I've been being charged taxes on eBay for quite a while now?
That's sales tax, not income tax.
So what happens to the tax collected by eBay when you sell an item? They charge the buyer tax, which should be income not sales since you're the one selling the item not them. If they charge tax, then they should be responsible for the income tax?
It's pretty simple really.
Sold goods aren't taxable as income if you are selling a used personal item for less than the original value. If you flip it or sell it for more than the original cost, you have to pay taxes on the surplus as capital gains.
Here is a good writeup on what the new law means for those that sell their used personal property. https://www.1040.com/blog/2019/7/12/selling-stuff-online-taxes-for-etsy-ebay-letgo-and-more/
......Sold goods aren't taxable as income if you are selling a used personal item for less than the original value. If you flip it or sell it for more than the original cost, you have to pay taxes on the surplus as capital gains......
Oh, that's the easy part of the law. The hard part is what people are supposed to do if they say...made* $800 during the course of the year, but it took 34 transactions to earn that. And none of those transaction have any paper trail beyond the 1099 or the sale on eBay b/c the seller bought the goods from flea markets and yardsales in cash.
EDIT: *Made = gross sales revenue. It doesn't actually mean there was a net profit.
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.
Oh, that's the easy part of the law. The hard part is what people are supposed to do if they say...made* $800 during the course of the year, but it took 34 transactions to earn that. And none of those transaction have any paper trail beyond the 1099 or the sale on eBay b/c the seller bought the goods from flea markets and yardsales in cash.
EDIT: *Made = gross sales revenue. It doesn't actually mean there was a net profit.
I'd say if one routinely purchase items with cash with the likely intent of flipping it sometime down the road, peck a note into your smartphone or jot it down in a memo pad. No official receipts, but at least there's a record. It is annoying the new policy is forcing ebay sellers to be more tax honest, whether big or small, but the tax was always applicable.
Oh, that's the easy part of the law. The hard part is what people are supposed to do if they say...made* $800 during the course of the year, but it took 34 transactions to earn that. And none of those transaction have any paper trail beyond the 1099 or the sale on eBay b/c the seller bought the goods from flea markets and yardsales in cash.
EDIT: *Made = gross sales revenue. It doesn't actually mean there was a net profit.
Just keep track of each item you buy with the intention to sell. 36 transaction a year seems more than the casual hobbyist selling some used equipment and more like someone flipping for income.
it doesn't increase taxes. It only changes the reporting obligation.
Most small businesses following the law were already reporting their transactions and this new requirement will change nothing for them. But for people like us, who like to sell a few metal detectors and/or acessories per year, it completely changes how we do our taxes (even if it doesn't change how much we have to pay). And if we don't want the extra work of proving to the irs we didn't make money, but lost money instead, we have to change how we accept payments.
If only people didn't hide their taxable income and didn't try to clean ill-gotten gains, we wouldn't have to deal with this.
....now they want to chase 600 bucks? ....
So what happens to the tax collected by eBay when you sell an item? They charge the buyer tax, which should be income not sales since you're the one selling the item not them. If they charge tax, then they should be responsible for the income tax?
It's pretty simple really.
Sold goods aren't taxable as income if you are selling a used personal item for less than the original value. If you flip it or sell it for more than the original cost, you have to pay taxes on the surplus as capital gains.
Here is a good writeup on what the new law means for those that sell their used personal property. https://www.1040.com/blog/2019/7/12/selling-stuff-online-taxes-for-etsy-ebay-letgo-and-more/
Dude, they have ALWAYS "chased" 600 bucks. I began my business in the 1980s. And even then, there was the 1099 rule, for whenever customers paid us $600 or more, in a calendar year.
Now as to whether or not everyone COMPLIED with that, is a different issue.
The only difference between then, and now, is that these days: $$ is changing hands digitally more and more. Not with paper checks and cash. So this is just keeping up with the times. It only SEEMS like this is "something new".
Besides, let's be honest : When you found that $10 bill lying the street last month, you dutifully reported that as income on your income tax. RIGHT ? So what are you griping about then ?