Current Events > Selling on Ebay just got more complicated...

(+) Yeah! (+)

I just got this today:

You may have heard about a new tax law that went into effect this year. We believe this new regulation just doesnt make sense. It creates confusing and unnecessary paperwork for millions of casual sellers on eBay, who will now receive tax forms even when they dont owe taxes.

To help support our sellers, weve been working to put pressure on Congress by bringing our community together to make their voices heard. We need sellers like you to speak out today and tell Congress to act in the interest of sellers across the US.

Heres whats happening

Companies like eBay are required to report sales to the IRS using a tax form called a 1099-K. Until recently, you would only get a 1099-K if you sold over $20,000, or more than 200 items. Starting this year, new legislation has lowered that threshold to just $600, even if that was from a single sale all year. Where it gets complicated is youll get this form even if you dont owe anything, because not all sales are taxablefor example, if you sell something for less than you paid for it. That means millions of sellers will now get unnecessary tax forms, creating confusion and pointless paperworkboth for the IRS, and for small-time sellers who arent set up to deal with it.

Imagine selling an old bike for $800 that cost you $1,500 a few years ago. Since you didnt make a profit, the IRS doesnt consider that taxable income. But under this new law, youre still going to get a 1099-K. And now youll have to prove to the IRS that you dont actually owe any taxes on that sale, which makes for complicated accounting work.
Heres what you can do

Were asking our community to take action today. Recently, new legislation was introduced in Congress to raise the threshold and limit the number of sellers getting these unnecessary forms. But we need your support to make sure it will pass!

Go to our eBay Main Street website and tell Congress to act now to support Americans selling online. It will only take a few minutes, and if we succeed, it can save you, and millions of other sellers the hassle of needless tax forms for years to come.
Speak out today

Were committed to making sure all our sellers are set up for success, and will continue to keep you updated. Look for emails and alerts from us that will help explain whats changed, and what you may need to do next. In the meantime, you can learn more in our FAQ about Form 1099-K and how it affects you.

Thanks for being part of the eBay community.

So for example, I sell Paper Mario 64 and make 3 times the original cost of the game, it is now considered as taxable income? Buyer pays taxes for the item, Ebay claws that to themselves and I will never see it on my end yet I will still have to pay taxes for sale which Ebay took away from me. What kind of BS will that be?

castrejon04 posted...

I sell Paper Mario 64 and make 3 times the original cost of the game, it is now considered as taxable income?

This was always considered taxable income lol, you just didn't have to report it if it was below a certain amount per year. On the flip side, if you bought it and then later sold less than you paid for then it is not taxable income. The difference is now you may have to <i>prove</i> to the IRS that you sold it for less than you paid for it. Hope you kept the receipt for anything you list on eBay, no matter how long you owned it!

holy_bolt posted...

This was always considered taxable income lol, you just didn't have to report it if it was below a certain amount per year. On the flip side, if you bought it and then later sold less than you paid for then it is not taxable income. The difference is now you may have to <i>prove</i> to the IRS that you sold it for less than you paid for it. Hope you kept the receipt for anything you list on eBay, no matter how long you owned it!

This. It's not that you're being taxed in some way you weren't previously. It's just that up until now you've been cheating on your tax forms by not reporting it, probably without realizing it, and technically you owe back taxes on all those sales.

It's not just eBay and it's an extremely stupid thing that was passed.

While you always have to pay taxes on any gain, going from $20k to $600 to get that extra $50-$100 in tax is literally scrounging for fucking pennies.

$600 seems like the magic number for the IRS recently, first they want to monitor bank accounts with over $600 of annual transactions and now they want people to report income made on Ebay if it's over $600.

Lowering the reporting threshold to $600 is dumb as hell. I don't know what congress were thinking on that one. Instead of going after the rich, this kind of shit makes it more difficult for lower income people.

.

project_night posted...

makes it more difficult for lower income people

So typical government things in America

E-Bay should just build it into their process. Give people the option to do it themselves or be taxed automatically through eBay fees.

project_night posted...

Lowering the reporting threshold to $600 is dumb as hell. I don't know what congress were thinking on that one. Instead of going after the rich, this kind of shit makes it more difficult for lower income people.

.

Congress has always gone after the poor, just look at their attempt to tax unrealized gains. They say it's to go after your average billionaire with assets tied up in stocks, but the reality is that the average person's biggest unrealized gain is your house.

project_night posted...

Lowering the reporting threshold to $600 is dumb as hell. I don't know what congress were thinking on that one. Instead of going after the rich, this kind of shit makes it more difficult for lower income people.

