Just an FYI. If you got a 1099 form and were informed it was reported to the IRS (which it was if you got one) then you will eventually get a letter from them notifying you they discovered a discrepancy in what you reported on your 1040 as income for that year - along with a bill for the tax owed, plus interest, plus a penalty for underreporting.
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1099 K From PayPal -
- Thread starter BostonJazz72
- Start date
Just an FYI. If you got a 1099 form and were informed it was reported to the IRS (which it was if you got one) then you will eventually get a letter from them notifying you they discovered a discrepancy in what you reported on your 1040 as income for that year - along with a bill for the tax owed, plus interest, plus a penalty for underreporting.
This is that Massachusetts says. It says it's informational, so it's up to you to decide whether or not in falls within the realm of taxable. I think automatically thinking of it as the same thing as a W-2 which IS a document of income is not correct. For some people it may be, but for most of us who are just unloading gear and not doing it as a business, then it's not.
So I think the advice that "you need to report it or you will be in trouble" is misguided. That doesn't apply to everyone. It depends on your own situation. It's like the difference between being an actual Uber driver and just getting gas money each week from a friend you give rides to.
So I think the advice that "you need to report it or you will be in trouble" is misguided. That doesn't apply to everyone. It depends on your own situation. It's like the difference between being an actual Uber driver and just getting gas money each week from a friend you give rides to.
Reverb (as required by law) issues you a 1099-K and reports it to Uncle Sam only if your annual sales volume through Reverb payments exceeds $20,000 AND you have 200 or more transactions in a calendar year. I think it’d be hard to make a case you’re not doing it as a business at that level of activity.
Massachusetts, on the other hand, requires a 1099 if you sold $600 or more annually. So if the amount is relatively small or only involves a few transactions (like you finally sold that Olympic White ‘62 PB you found in an attic
) then you could easily argue it was all non-taxable personal transactions.So the total amount and the state you live in will have bearing. A grand or two and a MA address probably won’t catch Uncle’s attention. $20K or better easily could result in a “s’up with that?” query.
The rule seems to be targeting those heavy duty flippers who have flown under the radar for a number of years now. All part of a trend towards closer government scrutiny of online sales activities. As the saying goes: “Great ride! It was fun while it lasted.”
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They’re sending it because the state requires it when you receive over a certain amount in annual transactions. They are hoping that you don’t investigate and just pay the taxes.
Um…because they are required to by law?
The only “detail” they’re reporting is the summed amount of the transactions. Your personal life and tax situation is of no interest or concern to Reverb. They’re just complying with the reporting regulations that are applicable to Reverb. What laws are applicable to you and whether or not you choose to comply with them is your business not theirs.
If taxes bug you take it up with your legislators. They’re the ones who write the laws and set the rules. Reverb isn’t the culprit here.
Odds are good they have it.
When you open a Reverb Pay or Paypal account they ask - and receive - a tax ID number associated with the checking account they’re linking it to from your bank. The tax ID is either going to be a business’s sales tax permit or business license number - or a SSN if it’s an individual’s checking account.
It’s also not hard to work it out if Uncle Sam has to:
- Hey Reverb! What bank did all these transactions get transferred to? BigBank in Boston? Cool! Could you send us the account information (which likely already has your SSN) and a complete list of every transaction that ever cleared through you for this account? Thankee!
- Hey BigBank! Here’s a list of transactions and a name. Did these clear to one of your checking accounts? They did? Groovy! Could you send us a copy of the customer’s file (which definitely has your SSN since a bank won’t open an account or rent a safe depisit box without one) for that account. And how about complete statements for the last five years while you’re at it? Much obliged.
- Gotcha!
Databases never forget. And they’re extremely easy to crossmatch these days.
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This is legit. Reverb does the same thing. Solution. Sell things on Craigslist or TB for cash or Venmo.
I quit using Paypal 2 years because of their policies. I quit selling on Reverb because of their crazy fee's.
I quit using Paypal 2 years because of their policies. I quit selling on Reverb because of their crazy fee's.
PayPal has my cc info— never gave them any other information.
Its’d pretty easy ( because it’s usually the case), to show a loss rather than a gain on used equipment sales.
CC info is linked to your credit record with the issuer. I’d be surprised if you didn’t supply your SSN when you applied for your card.
While it’s true a credit card company can’t technically require you to furnish your SSN, they also aren’t obligated to open an account for you if you refuse. So for all practical purposes it’s moot where the number comes from. Enough entities already have it that it’s easy to get.
And yeah. If you’ve got records you probably can show a loss.
“s’up with that?” -Reverb (as required by law) issues you a 1099-K and reports it to Uncle Sam only if your annual sales volume through Reverb payments exceeds $20,000 AND you have 200 or more transactions in a calendar year. I think it’d be hard to make a case you’re not doing it as a business at that level of activity.
