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1099 Tax Form from Ebay

Started by Desert Phone Guy, September 12, 2021, 11:55:55 AM

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Desert Phone Guy

I have always understood that a 1099 would be sent to sellers if they have over $20,000 in annual sales AND over 200 transactions.

MY question is  regarding the $20,000 plateau.

In looking at my sales report, total sales INCLUDES collected sales tax and shipping costs, if I understand it.  Moving over to the far right column, There is a NET sales column, which is considerably less.

Does anyone know which benchmark that Ebay uses to kick out a 1099 to the seller AND the IRS?  Seems wrong to use the gross sales line that includes shipping fees and collected sales sales tax.

What experience has anyone had dealing with this situation?

Thanks...

Steve

Doug Rose

Steve....1099 is sent by Paypal to IRS and Local State.

Like a lottery ticket, under $600 it is yours...over you are taxed.

We got our first 1099 in Feb of 2018 and I immediately stopped selling on eBay. ....Doug


http://www.classicrotaryphones.com/forum/index.php?topic=19768.msg203156#msg203156

Kidphone

kleenax

Quote from: Desert Phone Guy on September 12, 2021, 11:55:55 AM
I have always understood that a 1099 would be sent to sellers if they have over $20,000 in annual sales AND over 200 transactions.

MY question is  regarding the $20,000 plateau.

In looking at my sales report, total sales INCLUDES collected sales tax and shipping costs, if I understand it.  Moving over to the far right column, There is a NET sales column, which is considerably less.

Does anyone know which benchmark that Ebay uses to kick out a 1099 to the seller AND the IRS?  Seems wrong to use the gross sales line that includes shipping fees and collected sales sales tax.

What experience has anyone had dealing with this situation?

Thanks...

Steve
Hey Steve;

Respectfully, Doug is incorrect:

And, with eBay's changing of their "payment plan" in June 2021, I don't know how 2021 (and beyond) will be, but you are correct: their "Official Rules" were 200 transactions AND $20,000; you had to hit both. The $20K threshold is "GROSS PAYMENTS" into PayPal. Since I hit about $23K in 2017, I got hit with a 1099 FROM PAYPAL; but haven't since cause I stop selling when I reach about 185 PayPal transactions (eBay or anywhere else you get a PayPal payment). Keep in mind, now that eBay has completely changed their payment ways (direct to your bank account now), I haven't sat down and taken the time to dissect their "new" ways yet.
Ray Kotke
Recumbent Casting, LLC

Doug Rose

eBay or PayPal has nothing to do with The Federal or State Government. There "rules"  are meaningless. Over $600 and you are responsible for paying taxes.

If you think the IRS and your local State are going to let you make 20K and not pay taxes on it, you are in for a heap of hurtin' my friend.

Only thing certain are death and taxes. You will be taxed.

Not a risk I am willing to take.....Doug
Kidphone

wds

I've been watching this and other posts about 1099's from Ebay/Paypal.  I've had the same problem with getting the 1099's, but it's an easy problem to fix.  1099's from Paypal/Ebay will be reported on the "Other Income" page of your tax return, Schedule 1, line 21.  It shows up on that line as "1099-K Personal Property Sales"......$20K.  (Line 31a)  All you have to do is, on the same line (31b), list " 1099-K Cost of Personal Property"............ -$20k, and the net result is Zero.  Unless you are flipping phones for a living, and you are only selling off part of your personal collection you do not have to pay tax on those items.  Or if you are a flipper, you only pay tax on the profit from the flipping.  Since I maintain a collection that I've had for many years, and add to and remove items from the collection I do not pay any tax, and my cost is always equal to my income.  Easy fix.
Dave

kleenax

Quote from: Doug Rose on September 15, 2021, 06:03:17 PM
eBay or PayPal has nothing to do with The Federal or State Government. There "rules"  are meaningless. Over $600 and you are responsible for paying taxes.

