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2022 IRS Paypal (and others) rule change


GotAU?

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Starting in January, 2022, IRS will start requiring Paypal, EBay and others to report your total annual payments received if they are over $600 to the IRS for tax purposes.  I am wondering how my horse trading and flipping stuff, including prospecting gear will be affected on this- I’ve sold some single things for well over that, and it looks like even the part-time hobbyist  who wants to sell their old stuff will have to report any income (unless it’s a loss to save paying taxes on it) on total annual proceeds over $600 they got through payments using online services.  Anyone know the details?  I wonder how this will go with the dealers we all know. Will I have to go back to personal checks only?

It’s in the news. Here is something about it with better info from  a private site also:

https://stepanchukcpa.com/paypal-changes-you-should-know-about/

I may be doing a e-garage sale and using my proceeds for upgrading some of my prospecting stuff soon before this goes down!

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You don't have to pay taxes on items you sell on eBay. Unless it is a business. 

They may have to report it. But that does not mean you have to pay taxes on it. 

They are trying to tax businesses that are selling on eBay and not reporting their earnings. If they audit those businesses they may ask about that money. 

If you are not buying low and selling high on eBay there is no problem. But if you are doing it to make income you owe taxes on that income. 

I'm not sure how making people pay their fair share is a bad thing. Working men get those taxes taken out up front. Why shouldn't guys making money on EBay pay their taxes too?

Most of my income is through PayPal. I'm not afraid of the IRS. I file my taxes and take every deduction I can. If they want to audit me they can. Im not sure how PayPal reporting it makes any difference. 

It's a wonder they haven't made this rule sooner.

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As a public employee. I totally agree with you.  I was mainly wondering as a hobby person who likes to try out equipment and then usually turns it around, usually at a loss, how that worked. Would I have to put the amounts reported from Paypal, etc., on the 1099-K down as income but offset that through depreciation? Ugh, that would mean more paperwork. It’s certainly not a business that makes a living wage. The sales tax for e-sales should be handled the same  way IRS currently handles income from hobbies for us little guys, but $600 per year is only $50 per month. It’s easy to make more than that just reselling old junk we’ve owned for years!

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I thought the IRS had backed off on this?  It’s been two weeks but this was a talked about change (that I have no doubt will be implemented eventually) but had not yet been implemented.

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7 minutes ago, GotAU? said:

As a public employee. I totally agree with you.  I was mainly wondering as a hobby person who likes to try out equipment and then usually turns it around, usually at a loss, how that worked. Would I have to put the amounts reported from Paypal, etc., on the 1099-K down as income but offset that through depreciation? Ugh, that would mean more paperwork. It’s certainly not a business that makes a living wage. The sales tax for e-sales should be handled the same  way IRS currently handles income from hobbies for us little guys, but $600 per year is only $50 per month. It’s easy to make more than that just reselling old junk we’ve owned for years!

No. You don't have to do anything. It's simply not taxable income unless you are selling as a business.

It does not matter if it is a profit or loss. You can buy a car for $500 and sell it for $5000 and it is not taxable as long as you bought it for personal use.

Sure there is a gray area there. But you just don't have to claim profit or loss from the sale of personal items. Not even real estate. As long as it was bought for personal use. 

Big stuff like houses and cars have limits. You have to live in a house for 6 months before you sell it. You can only sell 3 cars a year. You get the idea.

You won't have to reconcile a thing unless you are audited. Then you just have to show that the sales were sales of personal items. Unless you are doing tons of volume they would never bother with it. And then you would probably be doing it as a business.

At least that is what my tax person says. I don't report any PayPal income that is not business related. It is not taxable income.

 

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33 minutes ago, Bedrock Bob said:

No. You don't have to do anything. It's simply not taxable income unless you are selling as a business.

It does not matter if it is a profit or loss. You can buy a car for $500 and sell it for $5000 and it is not taxable as long as you bought it for personal use.

Sure there is a gray area there. But you just don't have to claim profit or loss from the sale of personal items. Not even real estate. As long as it was bought for personal use. 

Big stuff like houses and cars have limits. You have to live in a house for 6 months before you sell it. You can only sell 3 cars a year. You get the idea.

You won't have to reconcile a thing unless you are audited. Then you just have to show that the sales were sales of personal items. Unless you are doing tons of volume they would never bother with it. And then you would probably be doing it as a business.

At least that is what my tax person says. I don't report any PayPal income that is not business related. It is not taxable income.

 

So, you are a tax attorney now, familiar with current tax laws?

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8 hours ago, GotAU? said:

Starting in January, 2022, IRS will start requiring Paypal, EBay and others to report your total annual payments received if they are over $600 to the IRS for tax purposes.  I am wondering how my horse trading and flipping stuff, including prospecting gear will be affected on this- I’ve sold some single things for well over that, and it looks like even the part-time hobbyist  who wants to sell their old stuff will have to report any income (unless it’s a loss to save paying taxes on it) on total annual proceeds over $600 they got through payments using online services.  Anyone know the details?  I wonder how this will go with the dealers we all know. Will I have to go back to personal checks only?

It’s in the news. Here is something about it with better info from  a private site also:

https://stepanchukcpa.com/paypal-changes-you-should-know-about/

I may be doing a e-garage sale and using my proceeds for upgrading some of my prospecting stuff soon before this goes down!

I heard Janet Yellen defending the $600 per year IRS reporting requirement. She said lots of people are cheating. 

