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

[CTDean]

Bob,
The paypal 1099K includes all money coming into your account for sales. You can buy with your funds, let it set, or transfer to your bank if you want. Your 1099K will include every dollar coming into your account no matter how it goes out.

[BobC]

Originally Posted by CTDean

Bob,
The paypal 1099K includes all money coming into your account for sales. You can buy with your funds, let it set, or transfer to your bank if you want. Your 1099K will include every dollar coming into your account no matter how it goes out.

Yes I know and understand that, and never said 100% of a person's sales through Paypal (unless they are F&F transfers which aren't considered as sales) don't count towards their 1099-K reporting. I was merely trying to point out to people that if someone never transferred sales money they got through Paypal back into their bank account, that sales money never shows up on their bank account statement or in their personal bank records, where the IRS can easily go and find it. And that was a main reason why they imposed the lower reporting threshold on Paypal and other third-party payment venues. If you go back and carefully re-read what I wrote, you should be able to get my point.

These are very complicated tax laws and reporting requirements, and despite my often writing novel length posts to try and explain them, I still can't begin to cover all the nuances and exceptions. Just trying to be helpful and give members some advice when it comes to our hobby and taxes. And that's why I most often end such posts suggesting people get in touch with a qualified tax professional for more specific help and guidance, especially one knowledgeable about the state they're in.

[Dewey]

Thanks, Bob. Very helpful.

[BobC]

Originally Posted by Dewey

Thanks, Bob. Very helpful.

You're welcome. If you do end up getting some professional tax help, hopefully this thread, and other posts I've made in the past will allow you to save on a half-hour to an hour's worth of billable fees where your accountant/tax preparer doesn't have to try explaining all this stuff to you from scratch. LOL

[Tyruscobb]

The eBay baseball card buying and selling experience has gradually deteriorated, especially over the past few years. First, purchasing cards became more expensive when states began collecting sales taxes.

Second, the new required managed payment system has decreased sellers. I personally know a few small sellers that refused to give eBay their banking information and no longer sell their cards on it now.

Third, this new 1099 standard will push even more sellers out the door. I know sellers always should’ve reported their profits, but now big brother is really watching. This will scare some sellers off, and create headaches for others.

Fourth, at some point in the future, eBay plans on lowering the authentication amount to just $250.00. This will undoubtedly increase my wait time. The seller will have to ship the raw $250 card to the grader, it will probably sit at the grader’s place for a while, and then the grader will eventually mail it to me when it certifies the card is authentic. How long will this entire process take? Who wants to now wait two months to receive a raw $250 eBay card purchase? No thanks.

[BobC]

Originally Posted by Tyruscobb

The eBay baseball card buying and selling experience has gradually deteriorated, especially over the past few years. First, purchasing cards became more expensive when states began collecting sales taxes.

Second, the new required managed payment system has decreased sellers. I personally know a few small sellers that refused to give eBay their banking information and no longer sell their cards on it now.

Third, this new 1099 standard will push even more sellers out the door. I know sellers always should’ve reported their profits, but now big brother is really watching. This will scare some sellers off, and create headaches for others.

Fourth, at some point in the future, eBay plans on lowering the authentication amount to just $250.00. This will undoubtedly increase my wait time. The seller will have to ship the raw $250 card to the grader, it will probably sit at the grader’s place for a while, and then the grader will eventually mail it to me when it certifies the card is authentic. How long will this entire process take? Who wants to now wait two months to receive a raw $250 eBay card purchase? No thanks.

Brent, In response to your four points I think - yup, yup, yup and yup!

But don't forget cards are not the biggest and main thing sold on Ebay. This new reporting compliance effects all the Ebay sellers, and all the other sellers on all the other online sales venues and platforms out there as well. And since most people selling online use the third-party payment services like Paypal, Venmo, and Zelle to transact business, these sellers may still be reported for their sales, regardless of where they move to sell. All of which can see a resurgence and return back to shows and flea markets, and more people running cash businesses and using checks, which I'd actually enjoy seeing. (But then watch them start pushing that $600 reporting limit on personal bank account activity again as well.)

And don't think that everyone may start jumping to cryptocurrencies to try to get around these tax reporting rules. I believe enhanced 1099-B reporting requirements for cryptocurrency activity and transactions are already in place and slated to take effect in 2024 or 2025 (forget now).

Maybe we baby boomers aren't so dumb after all in not necessarily fully embracing all the new-fangled technology and other supposed advances in doing everything online. If I pay by cash or check, I don't have to worry as much about a credit card being hacked, or an online payment service being comprised. And if I can go to shows to actually see and examine what I'm thinking of buying, I don't need it in any damn TPG holder to tell me it is real, or what condition it is in. LOL

[Tyruscobb]

Originally Posted by BobC

All of which can see a resurgence and return back to shows and flea markets, and more people running cash businesses and using checks, which I'd actually enjoy seeing.

Bob,

I think you are correct. I heard there were several dealers at this month's Dallas show that had cash only signs. I think this will become more prevalent going forward.

[Michael B]

Bob,

Thank you for writing all you do. I am amazed at all of the incessant hand-wringing everyone does over something that has essentially been there all along. I sold on Ebay for many years and never had any problem. You sell, you profit, you pay your taxes. That is not hard to understand. If you are making a concerted effort to try and obey the law you will have no problems. The IRS bogeyman is not hiding in your bushes watching your every move.

