Thought I'd summarize because I put some incorrect information in here and cannot edit it due to the timeout of the edit feature.
What: Federal guidelines state that if you have had $20k and 200 or more transactions processed in a calendar year, the third party processor is required to issue a 1099-K to you. This is probably done as a notice - hey we see what looks like a business. Now some states are requiring that same 1099-K notice be given when you hit much lower threshold of money processed, mostly a threshold of $600 with no limit on the number of transactions.
Why are they doing this? It's not to catch us, it's being done because Uber, Lyft and other gig economy types of jobs are considering themselves third-party processors that are just processing payments for their contracted drivers, etc. This gives them tax advantages and an occasional Uber driver that might do $5k in fares in a year would slip under the radar.
If you do not make a profit on your sale, you will not have to pay tax on the sale. But, you may need to file the paperwork. Check with your state to see what they say specifically. Vermont and Mass say that you don't need to file if you sell something at a lower price than you originally paid for it.
What should we do going forward: save your receipts when you buy something. I haven't and I can't really prove what I paid for anything. I'm going to use retail as a proxy for not having the receipt for something I purchased 5 years ago.
If I'm being taxed on profit, then I can write-off a loss, right? Possibly, but I'd only use the losses to offset other profits. You can technically write off $1500 individual / $3000 joint capital gains losses. But you and I know that unless you're making big bucks and have a few politicians' cell number on speed dial, then the tax system benefits aren't for us. So, keep the possibility in mind, but consult your tax professional.
Current states affected: Massachusetts, D.C., Mississippi, Vermont, New Jersey, Arkansas, Illinois, Virginia and Maryland. Look for the others to follow in the next few years.
