Price: $1.00 Payment method: PayPal Item condition: 10 Preowned equipment, but appears as new
Idk if I have been living under a rock or something, but apparently if you do not live in Illinois, Maryland, Massachusetts, Vermont, or Virginia, you do not get a 1099k from PayPal, unless you sell over $20k, or have 200+ transactions.
I hadn't realized this change was tucked away in the Big Ugly Bill until I read an article a few days ago. I thought I'd be getting a 1099 this year for a small handful of camera sales and am glad I won't, but $20,000 AND 200 transactions seems like a high threshold. $600 was definitely too low a threshold as that number has been around since I was a young accountant fresh out of college in 1986.
No one asked me, and congress does whatever the orange emperor tells them, but somewhere around $15,000 OR 50 transactions might have been more reasonable.
Why is it different for Illinois, Maryland, Massachusetts, Vermont, or Virginia?
I'm sure there are tax experts among members here. Does this mean you get the form from PayPal for information purposes. But it does not mean (automatically) that you will owe tax?
mjc wrote:
Why is it different for Illinois, Maryland, Massachusetts, Vermont, or Virginia?
From what I have read, it is due to their own tax regulations, which I find rather bizarre. One would think that an IRS "rule" would/should apply equally to all 50 states.
Blufox wrote:
From what I have read, it is due to their own tax regulations, which I find rather bizarre. One would think that an IRS "rule" would/should apply equally to all 50 states.
Well for federal taxes, sure, but I bet there are state/local tax laws in those states differ.
There are definitely different tax codes in various states. Some conform to federal code on most things but diverge where they see opportunities to raise revenue. Other states completely go their own way and tax things very differently. California (where I've lived the past 4 years) conforms to federal where it's advantageous but takes every opportunity to make certain things taxable, even when it makes zero logical sense. It's all about maximizing revenue taken from the middle class. OK... off that soapbox.
As regards PayPal, Venmo, etc. reporting transactions, Congress does what they feel will bring votes rather than what makes sense. Ensuring a big loophole for lots of people not reporting income from their side hustles buys votes, just like not including tips in taxable income (which is completely stupid since all the other working stiffs pay tax on all their income). There are much better ways to do all of this, but that's why accountants tend to not get elected to Congress.
Great post. I didn't know that the threshold was raised again either. Very happy about it though because was sort of dreading having to deal with that tax burden this year!
I thought lowering it to $600 was stupid anyway. I know the federal government wants their money but...making people pay taxes on selling second-hand goods = they'll most likely not sell as much or stop selling altogether because not financially feasible = more second-hand goods in the wastelands
Ming-Tzu wrote:
Great post. I didn't know that the threshold was raised again either. Very happy about it though because was sort of dreading having to deal with that tax burden this year!
I thought lowering it to $600 was stupid anyway. I know the federal government wants their money but...making people pay taxes on selling second-hand goods = they'll most likely not sell as much or stop selling altogether because not financially feasible = more second-hand goods in the wastelands
The requirement to pay taxes on any profit from sales hasn't changed - that is a fundamental aspect of the tax code. The thresholds being discussed are only the reporting thresholds for when financial institutions are required to issue a 1099k.
There’s one aspect of all this that is not clear to me. If we sell multiple items in a year, are we taxed on the total gains on all sales, minus the total losses? Or are we taxed on each and every item that sold for more than we originally paid, but items sold at a loss don’t count?
In other words, suppose I sold two lenses in a year. One lens sold for $300 more than I paid for it. The other sold for $200 less than I paid. Do I owe taxes on $300 or $100?
This is interesting because I just got a 1099k from eBay for selling 22 items that grossed $5400, I don't have a store, a business or anything that should be taxed. It's all personal items, just me selling old gear I don't use. I'm not in one of the tax states listed above and I certainly didn't hit the $20k/200 transaction threshold. Hmmm..
For those asking, you only pay tax on profit, not gross sales. But (there always is a but), you must keep a record of stuff you might sell as to time of purchase and amount paid. IRS is quite reasonable in their definition of record. Just record something on paper or computer and keep it in a safe place. A simple ledger is fine.
Most of us, especially me, will never make a gross profit on photo gear in any given year.
Update to 2025 tax code?
