New tax laws regarding PayPal, VenMo and Zelle

Yes garage sales and rummage sales usually will require permits.

Ahh reminds me of the ol classic Mayberry’s strict Green River Ordinance - peddlin’ without a license.

As Andy says to their intern ‘Ohhh Noooo!! You better pick Fife up on that!’


Well it’s same approach for this modern day scenario.
 
LOL, there's no way I'm profiting from my drum collecting. I just don't feel like documenting my losses. My business model is lose as little as possible and then rationalize the next purchase by how much I save off of M.A.P. price that I'm able to absorb the loss on the previous one. I justify the cost of shipping and sales tax I pay in having a nice kit to play for a few months or year. Break even is profit in my book.

I doubt the Shark Tank would want to back me. :ROFLMAO:
 
LOL, there's no way I'm profiting from my drum collecting. I just don't feel like documenting my losses. My business model is lose as little as possible and then rationalize the next purchase by how much I save off of M.A.P. price that I'm able to absorb the loss on the previous one. I justify the cost of shipping and sales tax I pay in having a nice kit to play for a few months or year. Break even is profit in my book. I doubt the Shark Tank would want to back me. :ROFLMAO:
It doesn’t work that way.

Profit or loss, unless this is your primary income route, which you’d still be reporting through a W2, once you hit over $600 in sales revenue, it becomes miscellaneous income taxable by Federal and or State agency.

Whether you live in a state that has annual income taxing like Colorado you may be further subject to state taxation, this is not the case for let’s say Texas.
 
You are profiting. It becomes 'self employment' when people are buying and selling multiple items on Ebay or Reverb.

No, it does not become "self employment".
If you sell something for more than you paid for it it's considered an "investment profit" and that's what they want you to report as income. That's not self employment, it's unearned income.
Funny, if you sell it for less you can't claim the loss. Because you're not a business.

If I buy a vintage kit for $1000 I can claim it as a business expense and get a tax break. If a few years later I sell that kit for $2000 I am required to tell the tax man and it may be included in my taxable income for the year.

Now this ^ is taxable income. Gear you buy and sell related to your profession of livelihood.

As 'dcrigger' points out, this is hardly going to impact the people who sell a couple of lower priced items every now and then, but many people are selling on the internet as a (defacto) business.

Not just lower priced items.
 
Am I wrong in thinking I heard that the current administration hired 75.000 extra IRS personnel?75.000.

Problem is, they were really under staffed, which was leading them to do a lot of audits of working people, which are fast and easy to do, vs. auditing wealthy people, which is very time consuming.

Funny, if you sell it for less you can't claim the loss. Because you're not a business.

You can if you treat it like a business and file a schedule C.
 
It doesn’t work that way.

Profit or loss, unless this is your primary income route, which you’d still be reporting through a W2, once you hit over $600 in sales revenue, it becomes miscellaneous income taxable by Federal and or State agency.

Whether you live in a state that has annual income taxing like Colorado you may be further subject to state taxation, this is not the case for let’s say Texas.

The IRS taxes profit. Taxing profit AND taxing revenue is inconsistent. Selling something for $600 doesn't mean you profited $600.
 
Problem is, they were really under staffed, which was leading them to do a lot of audits of working people, which are fast and easy to do, vs. auditing wealthy people, which is very time consuming.
Isn't that wonderful. Mess with the little guy when they could be deriving MUCH more revenue from the corps and billionaires who have legions of accountants/lawyers who are adept at hiding their profits. They can kiss my tookus!

"I'll give you my SQ2 when you pry (or take) it from my cold, dead hands" :cool:
 
The IRS taxes profit. Taxing profit AND taxing revenue is inconsistent. Selling something for $600 doesn't mean you profited $600.
Nobody is saying it is, including the IRS. The idea is that $600 (+) set of transactions that the IRS wants to be notified about - so that the party that received the money can explain (on their tax return) whether their was profit or not.

