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Paypal Venmo Third Party Payment Tax Reporting Delayed

#41
Lammchop93 said:
Would a TB message thread count as a record you think?
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Yes, that is a record that could be used. Personally, I keep an email folder I call "Receipts and Records," where I save all of my sales and purchases.

If I buy from a brick-and-mortar store - or any vendor that doesn't email - I keep the paper receipts.
 
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#42
AGCurry said:
That's what Schedule D and its accompanying forms are for. Schedule D is most often used for sales of stock and other financial assets, but it can be used for any asset.

You enter a description of the item, the sales amount, the date of sale, the cost basis, and the date you acquired the asset. Cost basis is what YOU paid for the item, or what you have "in" it. If you owned the item less than six months, that's short-term capital gain/loss, which is fully taxable. Otherwise, it's long-term capital gain/loss, which is taxed at a reduced rate.

If you've taken a loss on the sale, that's a reduction to your overall income.

Unless you are audited (rare for those of us who aren't wealthy), the IRS takes you at your word. If you are audited, some record of the purchase and sale transactions will be helpful, even if it's just emails you've saved.

What you DON'T want to do is leave the sale off your tax return. Doing so may land you in the Underreporter Program - not an audit, but you'll get a letter asking you to explain, along with a bill for tax, penalty, and interest should you fail to "explain it away."
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Interesting. Sched D probably *IS* the way to go. I was gonna use Sched C (as a reseller) and tweak the inventory numbers to account for the net loss I took on selling a bunch of gear (starting inventory is the total cost of all the items I sold, ending inventory is zero because I have none after selling the items). But Sched D seems easier. You dodge the whole "is this a business or a hobby" question. Although I definitely want to be able to write off shipping expenses, seller fees, etc.
 
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#44
ToneMonkey said:
Interesting. Sched D probably *IS* the way to go. I was gonna use Sched C (as a reseller) and tweak the inventory numbers to account for the net loss I took on selling a bunch of gear (incoming inventory is the total of all the items I sold, outgoing inventory is zero). But Sched D seems easier. You dodge the whole "is this a business or a hobby" question.
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It really depends on whether you are in the business of selling. If so, then Schedule C. If not, Schedule D.

I'm in the business of performing, not selling. When I buy a "capital asset" like a bass, it doesn't go on my Schedule C, since I'm not going to depreciate it. Stuff like lessons, strings, and vehicle mileage do.
 
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#45
Thumpin6string said:
FYI, you pay sales tax when you purchase something new. The 1099 is for income tax, not sales tax. Sales tax is where all the double dipping is done. Paying sales tax on a used item is double dipping. To me, selling something you already own is also NOT income.
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Selling something you already own for a profit is income. Selling it for less is a loss. Sales tax is handled by state and sometimes local municipality rules.
 
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#46
MultiScaleMale said:
Selling something you already own for a profit is income. Selling it for less is a loss. Sales tax is handled by state and sometimes local municipality rules.
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Yes, there is no federal sales tax in the U.S.A. And sales tax is always paid by the buyer ... so, although a single item may be sales-taxed as many times as it is sold, no one pays twice.
 
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#48
Repeat after me...

Only PROFIT is taxable. Full stop.

If you bought it for $1000 and sell it for $1100, and spend $25 on packing materials to ship it, a $25 listing fee, and $50 to ship, you owe zero tax on zero profit.

If you bought it for $1000 and sell it for $900, you took a loss. A loss can be deducted from profit on other items. It's the total during the tax year that matters.

Didn't ANYONE take Business 101 in high school? :rollno:
 
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#51
AGCurry said:
Yes, that is a record that could be used. Personally, I keep an email folder I call "Receipts and Records," where I save all of my sales and purchases.

If I buy from a brick-and-mortar store - or any vendor that doesn't email - I keep the paper receipts.
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If you sell through PayPal they have to send the 1099 to the feds. If you buy through PayPal you'll have records of amounts paid. Seems to me like they are a great one-stop place for all the records a tax payer would need.
 
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#54
AGCurry said:
Yes, that is a record that could be used. Personally, I keep an email folder I call "Receipts and Records," where I save all of my sales and purchases.

If I buy from a brick-and-mortar store - or any vendor that doesn't email - I keep the paper receipts.
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I keep a spreadsheet with all the details, date, price, tax and shipping paid, s/n, vendor... This is not only for tax purposes, but insurance as well.

Would I be able to produce every receipt? No. I'm not at all worried because my records could easily produce a reasonable purchase price. Does anyone really think the IRS is going to argue whether you paid $1300 or $1500 for bass? Or $650 vs. $550 on sale for a cabinet?
 
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#55
Plain Old Barry said:
Would I be able to produce every receipt? No. I'm not at all worried because my records could easily produce a reasonable purchase price. Does anyone really think the IRS is going to argue whether you paid $1300 or $1500 for bass? Or $650 vs. $550 on sale for a cabinet?
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You're absolutely right. The IRS doesn't worry about a few bucks. It does, however, like for items on your tax return to match up with what's reported to it, even if there's $0 change to your tax.
 
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#56
Grinderman said:
I think this tax, on the little guy, is crap and this topic causes thoughts about U.S. tax policies I can't express here beyond this: *@&#^#%
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The issue is big guys pretending to be little guys so that they don't have to pay their share.
 
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#60
Halabja said:
What I’m trying to understand is are all participating party’s of a transaction exceeding $600 subject to taxation/reporting? Or just those on the receiving end of said payment?

I hate this rule just on the basis of from a seller pov, having to further pay taxes on an item you’ve already paid taxes on in the initial purchase. It’s like the IRS is double dipping.
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It is not double dipping. It's sales tax or use tax when you purchase, and income tax if you sell for profit. You are simply now considered self employed if selling used items on record for more than $600 profit in a tax year, so you are paying income tax on...income.

If you don't like it, then make your sales under the table.
 
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