well, well! IRS has withdrawn the requirement of reporting $600 for selling your old stuff

[Grasswire2]

Amazing.

[link:https://www.aol.com/finance/irs-ditches-tax-requirement-caused-160527535.html|

Because some of you may not be able to access that story, I'm copying more than I normally would.
.............................................................

The Internal Revenue Service is delaying the new $600 reporting threshold for 1099-K tax forms, a move many tax experts believe will help avoid potential chaos this upcoming filing season.

The updated law, enacted by the American Rescue Plan, required third-party transaction networks such as Venmo, Paypal, eBay, and Etsy to issue a 1099-K for users who had more than $600 in payment transactions during the year. The previous threshold was $20,000 with over 200 transactions.

Many professional groups called for more time before implementation, noting the unexpected forms scheduled to go out in January would create confusion for many Americans who use the payment services for many nontaxable events.

“We appreciate the IRS providing this critical relief so that millions of people aren’t unnecessarily burdened with tax forms in 2023 for splitting meals, selling used goods, paying back a friend, or other instances where no taxable income was generated,” a spokesperson for the Coalition for 1099-K Fairness told Yahoo Finance in a statement after the delay was announced before the Christmas holiday.
The lower reporting threshold was intended to capture electronic cash incomes from side gigs, part-time work, or small businesses, but experts worried that many taxpayers would have received 1099-K for personal transactions that are not taxable.

"That's probably the biggest concern," Tom O'Saben, EA enrollment agent and director of tax content at the National Association of Tax Professionals, told Yahoo Finance before the delay. "People might be receiving government forms that look like income for nothing more than gifts going back and forth between family members."

Or, splitting the tab when dining out, he added.

"You and I go out to dinner and you pay for the whole check and I reimburse you on your Venmo for this totally personal expense," he said.

Selling used items for over $600 and getting paid through third-party cash apps could have also triggered the reporting requirement, generated a 1099-K form, and required extra tax return calculations to prove the event wasn't taxable.

more at link

[SheltieLover]

1. Delaying. Not withdrawing.

[Grasswire2]

3. yeah, but it will never come back.

It was ridiculous. The cost to staff up IRS to deal with untold number of filings -- ridiculous.

[bucolic_frolic]

2. They should just put a national sales tax on it and save $Billions in CPA Fees for everyone

Reporting for $600+ and reconciling it is SO inefficient because it's also a PITA.

[bucolic_frolic]

4. "extra tax return calculations to prove the event wasn't taxable" - how DO you prove a negative?

They want written ledgers for business use of mileage.

IRS needs to insist on better chokepoint reporting - point of sale - eBay, AMazon, Etsy. Those are sales numbers. Checkbook accounting ledgers in digital form are not.

[W_HAMILTON]

33. Pretty easily, actually.

You buy something for $500.

You use it and eventually sell it used for $100.

Your calculation shows that you sold it ($100) for less than your basis ($500), which means it is non-taxable since there is no taxable gain to report.

[ret5hd]

37. How do you prove you bought something...

for $500 8 or 9 years ago?

Am I supposed to keep every receipt for every item I buy in my lifetime?

[W_HAMILTON]

38. Once again, pretty easily.

Talking strictly about personal use items, most things people buy will inevitably decrease in value over time and with normal usage, therefore selling most personal items will often result in a loss (which you can't deduct), but it also means you don't have to report a gain since you are inevitably losing money on the transaction (i.e., selling it for less than you originally bought it for).

It's all about reasonableness and, contrary to popular belief, the IRS will usually give you the benefit of the doubt when it comes to matters such as these.

[ret5hd]

39. But you sell it on eBay and get "dinged" (whatever term you would use)...

on your $600/yr limit before being taxed...how do you prove you lost money?

[W_HAMILTON]

40. You report it on your taxes like you would other similar transactions.

You report how much you paid for it (or a reasonable estimate) and report the proceeds that are being reported by eBay to the IRS. Ta-da, you've now legally complied with the new reporting requirements.

The IRS is not going to hound you for a receipt showing you paid $50 for a sweater a decade ago that you sold for $5. They're just not. Now, if it's a big-ticket item or you are essentially in the business of selling personal goods, you probably want to keep better records, but that goes without saying.

For the vast majority of people, this entire exercise will be reduced to their tax software/CPA asking them if they received an IRS form reporting they received proceeds over $600 and then whether or not the money they received represented a taxable gain or taxable income. The IRS may not even require you to report the individual transaction items once they figure out how to implement it; they could simply ask you to "check the box" that the money was not a reportable taxable gain/income.