If you think the IRS and your local State are going to let you make 20K and not pay taxes on it, you are in for a heap of hurtin' my friend.

Only thing certain are death and taxes. You will be taxed.

Not a risk I am willing to take.....Doug
We are speaking on 2 completely separate subjects here Doug:
#1 subject: "At what $$ point do you get a Form 1099 from Paypal (for sales on eBay)?
#2 subject: "At what $$ point are you "required" to "pay" (additional) income tax?

The answer is this: The $20,000/200 transaction threshold is what the IRS has determined to be in excess of what they term "CASUAL INCOME", and if it is determined that your eBay (PayPal pmts) is your PRIMARY SOURCE of income, then you are "REQUIRED" to report it (and pay taxes on it). This DOES NOT MEAN that the IRS will be on your doorstep for you failing to report your PayPal earnings that are LESS THAN $20K AND 200 TRANSACTIONS. This is the "official" threshold (in the  IRS COMPUTER ALGORITHMS) that will trigger a RED FLAG on your taxes.

I have researched this extensively, and have been selling via PayPal/eBay since 1997, and have received a 1099 from PayPal (eBay did NOT issue 1099's up to June-2021). It was for "earning" in excess of $26,000/208 transactions via PayPal sales. Some of those sales were completely independent of eBay; the count is for TOTAL PayPal transactions, irrespective of whether or not they came from eBay sales.
Ray Kotke
Recumbent Casting, LLC

kleenax

Quote from: kleenax on September 18, 2021, 08:30:57 AM
We are speaking on 2 completely separate subjects here Doug:
#1 subject: "At what $$ point do you get a Form 1099 from Paypal (for sales on eBay)?
#2 subject: "At what $$ point are you "required" to "pay" (additional) income tax?

The answer is this: The $20,000/200 transaction threshold is what the IRS has determined to be in excess of what they term "CASUAL INCOME", and if it is determined that your eBay (PayPal pmts) is your PRIMARY SOURCE of income, then you are "REQUIRED" to report it (and pay taxes on it). This DOES NOT MEAN that the IRS will be on your doorstep for you failing to report your PayPal earnings that are LESS THAN $20K AND 200 TRANSACTIONS. This is the "official" threshold (in the  IRS COMPUTER ALGORITHMS) that will trigger a RED FLAG on your taxes.

I have researched this extensively, and have been selling via PayPal/eBay since 1997, and have received a 1099 from PayPal (eBay did NOT issue 1099's up to June-2021). It was for "earning" in excess of $26,000/208 transactions via PayPal sales. Some of those sales were completely independent of eBay; the count is for TOTAL PayPal transactions, irrespective of whether or not they came from eBay sales.

Hit "send" too soon!
So, in furtherance of this subject and Doug's answer:
While it is technically "true" that you are "supposed" to pay (additional) income tax on ANY additional (untaxed) income, it doesn't mean that you will be punished/flagged/tracked-down for not reporting ALL income. If your TOTAL gross income is under say, $100,000, then your chances of being audited by the IRS is REALLY REALLY LOW for not reporting "ALL" (untaxed) income. And unless you are "hiding" hundreds-of-thousands of income dollars from the IRS, an "AUDIT"  will consist of a letter requesting explanation OR payment of those alleged unpaid taxes; no jail time ;-) How do I know this? ;-)  The IRS has a LOT of bigger "fish" to catch for tax evasion.
Ray Kotke
Recumbent Casting, LLC

TelePlay

#7
And then there is this proposal to consider . . .

https://www.theepochtimes.com/mkt_app/banks-oppose-bidens-new-proposal-on-irs-reporting_4007332.html?v=ul

Second paragraph (of Biden's New Proposal on IRS Reporting attached below) explains how it will work,

"The proposal, which is being pushed by the Biden administration, would require banks and other financial institutions to report to the Internal Revenue Service (IRS) any deposits or withdrawals totaling more than $600 to or from all business and personal accounts."

if it is adopted.

