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1099 K From PayPal -

#61
This is the third or fourth year I've received one. It does mess up your filing because you need records that show how much profit (if any) you made on the PayPal income.

I put it on my schedule C which is where my music income goes. For instance, deduct the cost of a bass the year I buy it, then claim the Paypal income the year I sell it...but also deduct the PayPal fees and shipping expenses.
 
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#62
brianrost said:
This is the third or fourth year I've received one. It does mess up your filing because you need records that show how much profit (if any) you made on the PayPal income.

I put it on my schedule C which is where my music income goes. For instance, deduct the cost of a bass the year I buy it, then claim the Paypal income the year I sell it...but also deduct the PayPal fees and shipping expenses.
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Thanks! So essentially, I need the receipts of the things I bought to prove I sold it at a loss. That could take a while but I will start digging...
 
#66
I had to deal with this last year - essentially, you can't be taxed when you're selling a used item at a loss so you'll add that info as zero income to your returns. Google can provide a better idea of how to do it. FWIW I did this last year and didn't hear a peep from the IRS.

There are apparently only two states, VT and MA, that require this...
 
#68
#69
aguacateojos said:
I had to deal with this last year - essentially, you can't be taxed when you're selling a used item at a loss so you'll add that info as zero income to your returns. Google can provide a better idea of how to do it. FWIW I did this last year and didn't hear a peep from the IRS.

There are apparently only two states, VT and MA, that require this...
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Illinois is one, also. If you are reporting zero income then does that mean to not report anything?
 
#70
CallMeAl said:
Subbed. No 1099 emails, but I’ve gotten some scam “PayPal account locked” emails lately. When logging in directly, everything was fine. I’ve changed my password a bunch this year, just in case.

I didn’t make a ton on PayPal this year, definitely spent more than earned, but I did have a few sales and gig payouts.
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If you make the cursor hover over the sender in your e-mails, it shows the real source of a message and those are never from PayPal.
 
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#71
So, let's say this becomes more of a "thing" and you have to pay tax on online sales as if it were income, PayPal fees, listing fees, taxes at the top bracket of whatever you pay, quickly hitting the point of just giving it away or die with it.
 
#72
buldog5151bass said:
Governments are being more vigilant at going after tax that is owed. Nothing shady about that.
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I think in a lot of cases though, the gov is going to lose money. If someone is actually running a business, they should pay tax appropriately of course. For someone like myself(and I assume the majority of folks here), if I were to get pushed on this issue and I included all my buying and selling outside Reverb, I could easily show a sizeable loss. My total transactions increased this year because I bought and sold some gear that if we weren't in a pandemic I would have just tried and maybe not bonded with at a brick and mortar store. I got the form in question as well for a total of ~$300 on Reverb. I plan to ignore it, but if the IRS were to question me on it, I'd claim all the things I bought and sold(as a hobbiest) here on TB, on Craigslist, etc...So the $300 guitar head I sold on Reverb, I actually had bought locally on offerup for $325. I also bought a new telecaster from GC and figured out I wasn't really a tele guy, and sold it for a loss on Craigslist. Repeat many times. In the grand scheme it's all chump change so if they come at me about the $300 "capital gains", them and me will have a bunch of extra work and my quick estimate is that including shipping charges and everything I could easily show a $500 loss for 2020, probably more. Adds more complication when this crosses years. So, how about the bass I sold for $600 in 2020 that I bought for $500 in 2010? Also, why pick on musical instruments? I bought and sold a number of pieces of home fitness equipment last year. I sold a bench that I bought a few years ago at a profit in 2020, but I bought a Smith machine to replace it and paid a mint since home fitness is of course all the rage right now. And what about the mattress I bought online in 2020 for $400 and it was way too soft that I ended up selling on CL for $100? I get collecting taxes from a business, but how do they do this across platforms, and across different hobbies for people just buying and selling things for their personal use? If Reverb has to report this, how is it fair that Talkbass doesn't have to report these exact same type of transactions? What about the Reverb equivalent in the Knitting community, are their earnings when they sell a knitting needle or some yarn they aren't using being reported to the IRS?
 
