Go | New | Find | Notify | Tools | Reply |
Member |
Another sneaky money grab IMHO. Now that your 2021 taxes are done—or at least under way—it’s time to focus on a key tax change for 2022 affecting millions of Americans making money through platforms like eBay, Etsy, Airbnb, Venmo and Uber. This change, which is beginning to ripple through e-commerce, tightens the tax reporting on income earned by people selling goods and services through online platforms. Starting this year, the platforms must send a Form 1099-K to the Internal Revenue Service reporting an individual’s total revenue if platform earnings top $600. Now, many more sellers, resellers and gig workers than in the past will have their platform earnings reported to the IRS. The upshot: They may have to pay taxes they haven’t been paying, or else keep complex records showing why they don’t need to. Under prior law, platforms only had to send 1099-K forms if a vendor earned more than $20,000 and had over 200 transactions. The new bar is so low that opponents are trying to get it changed before the platforms send out a blizzard of confusing tax forms next January. Here’s what’s going on. Last year, Congress quietly lowered the 1099-K threshold as part of the American Rescue Plan Act. The goal was to boost tax compliance in an area notorious for lacking it—income the IRS doesn’t know about. According to the agency’s research, tax compliance is highest when employers, financial institutions and others tell the IRS about payments to individuals. These are reported on forms like W-2 wage statements or an array of 1099 forms for other types of income. Compliance suffers when there isn’t such reporting. The IRS’s most recent tax-gap study found that of $245 billion annually of misreported individual income taxes that are owed but not paid, 45% involved income without 1099s or similar reporting. Only 4% of the gap came from wage income subject to reporting and withholding. John Biscuti has stopped selling musical instruments and gear online because he wants to avoid tax hassles. PHOTO: LIZ DIKINSON Platforms like eBay, Airbnb, et al. have had to send 1099-K forms to their sellers for years. But the prior threshold of 200 transactions and $20,000 of revenue left room for significant tax dodging. If an owner of a short-term rental earned $30,000 from 25 rentals in a year, the rental platform didn’t have to send a 1099-K form because the owner had 200 or fewer transactions—even though revenue topped $20,000. Miguel Centeno, a principal at Shared Economy Tax, a tax-prep and advisory firm in Austin, Texas, serving more than 400 short-term rental operators, says most of his clients want to comply with the law. But he well remembers one who didn’t. “When he found out his rental income wasn’t going to be reported on a 1099-K, he asked us to leave it off his tax return,” says Mr. Centeno. “When we said we couldn’t, he immediately quit being a client.” The new $600 threshold will likely affect many gig workers who are independent contractors and haven’t been reporting income, so paying taxes on that income could be costly. It could also pressure companies hiring them to raise pay or expand benefits in a tight labor market. The tax issues are different for many sellers on eBay and similar platforms, especially “casual” resellers cleaning out closets and attics. These vendors may not owe tax at all if they’re selling items for less than they paid—or, when it comes to items inherited from Grandma, less than the item’s value on the date of death. They also won’t have to submit a form to the IRS detailing the purchase and selling prices of items, at least for now. Still, fear of becoming entangled with the IRS is prompting some sellers to back off. For many, 2021 marked their first year—and now first tax season—in cryptocurrency. WSJ tax columnist Laura Saunders breaks down how to navigate reporting digital assets to the IRS ahead of Tax Day. John Biscuti, 36, is a New York-based guitarist who works in a wedding cover band in addition to his day job at a tech firm. He enjoys buying, trying out, and then selling vintage guitars for a small profit or loss on Reverb, a platform for musical instruments and gear. Now, he’s not selling at all. “I want to avoid tax hassles, and so do a lot of people I know,” says Mr. Biscuti. “If I sell, I’ll use something like Craigslist, but that means a far smaller market.” Craigslist doesn’t issue 1099-Ks because it doesn’t transfer payments between buyers and sellers. Alarmed by the $600 threshold’s effects on e-commerce, some members of Congress are hoping to change the law for 2022. Proposals include repealing current law and restoring prior thresholds, or raising the 1099-K bar to $5,000. Nina Olson is one prominent tax specialist supporting an increase in the threshold, perhaps to $5,000. Ms. Olson, the longtime National Taxpayer Advocate at the IRS, now heads the Center for Taxpayer Rights. She points out that the $600 threshold for 1099-K forms, which also applies to two other 1099 forms received by self-employed workers, derives from a 1950s provision that wasn’t adjusted for inflation. If it had been, these thresholds would now be about $6,000, and she hopes Congress will raise them for all three forms. Meanwhile, platforms are changing systems to comply with the $600 threshold. Venmo, the payments app, asks senders of funds whether the payment is to “friends and family,” as for a share of a restaurant bill, or for “goods and services.” Only payments for goods and services receive purchase protection, and recipients of more than $600 in this category won’t receive their payments until they provide Social Security numbers or other tax IDs. As platforms adjust, sellers, resellers and gig workers using them need to check the new law’s effects as well. There’s no guarantee it will be loosened. LINK: https://www.wsj.com/articles/y...ill-know-11650015000 Write to Laura Saunders at laura.saunders@wsj.com | ||
|
I Am The Walrus |
