IRS Changes for 1099-K Reporting

[jaywings19]

Hello Everyone.

I'm not actively collecting cards anymore. I happen to work in the tax reporting field, so I wanted to pass along some U.S. tax related changes that got signed into law last week as part of the American Rescue Act. This will impact a lot of "casual" sellers on eBay/COMC since the reporting thresholds will be lowered dramatically for Tax Year 2022 (reporting in January 2023). I'm assuming the larger sellers are already receiving a 1099-K for their annual transactions on these platforms.

IRS reporting changes effective 01/01/2022 are as follows:

Dollar threshold = $600 (formerly $20,000)
Transaction threshold = None (formerly 200)

Previously, you had to eclipse both thresholds to qualify for IRS reporting. This is being replaced by a single $600 threshold starting in Tax Year 2022.

The following article goes into a bit more detail:

https://www.twrblog.com/2021/03/ame...k-reporting-and-reduces-de-minimis-threshold/

 

[capsfan30]

Jay!! Long time, no see! I hope all is well!

Thanks for the head's up with this! Who provides these 1099-K forms? Or do we have to keep track ourselves?

 

[jaywings19]

Jay!! Long time, no see! I hope all is well!

Thanks for the head's up with this! Who provides these 1099-K forms? Or do we have to keep track ourselves?

Hi CJ.

I'd assume eBay/COMC would be responsible to send the seller a 1099-K to summarize their annual transactions, which ultimately gets reported to the IRS. Though, I'm not sure if payment services like Paypal would somehow be involved.

Perhaps one of our "larger" sellers can clarify since they are likely already exceeding the $20k/200 thresholds.

 

[quincy]

There's a lengthy thread over on Blowout about this.

 

[odjickfan]

Looks like the government wanted a part of the card boom!

I wonder from how much money and how many transactions is paypal reporting to Canada Revenue Agency.

 

[MGiuseffi1969]

Hey Jason! I have been getting tax stuff from ebay and paypal for a while. I keep track of my purchases (wax, supplies, postage, etc) and it's really not too bad.

Sent from my SM-G960U using Tapatalk

 

[weasel-king]

Looks like the government wanted a part of the card boom!

We gotta pay for all these stimulus bills somehow.

 

[dismonkey1]

Jay!! Long time, no see! I hope all is well!

Thanks for the head's up with this! Who provides these 1099-K forms? Or do we have to keep track ourselves?

Virginia already has this threshold for this tax year (they passed legislation last March to lower to $600 for reporting to the state). Therefore, the state and federal get reported for anything over $600. I received my 1099-K from PayPal in January. A couple of other states also had lower thresholds. Now it looks like everybody else will get to join in the fun at least for federal purposes although I am sure the states will follow. It is designed to stop wealthy people from using pass throughs as a loop hole for income taxes, but as usual captures the "non-pros" as well. In my opinion, if they want to tax like a business, then we should treat it like a business. Open up business checking accounts, keep all expenses, create DBAs or better LLCs (about $100 to use a 3rd party online formation in Virginai) and write off everything.

The 1099K is from the 3rd party payment servicer (Paypal, Square, etc)

 

[Burner]

Technically even if you weren't getting a 1099 from ebay/paypal because you were below the 20k threshold you were still responsible for reporting all sales (this applies to any sales you make anywhere, not just ebay).