Hey, I had no idea where to ask this. Sorry if this isn't the right place to ask. I haven't tried to sell gear on the Buy-Sell Board in a couple of years, so it's like starting over.
What do you all (who use PayPal to receive payment) do about collecting sales tax on your gear sales? I don't even know where to start with this and wonder if it's worth it given the hassle.
In most states it's the responsibility of the buyer to report private purchases and pay any required tax. In reality, very few people do that.
On the other hand, if you normally collect sales tax and file sale tax returns in your state for your business, you might want to consider doing it. You can use the PayPal invoice feature to generate an invoice to your buyer and add sales tax.
Don’t even think about it. You’re not required to collect sales tax. That’s on the buyer. You’re only required to pay any capital gains taxes for anything you sell for more than you purchased it for. I guarantee that’s unlikely to happen when selling a used lens. Just buy and sell and don’t worry about it.
Yeah, as a private seller you don't have to collect sales tax.
What you will have to do now if you receive more than $600 in payments from Paypal (or Venmo) as "goods and services" in a year is report that to the IRS with your next tax return (the threshold used to be $20K). You won't owe tax if you sell stuff at a loss (which probably everyone here will do) so it's more of a reporting hassle than anything else and I'm sure it'll only take a few extra minutes to deal with in Turbotax. But I've started requesting PP invoices or receipts for stuff I buy online now so I have easy proof I made no money if I later sell that item.
This is why a lot of people are now specifying payment via Paypal gift/friends and family, or something like Zelle, which are not subject to IRS reporting requirements. But buying that way also gives you no buyer or seller protection so I prefer not to use them unless I know someone (and Zelle payments are also reversible, which is a further risk as a seller)
mudlake wrote:
Don’t even think about it. You’re not required to collect sales tax. That’s on the buyer. You’re only required to pay any capital gains taxes for anything you sell for more than you purchased it for. I guarantee that’s unlikely to happen when selling a used lens. Just buy and sell and don’t worry about it.
It's not capital gains unfortunately, it's regular income.
PayPal is sending out 1099s now, so anything over $600 in sales that's been 1099'd has to be itemized and noted as a loss (as in, I paid $1200 for that lens and sold it for $800, so I don't owe the IRS anything).
As you note none of us are making a profit on B&S ;-) - just a little more work on the ol tax return.