Lots of talk about this on guitar forums. As some of you may know, mid-level guitars these days are well over $1,000 and guitar players frequently flip gear as their musical tastes change over the years. Personally I find it ridiculous that the original purchase was taxed and every time someone wants to sell it, it has to be taxed again. Of course, it says if you profited but how many people outside of the business of flipping keep receipts in case they're audited? I have bought and sold many guitars over the years, I didn't keep receipts to prove whether I lost or made money. This just reeks of the government sticking their hands further into our pockets. _____________ | |||
|
Ammoholic |
I think the threshold is too low. Secondly there's a difference between an estate sale and a business. If you're running a business and making more than $5-10k a year off it then you should pay taxes on it. If you're selling grandma's antiques and jewelry then no. Jesse Sic Semper Tyrannis | |||
|
probably a good thing I don't have a cut |
Guess people will go back to paying with cash and checks then. And using bulletin boards and classified ads. | |||
|
Member |
^^^^^^^^^^^^^ I agree. BTW who is the Chairman of the House Ways and Means Committee these days? In addition to your Congress critter this would seem to be the person to write. | |||
|
Freethinker |
Question for the knowledgeable in line with this: As I long understood the general rule about income from sales of personal property, and as mentioned in the article, if it’s sold for less than it was purchased for, the sale isn’t taxable. My question, though, is “less than” based on absolute dollar amounts or can it be adjusted for inflation? For example, if I sell the S&W model 60 that I bought for $150 in 1969 and which would be equivalent to about $1175 today, and sell it for $800 now, would that be taxable? (This has nothing to do with what the IRS would know by whatever means, it’s about what the law and/or rules are.) ► 6.4/93.6 | |||
|
Member |
Thats literally the ONLY thing they are good at. | |||
|
Member |
^^^^^^^^^^^^^ Yes. Long term capital gain. Tying to inflation would be too cumbersome. The only time you get a capital gain break is when you inherit stocks. You get the stepped up tax basis not the original cost. | |||
|
Staring back from the abyss |
Selling your primary home is exempt as well...unless they've changed that. ________________________________________________________ "Great danger lies in the notion that we can reason with evil." Doug Patton. | |||
|
Member |
^^^ I remember something about investing it in a new home. That is why I have a CPA. | |||
|
Member |
Wait til I drop a 1099 on the kid that cuts my lawn. | |||
|
Member |
I buy and sell a lot of guitar gear on eBay and Reverb. And I probably booked $8k in sales in the last month, just got another $1200 today on a Craigslist sale. That was barely more than I spent on those amps, but I paid cash in parking lots for two of them years ago and bought the other two on Reverb. AFAIK, Reverb reports the total payment I received, does not back out their fees or even returns. After shipping and fees, I made a little money, but I also did some work on those amps and didn't bother keeping receipts for tubes, pots, caps and other parts I bought years ago. This is some bullshit. Offsetting these 1099s is gonna take some serious legwork and the feds aren't going to realize 1% of whatever revenue they project from this, let alone put it to any kind of good use. | |||
|
Frangas non Flectes |
Awesome. I've got three amps I'm looking to sell to buy a Soldano SLO 100 through work. I guess I'll be taking cash only. ______________________________________________ “There are plenty of good reasons for fighting, but no good reason ever to hate without reservation, to imagine that God Almighty Himself hates with you, too.” | |||
|
More persistent than capable |
If the inherited items sell for less than the appraisal, there is no tax. The appraisal is to determine value of the estate. Lick the lollipop of mediocrity once and you suck forever. | |||
|
Member |
I traded an ES-335 I had $1000 into for a like new SLO 100, even up, though I paid shipping both ways, so call it $1200. I think I traded with Derek Trucks through a middleman. I later sold that SLO for $2750 before the prices went nuts. | |||
|
Frangas non Flectes |
Nice. That’s ok, I apparently missed out on when Mike came around the shop and was offering free amps before he sold the business to Boutique Amp Distributors. The new version has DC heaters on the preamp tubes to quiet the hum. Newer manufacture tubes are really noisy compared to what was coming out in the 80’s and 90’s, so I’ll be happier with the new one anyway. I get good guy pricing, just have to put the scratch together. ______________________________________________ “There are plenty of good reasons for fighting, but no good reason ever to hate without reservation, to imagine that God Almighty Himself hates with you, too.” | |||
|
Member |
So if you have to pay on gains what about losses. | |||
|
Don't Panic |
It's dollar amounts. | |||
|
Member |
Ok, so for guns - if they are "gifted/inherited" their cost basis is stepped up to the value at the time of the original owners death so your gain would be less. The step-up in basis loophole allows the basis of an inherited asset to be stepped up to its value at the time of the original owner's death, which reduces any potential capital gains taxes owed by the person who inherits it. | |||
|
Wait, what? |
The $600 threshold will be just the beginning. Before you know it, they’ll make it a lower cumulative figure and without a certain number of transactions. If we get to the point of a cashless society (that’s what they really want) there will be no way to hide any income other than a black market barter system for goods and services only. “Remember to get vaccinated or a vaccinated person might get sick from a virus they got vaccinated against because you’re not vaccinated.” - author unknown | |||
|
Powered by Social Strata | Page 1 2 3 4 |
Please Wait. Your request is being processed... |