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

[Dandor]

Originally Posted by Johnny630

It didn't get swept under a rug, it's filed as a business.

Schedule C. This is a red flag for the IRS when people use this and declare losses in consecutive years. My advice to people using a Schedule C for card collecting is to always have some type of profit each year, even if you can take more deductions at a loss.

IMO there needs to be a straightforward way to deal with this without a collector needing to be a business or treating cards as a stock with a Schedule D. They need to rework the hobby tax deduction rules and allow card collecting to fall under this umbrella.

Many people will yell and scream that if you sell something online that you should always declare this as income on taxes. Those same people will sell cards at a card show for cash and not declare it as income. They will also purchase items without paying sales tax. The fact is the IRS has made participating in a hobby as a complete nightmare.

[BobC]

Originally Posted by Dandor

Schedule C. This is a red flag for the IRS when people use this and declare losses in consecutive years. My advice to people using a Schedule C for card collecting is to always have some type of profit each year, even if you can take more deductions at a loss.

IMO there needs to be a straightforward way to deal with this without a collector needing to be a business or treating cards as a stock with a Schedule D. They need to rework the hobby tax deduction rules and allow card collecting to fall under this umbrella.

Many people will yell and scream that if you sell something online that you should always declare this as income on taxes. Those same people will sell cards at a card show for cash and not declare it as income. They will also purchase items without paying sales tax. The fact is the IRS has made participating in a hobby as a complete nightmare.

What you are referring to is commonly known as the "Hobby Loss Rule". If someone filing as a Schedule C business on their tax return does not report a profit from the business in at least 3 years out of any 5 consecutive year period, the IRS can come in and question if you are truly running a business or just trying to get a tax deduct for your hobby. If you fall under this, the burden of proof is now on the taxpayer to prove they are in a legit, for profit business. Failure to do so will result in net losses from that supposed business no longer being tax deductible.

As for some of the other points you mentioned.....no comment, you are entitled to your opinions. But the thing is, this "hobby" has grown way beyond what a bunch of simple collectors would normally do, and has cards worth hundreds of thousands, if not millions of dollars, coming out everywhere it seems. As an old-fashioned collector myself, I'm not necessarily happy about it, but just have to accept that our hobby is a big business now. And the government and the IRS have no choice but to treat all the people and enterprises involved in it, as such.

Interesting FYI point maybe. I'd always heard the "Hobby Loss Rule". originally came about from the IRS going after horse farms, where the rich owners never showed any profits and just kept generating big tax loss write-offs year after year.