"Warning"Change in 2022. tax laws

[Tom_in_CA]

Yup, I take a beating on taxes ....

I don't think that anyone in govt. would dispute your rationale. They're just human too. And they would probably be the first to agree that if a dude find $700 worth of gold, or sells DVDs he bought 8 yrs. ago, for $5 each on ebay, that ...... this is not a "business".

HOWEVER, the problem is that persons who are indeed making $$ (as a business of buy, sell, labor, etc....) will immediately jump on the bandwagon and say "It's just a hobby" or "I'm too insignificant, so why are you picking on me ?", etc....

For example, I own a street sweeper business. What's to stop me from saying that it's all for fun & games hobby, and shirk all taxes ? Do you see the "camel's nose in the tent" ? EVERYONE will jump on avoidances, if they can.

The $600 criteria for a 1099 is AGE-OLD. It's nothing new. It's just adapting to the digital age is all.

Technically, persons that made $$ at the flea market and yard sales selling flipped DVDs, or selling their own used furniture, etc.... were required to pay taxes (the honor system) on profits, even in the old days. And if you object and say : "By my expenses net a zero profit", fine then : You're welcome to do the long-form taxes, and start itemizing deduction write-offs.

In the old days of physical cash changing hands, it was easier for businesses to skirt their obligations. But now that everything's being done @ venmo, paypal, etc.... Uncle Sam is just trying to enter the 21st century.

 

[Jamflicker]

The government has been handing out too much money and now has to finds ways to take it back.

 

[cellrdwellr]

I want those little kids who set up lemon aid stands in the summertime to pay their fair share too. They've been getting away without paying taxes for way too long.

Great post!

 

[maxxkatt]

EBay and other corporations evade billions in taxes every year, but let's go after someone who makes 20k a year selling his possessions on eBay. This is what happens when all your politicians are millionaires...

This is true, they avoid taxes legally because they have congressmen and women and senators in their back pocket via financial contributions and they pass tax laws FAVORABLE to their donors.

TERM LIMITS IS THE ONLY ANSWER. But that will only happen if the states get together and pass an admendment to the US Constitution and that won't happen because the state politicians don't want that either.

 

[bmattioli]

Eating M&M's as I read this..

 

[CallMeGrey]

Just to clarify: Income from a hobby is taxable. You just can't deduct any business expenses.

My wife just retired and likes sewing - especially for the grandkids. She posted some pictures on social media and some people wanted to buy some of her creations. If she were to run it as a business, she would have to track all her costs (materials mainly) and inventory. Then if an item costs $20 to make and she sells it for $40, she would show a profit of $20 and pay tax on it. However, as a hobby, she reports $40 as income. It's just to costly/time consuming to do all the bookkeeping.
In addition, if she does all the record keeping, and her costs are more than the sales, she may not be able to deduct the loss from taxable income because the IRS can say it's just a "hobby" and there's no intent to make profit.
So many "anti-little guy" rules and laws. And billionaires pay little/no taxes.

 

[mh9162013]

Just to clarify: Income from a hobby is taxable. You just can't deduct any business expenses.

My wife just retired and likes sewing - especially for the grandkids. She posted some pictures on social media and some people wanted to buy some of her creations. If she were to run it as a business, she would have to track all her costs (materials mainly) and inventory. Then if an item costs $20 to make and she sells it for $40, she would show a profit of $20 and pay tax on it. However, as a hobby, she reports $40 as income. It's just to costly/time consuming to do all the bookkeeping.
In addition, if she does all the record keeping, and her costs are more than the sales, she may not be able to deduct the loss from taxable income because the IRS can say it's just a "hobby" and there's no intent to make profit.
So many "anti-little guy" rules and laws. And billionaires pay little/no taxes.

That sounds right to me (in terms of the law), but it sounds awful to me in terms of fairness.

If the IRS is gonna start nickel and diming us with our hobbies, we should be able to nickel and dime them on our other expenses.

So I made $50 when I flipped some lawn equipment from a yard sale. Now I have to pay income taxes on that $50. Fine, that's fair, even if I only do this a few times a year (so it's a hobby, not a business). Then in that case, I'll buy a PlayStation 5 for $800 then a few years from now when I want the PlayStation 6, I sell my Playstation 5 for $200. I should be able to report a $600 loss on my taxes as it qualifies as a "hobby tax deduction."

Yeah, yeah, I know this is just fantasy. But I can dream...

 

[IDXMonster]

EBay and other corporations evade billions in taxes every year, but let's go after someone who makes 20k a year selling his possessions on eBay. This is what happens when all your politicians are millionaires...

The real stick licker is that you paid taxes when you earned it, then paid taxes when you bought whatever, then you’re supposed to pay taxes when you sell whatever….taxation in this country is OUT of control. There should be a FLAT tax and everyone besides the genuinely unable and retired should be REQUIRED to contribute that flat tax. In other words….you’d BETTER have a job and be a contributor, under penalty of something bad. Tax reform isn’t something ANYONE wants to talk about, because no matter who they are, EVERYONE feels like they’re getting screwed. And most of them are right. I seem to recall a story about 40 tons of tea being dumped because of something very similar. People are TIRED of getting nickel and dimed EVERY time they try to trade a goat for a pair of shoes. Enough already!

