it take to do that?

I am refining and downsizing my collection. Most of the items I'm selling were acquired at a cost, although I have no written sales records of what I paid for 99+% of those items. I understand paying taxes on sales at the capital gains rate, but how do I establish a price paid for something I sell so that I don't have to pay taxes on the gross amount? Will the IRS just take my word for what I paid? I imagine many of you are in the same boat. How are you going to handle it?

Not long ago I sold a Jim Rice signed baseball for $25, which is what I paid for it, when I bought a few from Sure Shot Promotions. After ebay fees, I lost money on this baseball, but under the new law ebay would show this as a $30 income ($25 + $5 postage), when in reality it was a net loss to me. Having to pay tax on a net loss is salt in the wound. Many of you probably have clear memories of what you paid for certain things but would be at a loss if IRS asked you to prove it. Some of the things I am selling, I purchased 20- 40 years ago. No sales receipts and memory would not be reliable. Some items were acquired in trades. How do we deal with these issues?

If I bought a card in 1990 for $500 and sold it in 2022 for $1000, and have no documentation of my buy price, how can I avoid paying tax on the entire $1000? This has been fun as a 'hobby' and if I made money selling an item, it has been my means of funding other purchases for my collection.

It seems that this may push many hobbyists into creating "businesses" and all of the headaches that will bring just to avoid overpaying taxes. I don't want to look at my hobby as a business. Am I wrong? Am I making any sense?

You make a lot of sense and I can understand your confusion, but don't think you're alone. If you're thinking you have to form a business now, you don't. If you look at and read my posts, in this thread and back in others from prior months/years, I've talked and written about the various ways people in this hobby can end up reporting their sales activity, and at least some of the pros and cons of each way to possibly report what they're doing. As I've been saying for quite a while now, people buying and then selling sports cards, like many of us do, will basically fall into and end up reporting their card sales activity as either a dealer/seller/flipper that is actually in business and treating what they do as such, or as an investor, and also finally as a true collector/hobbyist. And I've also said you can probably be reporting as any of these three different sales types (dealer/investor/collector) all at the same time, depending on your unique set of circumstances.

I'm merely passing along information so fellow collectors will at least have and know the basics of what they should be doing, so they are better informed and able to best decide how to handle and report things for their own unique situations and circumstances. And I'm a big proponent of advising people to seek out good, qualified professional help with tax reporting and preparation when they need it. If you start going back and reading through my posts, you'll soon see I keep saying the same things over and over again, and I'm really getting tired of all this typing. LOL

Anywy, to specifically answer your question about costs and records, even if you don't have an actual receipt or other specific documentation to support every single thing you've ever bought, I would not go and just report the cost of such an item as $0 then if I sold it. Instead, I would give it my best effort to recreate what the cost was, and failing that, would give it my best educated guesstimate as to what I paid for something, and use that to report on a return. You could even create or maintain some type of log, notes, spreadsheets, or other written records to keep track of such undocumented acquisitions, like cash purchases you had from a show you attended years ago. It may not be perfect, but you do the best you can to be reasonable and as accurate as possible. Hope this hopes. Good luck.