The 1099 reporting in itself declares nothing about taxes owed - it simply reports that money changed hands. And our tax law basically says that any and all money that we receive for any purpose needs to be reported on our tax filings - so we can pay any tax that might be due. In the case of selling gear, if there was no profit, there will be no tax owed.
 
The IRS taxes profit. Taxing profit AND taxing revenue is inconsistent. Selling something for $600 doesn't mean you profited $600.
Hi bud7h4 outside of direct out the gate taxable sales, in short there’s a thing called sales and use tax, this is a reconciliatory time for vendors to have their non taxed items reported and pay tax.

Here’s where your revenue theory is slight.
So unless private seller who sold something at $600 attributed federal and state (where applicable) taxes to sale, and filed/reported a DR0154 - Sales tax return for occasional sales, which most likely didn’t.
It will be need to be reported/taxed at the year’s end via 1099.
 
So does PayPal and others charge Federal or State taxes. Rules can be much different, as are percentages.
 
Isn't that wonderful. Mess with the little guy when they could be deriving MUCH more revenue from the corps and billionaires who have legions of accountants/lawyers who are adept at hiding their profits. They can kiss my tookus!

"I'll give you my SQ2 when you pry (or take) it from my cold, dead hands" :cool:
Sorry but no little guys will be messed with that aren’t failing to report profits - and those that are should be IMO because the guys selling used gear out of their small drum shops have and why should they get undercut by the guy selling out of his garage.

None of this mattered much when us little guys were doing our little cash sales locally at garage sales and swap meets - but everyone of us can now with an Ebay membership, sell internationally with credit card payments with near zero overhead. This puts us collectively in direct competition with more traditional businesses - and you would suggest that we should maintain an easy “under the table” tax advantage as well.

I believe everyone should have to play by similar rules.

Also anyone that is selling online and depositing that money in their bank account is already easy pickings for an audit - this 1099 thing just underlined yet.

Again the only way to be “under the table” is with cash - and cash that never touches an account. Anyone who ignores that is just asking for an audit - none of that has changed.

Personally I sell so much more stuff the modern way and it is so much easier to do it, that I don’t mind simply declaring it all and paying whatever small tax I might owe.
 
I’m a left leaning guy. But taxes are ridiculous in a lot ways.

For example, in addition to collecting drums, I also collect Jordan 1’s… and there is an online sneaker reseller site like reverb but for sneakers. I think it’s crap that someone pays taxes on a pair of shoes then resells them and that new buyer also has to pay taxes on the shoes.

I know it’s state taxes but an item should only be allowed to be taxed once.
 
Sorry but no little guys will be messed with that aren’t failing to report profits - and those that are should be IMO because the guys selling used gear out of their small drum shops have and why should they get undercut by the guy selling out of his garage.

None of this mattered much when us little guys were doing our little cash sales locally at garage sales and swap meets - but everyone of us can now with an Ebay membership, sell internationally with credit card payments with near zero overhead. This puts us collectively in direct competition with more traditional businesses - and you would suggest that we should maintain an easy “under the table” tax advantage as well.

I believe everyone should have to play by similar rules.

Also anyone that is selling online and depositing that money in their bank account is already easy pickings for an audit - this 1099 thing just underlined yet.

Again the only way to be “under the table” is with cash - and cash that never touches an account. Anyone who ignores that is just asking for an audit - none of that has changed.

Personally I sell so much more stuff the modern way and it is so much easier to do it, that I don’t mind simply declaring it all and paying whatever small tax I might owe.
I can show that I haven't made a dime as I do keep receipts and have access to all paypal transactions. My contention is that I'm not running a business. It's not me undercutting the small shops it's the big box stores that are destroying your neighborhood shops of every ilk. Why do you think Main St is all boarded up in small towns. But hey, keep shopping at your Walmarts and Home Depots. I sell a kit or two during the course of the year and I'm supposed to go through all the aggravation of setting up a business to do it? Fugheddaboutit. Not happening.