There are plenty of opportunities to reduce the liability which seem to be lost in the conversation. What is the basis of the item? Honest, best guess will work. No one is going to pore over 10 year old issues of Baseball Card magazine to find out that you overstated how much you paid for an item by 75¢. There are also packing materials, postage, other supplies (pens), roundtrip mileage to the post office, subscriptions to any site or publication which helps you price your items and ebay fees. Also the expenses of travelling to a show - hotels, admission, food, gas (or mileage), tolls, parking, etc. If you are attending a show to purchase items to eventually sell the expenses to attend the show are part of the deduction equation. These travel expenses can also be incurred by going to flea markets, antique shows, stamp/coin shows, yard sales. Plenty of people have posted new acquisitions on this board that they found at a yard sale and then intend to sell. There were expenses over the money paid for the item that are part of the true cost.

I may be oversimplifying the facts, but I learned from a former work acquaintance who was an attorney/accountant that it is important to pay attention to what you are spending to acquire something you intend to sell for a profit.

[BobC]

Originally Posted by Michael B

Bob,

Thank you for writing all you do. I am amazed at all of the incessant hand-wringing everyone does over something that has essentially been there all along. I sold on Ebay for many years and never had any problem. You sell, you profit, you pay your taxes. That is not hard to understand. If you are making a concerted effort to try and obey the law you will have no problems. The IRS bogeyman is not hiding in your bushes watching your every move.

There are plenty of opportunities to reduce the liability which seem to be lost in the conversation. What is the basis of the item? Honest, best guess will work. No one is going to pore over 10 year old issues of Baseball Card magazine to find out that you overstated how much you paid for an item by 75¢. There are also packing materials, postage, other supplies (pens), roundtrip mileage to the post office, subscriptions to any site or publication which helps you price your items and ebay fees. Also the expenses of travelling to a show - hotels, admission, food, gas (or mileage), tolls, parking, etc. If you are attending a show to purchase items to eventually sell the expenses to attend the show are part of the deduction equation. These travel expenses can also be incurred by going to flea markets, antique shows, stamp/coin shows, yard sales. Plenty of people have posted new acquisitions on this board that they found at a yard sale and then intend to sell. There were expenses over the money paid for the item that are part of the true cost.

I may be oversimplifying the facts, but I learned from a former work acquaintance who was an attorney/accountant that it is important to pay attention to what you are spending to acquire something you intend to sell for a profit.

All true. One of my all-time mantras has always been:

Tax evasion is a crime, but tax avoidance is your Constitutional and God given right! Amen.

As for the comments about the importance of expenses, that is also very true. But the exact types and amount of expenses you end up deducting can vary greatly depending on whether or not you file your tax return and report the sale of your cards as a dealer, as an investor, or as just a pure hobby collector. Can actually make a big difference.

[Michael B]

Originally Posted by BobC

All true. One of my all-time mantras has always been:

Tax evasion is a crime, but tax avoidance is your Constitutional and God given right! Amen.

As for the comments about the importance of expenses, that is also very true. But the exact types and amount of expenses you end up deducting can vary greatly depending on whether or not you file your tax return and report the sale of your cards as a dealer, as an investor, or as just a pure hobby collector. Can actually make a big difference.

Yes, I fully agree, that is why I said I was oversimplifying it. If you can get in the mindset of paying attention to the costs and expenses your are much more prepared when you do have to file. I first experienced the approach working as a freelance legal researcher travelling to multiple courthouses around Mass. When I was selling on ebay I was a full time salaried employee of a large corporation, but I was prepared to note the said costs and expenses and it went very smoothly. My accountant who has done my taxes for 33 years said I was doing it properly. LIke you, I am also old school. Rather than an accounting program I wrote everything down in a notebook and totalled each page as I finished it. My selling paid for a destination wedding and two week honeymoon in Australia among other things.

[Michael B]

Originally Posted by BobC

All true. One of my all-time mantras has always been:

Tax evasion is a crime, but tax avoidance is your Constitutional and God given right! Amen.

As for the comments about the importance of expenses, that is also very true. But the exact types and amount of expenses you end up deducting can vary greatly depending on whether or not you file your tax return and report the sale of your cards as a dealer, as an investor, or as just a pure hobby collector. Can actually make a big difference.

Yes, I fully agree, that is why I said I was oversimplifying it. If you can get in the mindset of paying attention to the costs and expenses your are much more prepared when you do have to file. I first experienced the approach working as a freelance legal researcher travelling to multiple courthouses around Mass. When I was selling on ebay I was a full time salaried employee of a large corporation, but I was prepared to note the said costs and expenses and it went very smoothly. My accountant who has done my taxes for 33 years said I was doing it properly. Like you, I am also old school. Though for me than an accounting program I wrote everything down in a notebook and totaled each page as I finished it. My selling paid for a destination wedding and two week honeymoon in Australia among other things.

[conor912]

My guess is that a lot of sellers have traditionally operated in the 15-30% overall profit margins. If a large chunk of that now goes to Uncle Sam, it’s hard to see how sellers don’t bail in droves.

[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.