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23 minutes ago, Dakota Slim said:

I heard Janet Yellen defending the $600 per year IRS reporting requirement. She said lots of people are cheating. 

Im not even worth 1/40th of her net worth, and they’re worried about a $50 profit per month “business”? :nutty:

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58 minutes ago, Dakota Slim said:

So, you are a tax attorney now, familiar with current tax laws?

No. I'm a businessman who files a tax return every year.

I know enough about tax laws to know that the sale of personal stuff is not taxable income. I ask that exact question every year when I file my taxes. The answer has always been the same. I can only assume it will be the same next year. 

I suggest you consult a knowledgeable tax professional that you trust and ask them about it yourself. 

 

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38 minutes ago, GotAU? said:

Im not even worth 1/40th of her net worth, and they’re worried about a $50 profit per month “business”? :nutty:

Yes. If a business is profitable you must pay tax on that profit. 

That's just reality. Shouldn't profitable businesses pay taxes?

If you have a business then there are deductions to take so you don't have to pay taxes. You claim a loss. It's the American way.

Rules are rules my friend. It has been that way long before eBay started reporting to the IRS. 

It's just not a big deal. We all have to pay taxes on the (traceable) money we make. And if we have a little side gig that brings in a few bucks we all know that we are supposed to be including that in our income.

I think we can expect the trend to continue. It won't be too long before everyone has access to your electronic spending data. Unless we keep it cash or trade the IRS is going to be an issue.

 

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3 minutes ago, Bedrock Bob said:

Yes. If a business is profitable you must pay tax on that profit. 

That's just reality. Shouldn't profitable businesses pay taxes?

If you have a business then there are deductions to take so you don't have to pay taxes. You claim a loss. It's the American way.

Rules are rules my friend. It has been that way long before eBay started reporting to the IRS. 

It's just not a big deal. We all have to pay taxes on the (traceable) money we make. And if we have a little side gig that brings in a few bucks we all know that we are supposed to be including that in our income.

I think we can expect the trend to continue. It won't be too long before everyone has access to your electronic spending data. Unless we keep it cash or trade the IRS is going to be an issue.

 

Sounds like Bob will be one of the new IRS agents!

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For the record, "if you are self-employed you are required to file a tax return if your net income from your business is $400 or more". :old:

"You have to file an income tax return if your net earnings from self-employment were $400 or more."

https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center

Edited by Dakota Slim
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7 minutes ago, Dakota Slim said:

For the record, "if you are self-employed you are required to file a tax return if your net income from your business is $400 or more". :old:

"You have to file an income tax return if your net earnings from self-employment were $400 or more."

https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center

"Is the sale of a personal car taxable income?"
Selling a car for more than you have invested in it is considered a capital gain. Thus, you have to pay capital gains tax on this transaction. ... You do not have to pay this tax until you file your tax return for the year.
Selling a vehicle for a profit is considered a capital gain by the IRS, so it does need to be reported on your tax return. ... You'll need to add the cost of the improvements you made to the car to your original purchase price (listed on the bill of sale you received when you first bought the car).Jul 21, 2021
 
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17 minutes ago, BMc said:
"Is the sale of a personal car taxable income?"
Selling a car for more than you have invested in it is considered a capital gain. Thus, you have to pay capital gains tax on this transaction. ... You do not have to pay this tax until you file your tax return for the year.
Selling a vehicle for a profit is considered a capital gain by the IRS, so it does need to be reported on your tax return. ... You'll need to add the cost of the improvements you made to the car to your original purchase price (listed on the bill of sale you received when you first bought the car).Jul 21, 2021
 

It's getting to the point where people should seek professional help with their taxes to avoid penalties. If, in fact, they do add 80'some thousand new IRS agents they will be probably be looking for anyone who underpaid a penny taxes. 

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30 minutes ago, BMc said:
"Is the sale of a personal car taxable income?"
Selling a car for more than you have invested in it is considered a capital gain. Thus, you have to pay capital gains tax on this transaction. ... You do not have to pay this tax until you file your tax return for the year.
Selling a vehicle for a profit is considered a capital gain by the IRS, so it does need to be reported on your tax return. ... You'll need to add the cost of the improvements you made to the car to your original purchase price (listed on the bill of sale you received when you first bought the car).Jul 21, 2021
 

Oops… this doesn’t include restored old motorbikes, does it?  :inocent: Insert bag on head emoji here…. 

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56 minutes ago, Dakota Slim said:

Sounds like Bob will be one of the new IRS agents!

Sounds like Slim is trolling for a conflict again.

You know Slim you can just leave it alone. You don't have to keep poking at me trying to start something. 

It's your choice buddy. If you want to go down this road again we can do that.

Why don't you just calm down and be civil? You really don't have to do this.

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20 minutes ago, Bedrock Bob said:

Sounds like Slim is trolling for a conflict again.

You know Slim you can just leave it alone. You don't have to keep poking at me trying to start something. 

It's your choice buddy. If you want to go down this road again we can do that.

Why don't you just calm down and be civil? You really don't have to do this.

Sorry Bob. I'm cool, calm and collected. Wasn't trolling. Just made an observation.  

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6 minutes ago, Dakota Slim said:

Sorry Bob. I'm cool, calm and collected. Wasn't trolling. Just made an observation.  

Your apology is accepted.

Now, we won't have to quarrel if you stop directing your comments at me personally.

I won't allow you to snipe at me. So please stop.

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