Massachusetts, on the other hand, requires a 1099 if you sold $600 or more annually. So if the amount is relatively small or only involves a few transactions (like you finally sold that Olympic White ‘62 PB you found in an attic
So the total amount and the state you live in will have bearing. A grand or two and a MA address probably won’t catch Uncle’s attention. $20K or better easily could result in a “s’up with that?” query.
The rule seems to be targeting those heavy duty flippers who have flown under the radar for a number of years now. All part of a trend towards closer government scrutiny of online sales activities. As the saying goes: “Great ride! It was fun while it lasted.”
We are going to talk about taxes. We are going to talk about PayPal. We are going to talk about Reverb....
Maybe at the end of day it is best to go back to Craigslist... I know a lot more people saying they only accept Venmo but that makes me too nervous to send money that way. Also, what about Facebook Marketplace. I have sold on here, too. So maybe I will be seeing a 1099 from those guys? This is getting to be painful.
I think most states are strapped for cash especially after this year and now they are going after everyone they can. I know in Chicago a lot of downtown business have closed and thus no longer producing taxable revenue for the state. Add that to the fact that people are moving out of the city. Thus, no real estate tax.
Also, in regards to Capital Gains - lets say Uncle Buck passed away and gifted you his 66 J Bass that he bought for one hundred bucks and you sell it for 10K. Are you paying the 9,900 in capital gains or is appreciation being factored in? Better call Saul...
I think most states are strapped for cash especially after this year and now they are going after everyone they can. I know in Chicago a lot of downtown business have closed and thus no longer producing taxable revenue for the state. Add that to the fact that people are moving out of the city. Thus, no real estate tax.
Also, in regards to Capital Gains - lets say Uncle Buck passed away and gifted you his 66 J Bass that he bought for one hundred bucks and you sell it for 10K. Are you paying the 9,900 in capital gains or is appreciation being factored in? Better call Saul...
each state has their own particular way of screwing its citizens.. here in SC, every penny i make is taxable, and every penny i spend is taxable, including those pennies i made / spent outside of the state (hence, all paypal transactions) .... actually, all those pennies might not be taxable, but they all have to be reported... they'll be sure to tell me how much more they want to squeeze out of me, i'm sure.
buldog5151bass
Kibble, milkbones, and P Basses. And redheads.
If you don't believe you owe taxes on those sales, then complete your tax return showing how you don't owe on the purchases. Just like everyone here reports all their cash gig income, right?
Once the feds have the form, you now have more income.
No way around that. Ignoring it seems like a really bad idea, but always an option.
File as you would normally. If you no longer have income, you don't need to file at all.
I have a friend that does a lot of business through PayPal and I can confirm the trigger amount is 20k.
Good luck,
Dirk
No way around that. Ignoring it seems like a really bad idea, but always an option.
File as you would normally. If you no longer have income, you don't need to file at all.
I have a friend that does a lot of business through PayPal and I can confirm the trigger amount is 20k.
Good luck,
Dirk
This is an classic example of over regulation of fintech. The IRS doesn't understand it so they tax everyone they can. It will be challenged in court I sure. Paypal was strong-armed into this by the IRS . Just as Reverb.com was strong-armed to charge sales tax to buyers. My question is "why would I have to pay tax on used stuff I sell on Paypal if I can sell my used Harley to a dealer and not get a tax form or reported sale to the IRS?" If this holds I won't be using Paypal or Reverb and it won't be long before Talkbass.com gets a call from the IRS.
The threshold appears to be $4,000 in most states and in some states, like Virginia where I live, it's a $600 threshold!! So if I sell one bass it's a taxable event? Unreasonable.
Reselling on eBay or Reverb or Talkbass is not a business for most. It's cleaning out what you don't use. If you are going to be taxed you have the right to write off business taxes, cost of goods sold, marketing, supplies, shipping, etc. We hobby bassists are not a running a for-profit business.
I will talk to my accountant next week. Seems like misguided overreach and a money grab.
The threshold appears to be $4,000 in most states and in some states, like Virginia where I live, it's a $600 threshold!! So if I sell one bass it's a taxable event? Unreasonable.
Reselling on eBay or Reverb or Talkbass is not a business for most. It's cleaning out what you don't use. If you are going to be taxed you have the right to write off business taxes, cost of goods sold, marketing, supplies, shipping, etc. We hobby bassists are not a running a for-profit business.
I will talk to my accountant next week. Seems like misguided overreach and a money grab.
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Yes, I agree that is seems like a big money grab to me. In Illinois, it is 1K threshold. But it seems that it is anything you gained from and not sold at a loss. My thing is that I would need to find the receipts for things I bought to prove I sold at a loss.
If it's real, it probably does. If you made anything substantial, I'd suggest talking to a tax accountant rather than discussing potential tax evasion on a public internet forum though.
If you sell something for more than you paid for it you will, generally speaking, owe capital gains tax on the "profit." It doesn't matter if it is stock in IBM you held for 50 years (although long term vs short term would impact the rate), 60 guitars in a year of active side business or one guitar you flip for $100 in an afternoon after buying for $50 at a garage sale.