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#73
buldog5151bass said:
Governments are being more vigilant at going after tax that is owed. Nothing shady about that.
Click to expand...

The fed-level version of the 1099-K rules makes sense - it's basically a notice that "we see you and know that you're running a business". The state-level 1099-K with their far, far lower thresholds really looks more like a money grab and they're hoping that people will just report the full amount as income without knowing better. Massachusetts and Vermont have good explanations on their website of when you need to pay tax and when you don't. Illinois omits that info.
 
#74
Jack Butler said:
I think in a lot of cases though, the gov is going to lose money. If someone is actually running a business, they should pay tax appropriately of course. For someone like myself(and I assume the majority of folks here), if I were to get pushed on this issue and I included all my buying and selling outside Reverb, I could easily show a sizeable loss. My total transactions increased this year because I bought and sold some gear that if we weren't in a pandemic I would have just tried and maybe not bonded with at a brick and mortar store. I got the form in question as well for a total of ~$300 on Reverb. I plan to ignore it, but if the IRS were to question me on it, I'd claim all the things I bought and sold(as a hobbiest) here on TB, on Craigslist, etc...So the $300 guitar head I sold on Reverb, I actually had bought locally on offerup for $325. I also bought a new telecaster from GC and figured out I wasn't really a tele guy, and sold it for a loss on Craigslist. Repeat many times. In the grand scheme it's all chump change so if they come at me about the $300 "capital gains", them and me will have a bunch of extra work and my quick estimate is that including shipping charges and everything I could easily show a $500 loss for 2020, probably more. Adds more complication when this crosses years. So, how about the bass I sold for $600 in 2020 that I bought for $500 in 2010? Also, why pick on musical instruments? I bought and sold a number of pieces of home fitness equipment last year. I sold a bench that I bought a few years ago at a profit in 2020, but I bought a Smith machine to replace it and paid a mint since home fitness is of course all the rage right now. And what about the mattress I bought online in 2020 for $400 and it was way too soft that I ended up selling on CL for $100? I get collecting taxes from a business, but how do they do this across platforms, and across different hobbies for people just buying and selling things for their personal use? If Reverb has to report this, how is it fair that Talkbass doesn't have to report these exact same type of transactions?
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It doesn't cost the state anything to pass legislation that the burden of reporting will be on PayPal, etc. They can just sit back and collect the money. And this is kinda proof that the little guy has little representation when it comes to laws. Businesses would have lobbied this to death.
 
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#76
lermgalieu said:
I don't see how PayPal has enough information about these transactions to know if they are taxable.
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PayPal doesn't decide what is taxable and what isn't. That's between you and the taxing authorities. PayPal is only required to report certain transactions as possibly taxable.

Remember, even "normal" income reported on a 1099 may not be taxable, depending on allowable expenses that can be matched against it.
 
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#77
BostonJazz72 said:
So today I received an email from PayPal saying my 1099K was available for download and that they would send it also to IRS. I don't recall this being a thing in the past. So basically, I need to pay taxes for any gains I received from selling gear in 2020? Does anyone have experience with reporting their 1099s? Does it mean I pay Federal and State tax on it? I briefly looked at Illinois tax law and says anything gained over 1K needs to be reported.
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Yes, in this country you make money, somebody (not mentioning any names) is going to get in your pocket for their fair share. What you are experiencing is what’s known as the enforcement of current tax laws. Best advice is to comply.
 
#79
BostonJazz72 said:
Also, if that is the case then why is PayPal sending a 1099 to IRS when they don't have the full details?
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When you sell something for more that what you paid, that is a capital gain. It can be a tangible asset, like a bass, car house, business, or intangible like stocks, bonds, and mutual funds. The seller is charged with keeping records of what was paid, and it’s doesn’t matter how long you’ve owned it either.

For instance, that 1970 PB that you paid $270 for, and sold it for $4,000 last year, $3,730 of that transaction is taxable as a capital gain. Not to get political, but the sad fact is, adjusted for inflation, more than likely there was no realized financial gain, but tough noogies, you’re paying the tax (15%) anyway.
 

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