 

[Tom_in_CA]

.... It's just to costly/time consuming to do all the bookkeeping.....

I've just been summarizing this with "long form" and "short form". If you're not a tax accountant (or very handy with turbo-tax and how-to), then yes, it can be daunting.

..... And billionaires pay little/no taxes.

This is an old wives' tail. The very-rich in our country are indeed paying a large percentage chunk of the taxes that Uncle Sam brings in.

 

[SeabeeRon]

Just to clarify: Income from a hobby is taxable. You just can't deduct any business expenses.

My wife just retired and likes sewing - especially for the grandkids. She posted some pictures on social media and some people wanted to buy some of her creations. If she were to run it as a business, she would have to track all her costs (materials mainly) and inventory. Then if an item costs $20 to make and she sells it for $40, she would show a profit of $20 and pay tax on it. However, as a hobby, she reports $40 as income. It's just to costly/time consuming to do all the bookkeeping.
In addition, if she does all the record keeping, and her costs are more than the sales, she may not be able to deduct the loss from taxable income because the IRS can say it's just a "hobby" and there's no intent to make profit.
So many "anti-little guy" rules and laws. And billionaires pay little/no taxes.

If what you say is truly written in Tax Law, than all of us that have participated in this thread over the years are in Big Doo Doo!!.....https://metaldetectingforum.com/showthread.php?t=293525

 

[CallMeGrey]

If what you say is truly written in Tax Law, than all of us that have participated in this thread over the years are in Big Doo Doo!!.....https://metaldetectingforum.com/showthread.php?t=293525

Luckily none of that gets you a 1099.

Btw, I am a retired accountant - but offer no official advice or recommendations. Just posting what I understand the current tax regulations to be . And everyone knows the regs are open to "interpretation".

I personally see myself doing more cash transactions in the future.

 

[CallMeGrey]

This is an old wives' tail. The very-rich in our country are indeed paying a large percentage chunk of the taxes that Uncle Sam brings in.

Fair point - you're right! But... some pay a lower rate of tax than most wage earners.

 

[MuddyMo]

Sorry but I see this as a typical gov money grab. How much do they really think they will gain compared to what they waste and steal from us?. How about; stop buying votes with our tax dollars, stop getting rich by helping big corps, stop wasting our tax dollars on bs, stop spending money they don't have, etc etc.??

 

[Bajanick]

Just to clarify: Income from a hobby is taxable. You just can't deduct any business expenses.

Ok, so for now on my hobby is now a business, I consider the $1.14 cents I found last week as income, Now I can deduct my Detector, shovel, scoops, boots, batteries... Etc
Alright, I get a new detector every year..............

 

[mh9162013]

Ok, so for now on my hobby is now a business, I consider the $1.14 cents I found last week as income, Now I can deduct my Detector, shovel, scoops, boots, batteries... Etc
Alright, I get a new detector every year..............

If your "business" isn't being profitable, the IRS will take note and call you out on it. What exactly this consists of, I don't know. But a business that constantly loses money could easily be a hobby or a front for a money laundering operation.

 

[Steve]

, stop spending money they don't have

The nature of the beast... not only will they continue to spend money they don't have but they are going to have to INCREASE this amount on a % basis or the debt based system will exploded.
What happens then? All those pigs at the top will find a way to make the "doo doo" land right on the bottom 90% through made up laws, self-bailouts, etc...

Let's just hope the money velocity stays at record lows due to the scamdemic, otherwise its hello "Venezuela" inflation numbers.

 

[fishnnut]

Just another way of making life difficult for the little guy. another gov't money grab, made possible by a cashless society.

Exactly and pretty soon big brother will tell you when to go the bathroom and where. People better wake up soon!

 

[Bajanick]

If your "business" isn't being profitable, the IRS will take note and call you out on it. What exactly this consists of, I don't know. But a business that constantly loses money could easily be a hobby or a front for a money laundering operation.

The profit would be in the enjoyment I get out of finding cool things.

 

[Tom_in_CA]

..... But... some pay a lower rate of tax than most wage earners.

The implication of your statement, is that they (those evil rich people) shouldn't have a *RATE* (percentage) that is lower than middle class or poor people. Right ?

Ok, I'll go a step further , and not only agree with you, but also say : They also shouldn't pay a HIGHER rate either. After all, they worked their #sses off for it. They took risks, etc.....

So then, in order to solve this, what's wrong with 10% across the board ? For all categories ? Poor, middle, & rich ? What would be unfair about that ?

 

[Tom_in_CA]

If your "business" isn't being profitable, the IRS will take note and call you out on it. What exactly this consists of, I don't know. ....

From what I understand, the IRS doesn't raise an eyebrow, if the business shows losses in all the first 5-ish yrs. Because it's a "given", that startup years will be difficult, getting your shingle out there, etc....

But if, after 5-ish years, you're still showing a loss, you could be subject to an audit. And if you're living in a palatial mansion, and calling that your "office", that can be a problem. If your "employees" are making $300k per year, that could raise flags, etc....

Still though, if all your #'s (receipts, records, etc...) are in-order, then I don't know why it would illegal to operate a loosing business ? Ie.: Perhaps I'm just a numb-nuts that likes to lose money ?