It's easier to rob $10, from a 100 working class, than it is to rob $1000 from one rich man.

they cant afford to battle the 1% so they fuck over the working class and poor

[LFAQs-redacted-quote]


You've always owed taxes on that profit, though. You've just been not paying it.

https://www.findlaw.com/tax/federal-taxes/do-you-need-to-report-your-online-sales-to-the-irs.html

Reportable gains on online sales of items such as antiques, art, and collectibles should be reported to the IRS where the sales price is more than the cost of the item. If, for example, you sold a vintage automobile online for a profit, you should report this gain. Depending on the nature of the online sale, the gain may be reported as business income or capital gains

In your case, you should be reporting it as "hobby income":

Determining Whether Sales Are Hobby or Business
Income made from online sales can be reported to the IRS as "hobby income" if the sales activity qualifies as a hobby according to the IRS, i.e. sale without the intention of making money. For example, a recreational photographer selling a photo on ebay should report the sale as hobby income.

The IRS will consider your hobby to be a business if you made a profit in three of the last five years. While at one time you could deduct your hobby expenses from your hobby income, since 2018, hobby expenses are no longer deductible.

If I buy something and sell it at a loss is that tax deductible?

Well on the bright side, the scalpers are going to get screwed over big time next year. So even if you sold on PS5 for profit as a scalper, uncle Sam will take a piece of the pie as well.

SHRlKE posted... If I buy something and sell it at a loss is that tax deductible?

Nope, that's not how it works.

$600 is such a low threshold for any of these new tax laws. Blatantly targeting lower income households instead of going after the people who are really robbing the IRS

Are these the same folks who complain when the IRS comes after them for not reporting income on their ebay business for 5 years?

SHRlKE posted...

If I buy something and sell it at a loss is that tax deductible?

Not if you're doing it as a hobby, but yes if you have a business. You also dont owe taxes on that sale anyway, though, since it's a loss, so it's a moot point.

How does this work for something like magic cards? What did I spend on a card that came in a pack?

The IRS can go burn in hell tbh

Relient_K posted...

How does this work for something like magic cards? What did I spend on a card that came in a pack?

1/nth the cost of the pack id assume.

Relient_K posted...

How does this work for something like magic cards? What did I spend on a card that came in a pack?

Technically for something like that I guess you would be dividing the cost of the booster pack or box by the number of cards in total to consider that your "cost per card" and then you have to report profit on every card sold above that value.

I'm fine with this. Pay your taxes.

Billyionaire posted...

I'm fine with this. Pay your taxes.

Shut the fuck up.

Damn. I got some stuff I dont need that I was planning on listing on eBay.

Wat do

Is this going to put a damper on scalpers is what i want to know

Everybody wants socialism but doesn't want to pay taxes

This olllld news.

Billyionaire posted...

Everybody wants socialism but doesn't want to pay taxes

This is why Im a big proponent of MMT. You dont need taxes with MMT to raise funds. Taxes are there to control inflation and not raise funds.

Is that email real? Sounds a little too preachy to be a corporate email. I'm an active seller and didn't get anything.

On another note, just don't report the shit. Let them send you a form, who cares unless you get audited which is highly unlikely unless you're raking in over 6 figures from it

Fuck ebay

Tropicalwood posted...

$600 seems like the magic number for the IRS recently, first they want to monitor bank accounts with over $600 of annual transactions and now they want people to report income made on Ebay if it's over $600.

Paypal had that $600 limit since forever as well.

LeoRavus posted...

On another note, just don't report the shit. Let them send you a form, who cares unless you get audited which is highly unlikely unless you're raking in over 6 figures from it

An audit has nothing to do with this. They just bill you on what's reported to them.

HagenEx posted...

Paypal had that $600 limit since forever as well.

$600 limit for what? It's always been $20k unless 1099-MISC, which is not the same thing.

tax the rich but not meeeeee

My old co-worker sold 3 electronics on ebay. Each time the customer claimed the item was broken and they took his money away.

HornyLevel posted...

$600 limit for what? It's always been $20k unless 1099-MISC, which is not the same thing.

They make you submit some documents if your account is not linked to the bank directly.

HagenEx posted...

They make you submit some documents if your account is not linked to the bank directly.

I'm not sure what you mean by this. Bank accounts would have nothing to do with tax status and the like.

I had an old co-worker with a goofy little ebay business reselling stuff from the thrift store right next to his house. He always tried to convince me that taxes were a scam and that you should just ignore them. Said he'd never paid taxes in his life. I wonder how that guy's doing these days.