I'm retired but I still have an attorney that has a tax person in their office so they do mine every year. I'll just throw it in the bag with the rest of the stuff. IRS be damned!
 
Nobody is saying it is, including the IRS. The idea is that $600 (+) set of transactions that the IRS wants to be notified about - so that the party that received the money can explain (on their tax return) whether their was profit or not.

The 1099 reporting in itself declares nothing about taxes owed - it simply reports that money changed hands. And our tax law basically says that any and all money that we receive for any purpose needs to be reported on our tax filings - so we can pay any tax that might be due. In the case of selling gear, if there was no profit, there will be no tax owed.

It doesn't say that. And if it did, they wouldn't be able to enforce that even if that was all they did.
 
I can show that I haven't made a dime as I do keep receipts and have access to all paypal transactions. My contention is that I'm not running a business. It's not me undercutting the small shops it's the big box stores that are destroying your neighborhood shops of every ilk. Why do you think Main St is all boarded up in small towns. But hey, keep shopping at your Walmarts and Home Depots. I sell a kit or two during the course of the year and I'm supposed to go through all the aggravation of setting up a business to do it? Fugheddaboutit. Not happening.

I'm retired but I still have an attorney that has a tax person in their office so they do mine every year. I'll just throw it in the bag with the rest of the stuff. IRS be damned!
Darth - I've no interest to getting dragged into the politics of this - or even the economic theory of it.

Again no law has changed here... at all. No tax is being collected that hasn't been part of selling anything in this country for decades. Who's doing who more harm is not the issue. You being retired or not is not the issue either. You're going to do exactly what everyone should do - buy stuff keep receipts and sell stuff then put it all in our tax info pile - and sort it out at tax time (or have your accountant do it (I'm a working musician, so I can't afford to have my CPA charge me to sort through my mountains of receipts - so I do most of it myself) - all adding up to the fact being - this is no big deal. So why get bent about it?

Again for those of us that play for a living this is just business as usual - because just buying the gear in the first place is a tax deduction. So the record keeping is already in place for us. In any case, it's just no big deal - than I guess for those that were hoping to sell a lot of gear for profit while not planning to pay any taxes on those sales.
 
It doesn't say that. And if it did, they wouldn't be able to enforce that even if that was all they did.
Actually (and again any CPA types here feel free to correct me) it kind of does. There are amounts that don't matter - and everything declared doesn't owe a tax. But think about it - $600 isn't a lot of money in today's world and companies are being told to report all of it. My bank has to send me a 1099, if they pay me $3 in interest. So yeah, their goal is to have all money, all transaction accounted for.

As for the second part - you are absolutely right - or at least, you would've been in the past. But today, compared to 20-30 years ago, the ability to crunch mountains of insignificant data has increased a thousand fold (at least). Including the ability for their computers to keep track of something like... a person that receives a 1099 reporting $600 in revenue (not income, just misc. revenue) should have something like that declared on their electronically submitted returns. If they don't, it will trigger an inquiry - usually an automatic electronic one looking for an explanation... "We see you received $600 from so and so and yet, we can't find that $600 dollars on your return. Please explain." And if he doesn't, he'll likely get a bill for the tax on $600 at least - at worst, it will trigger an audit. But they don't need to audit to collect all of these small amounts - they just need to inquire and then bill, if the response is inadequate. Tons of audits will now be people requesting them - needing a one-on-one in order to better explain something.

Sure when returns were on paper and had to be scanned or be looked at by a human, this amount of scrutiny would never pay for itself. But with today's computer systems and everything coming in as digital data - millions of such connections can be tracked and cataloged effortlessly and automatically - including contacting the tax payer for an explanation and reviewing their response long before any human agent has to be involved at all.

So no - it is now possible to keep track of, inquiry about and enforce penalties on millions of these small issues with little to no human involvement at all. (My CPA drug his feet for years resisting filing returns electronically for just this reason - until, of course, there was eventually no choice.) It is - for good and bad - a whole new world.
 
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