This from page 94 of the Dept. of the Treasury proposal document, attached below (Administration's Fiscal Year 2022
Revenue Proposals)

"Proposal

This proposal would create a comprehensive financial account information reporting regime. Financial institutions would report data on financial accounts in an information return. The annual return will report gross inflows and outflows with a breakdown for physical cash, transactions with a foreign account, and transfers to and from another account with the same owner. This requirement would apply to all business and personal accounts from financial institutions, including bank, loan, and investment accounts,2 with the exception of accounts below a low de minimis gross flow threshold of $600 or fair market value of $600. Other accounts with characteristics similar to financial institution accounts will be covered under this information reporting regime. In particular, payment settlement entities would collect Taxpayer Identification Numbers (TINs) and file a revised Form 1099-K expanded to all payee accounts (subject to the same de minimis threshold), reporting not only gro
ss receipts but also gross purchases, physical cash, as well as payments to and from foreign accounts, and transfer inflows and outflows."


Doug Rose

#8
Quote from: kleenax on September 18, 2021, 08:45:32 AM
Hit "send" too soon!
So, in furtherance of this subject and Doug's answer:
While it is technically "true" that you are "supposed" to pay (additional) income tax on ANY additional (untaxed) income, it doesn't mean that you will be punished/flagged/tracked-down for not reporting ALL income. If your TOTAL gross income is under say, $100,000, then your chances of being audited by the IRS is REALLY REALLY LOW for not reporting "ALL" (untaxed) income. And unless you are "hiding" hundreds-of-thousands of income dollars from the IRS, an "AUDIT"  will consist of a letter requesting explanation OR payment of those alleged unpaid taxes; no jail time ;-) How do I know this? ;-)  The IRS has a LOT of bigger "fish" to catch for tax evasion.
From the TCI List

[TCI] OFF TOPIC but of note to eBay Sellers: Ebay or Etsy Sale of $600 Now Prompt an IRS Form 1099-K | Money    
Thu, Oct 7, 2021 4:26 pm
Ray K (kleenax@gmail.com)To:you (Bcc) + 1 more Details
Ebay or Etsy Sale of $600 Now Prompt an IRS Form 1099-K | Money


https://money.com/tax-1099-k-600-ebay-etsy/
Kidphone

FABphones

A collector of  'Monochrome Phones with Sepia Tones'   ...and a Duck!
***********
Vintage Phones - 10% man made, 90% Tribble
*************

tubaman


Doug Rose

Kidphone

FABphones

Quote from: Doug Rose on October 08, 2021, 02:18:22 PM
Big John "loves" the Forum, just ask him...

I must be missing something, I thought this thread was about completing an IRS form.

Back on topic, as they say - simples - sellers should pay their taxes alongside every other citizen.

:)

A collector of  'Monochrome Phones with Sepia Tones'   ...and a Duck!
***********
Vintage Phones - 10% man made, 90% Tribble
*************

Doug Rose

Quote from: FABphones on October 08, 2021, 03:45:21 PM
I must be missing something, I thought this thread was about completing an IRS form.

Back on topic, as they say - simples - sellers should pay their taxes alongside every other citizen.

:)


I am in agreement as you can see in reply 2....Doug
Kidphone

markosjal

So what strikes me as really weird about this it is $600 in "sales" meaning they even send the 1099 that includes ebay fees that I never receive. Also looking further at ebay's site I see no way to track shipping expenses (that I buy via ebay), more than 90 days back.

So shouldn't ebay only send me a 1099 for the amount I actually RECEIVE?

It seems to me they are placing unnecessary burden on casual sellers.

I recently had my biggest ebay month ever and it was 880 in Actual sales but less than $700 came to me after I paid all the fees and shipping .

It seems to me if they are going to make me calculate shipping I might as well charge it outright to the buyer with a mark-up.
Phat Phantom's phreaking phone phettish