[MichMan]

44. So just make up what you actually paid in order that you never show a profit?

I have no freaking idea what I spent to buy some old car part that's been hiding in my garage for 20 years. I don't.

I guess if I now sell it for $50, I should just say I bought it for $47 ? Need to make two sets of books to cover myself I suppose for when it comes back.

[W_HAMILTON]

45. It's not making up what you actually paid.

Lying on your taxes is a crime, you are surely aware of that, yes?

A reasonable estimate of the cost you paid is just that. No one is going to expect you to maintain records for minor items and the IRS is not going to hound you for a receipt of a minor item you bought decades ago and decided to sell on eBay.

Furthermore, you realize that this is something you should have been doing all along, in terms of reporting a profit on something you sell, yes? But odds are that most items people buy depreciate in value over time and are not usually sold for a profit. The only difference now is that companies will be required to report transactions totaling over a certain amount so that people don't skirt around the rules already in place in terms of reporting taxable transactions.

[Meowmee]

5. It says they are delaying it

Does that mean it will happen at some point? I suppose so, lol.

[intrepidity]

6. Jesus, even so, $600? FFS, nickle and diming the masses

while the wealthy continue skating by, wheeeeeeee!

[yaesu]

15. The IRS is afraid to go after the rich as that cost them too much money

So they squeeze us for every drop while the rich can cheat to their hearts desire, like the Sec not going after the yuge stock cheats, the ones they play with after work, all a fixed game

[Kaleva]

16. $600 is big money to me.

Not something Id have to worry about . It's been a long time since I have had to pay income tax but I still file every year.

[LeftInTX]

26. The amt of taxes on $600 is not much

But, gosh a pain to report!
Nothing like having to report a yard sale to the IRS!

[kelly1mm]

27. That $600 if declared as income would generally be subject to 15.4% Self Employment

tax in addition to federal and state income tax rates. So even if you are in the 10% federal income tax bracket $600 (assuming it was all profit) would be about $150 of total federal taxes (plus possibly state taxes).

[Chainfire]

7. Delay, indeed, digging more money out of the little people.

The IRS will come after you like ugly on an ape for $200.00 in unpaid taxes, but let people like Trump skate for millions. It is because we put up with it...

[RKP5637]

9. K&R!!!!! Going after little people is absurd. And letting billionaires roll in millions.

It's total bullshit!!!!!!!!!!!!!!!!

[MichMan]

10. It passed both the House and the Senate and was signed into law

It didn't come out of thin air.

[RKP5637]

11. And it's still absurd! n/t

[Igel]

42. No.

But if either had failed to pass the bill that it contained, media would have scoured the bill for a positive.

"House ditches $600 reporting requirement" = "House loves climate change, kills our children's futures".

When you have a thousand provisions in "a" bill, it's an easy game to play. Bills should be small and focused. Otherwise democracy dies by bribes.

[MichMan]

43. Weeks before the bill was actually passed, there were rumors & complaints it was in there.

Last edited Wed Dec 28, 2022, 01:13 PM - Edit history (3)

It was put in there on purpose. It could have easily been taken out and wasn't. Why not ? How did it get in there in the first place?

Someone deliberately wanted it in there to get revenue to offset some other spending. Several opportunities to repeal it in the 20 months since it was passed, if so desired, and nada. The IRS just did Congress a favor by letting them off the hook from the furor of their constituents.

I agree with you on the size of bills. Congress votes on bills all the time without knowing exactly what's in it. Who even knows yet what's buried in this last bill to avert the shutdown? They knew the deadline is coming for months and months and always pass something at the last minute before the end of the year. Their main job is legislating, and I'm not giving anyone a free pass.

[Kaleva]

18. It doesn't affect little people

Little people don't make enough to pay tax. I'm one of those little people

[RKP5637]

22. ... but if one was selling a little bit on eBay, for example, used stuff, I guess you have to

somehow show that?

[MichMan]

8. How can the IRS just decide to unilaterally ignore a law passed by Congress?

It was passed as part of the American Rescue Plan in March 2020.

If congress passes a rate increase in capital gains taxes or a child care tax credit, can the IRS just refuse to implement it?

[tritsofme]

21. My guess is that the law directs the IRS to develop a rule

And that the IRS has delayed finalizing it.

[bucolic_frolic]

12. More proof - deal in cash whenever you can

until they make that illegal too, as well as tax deposits of cash.

[judesedit]

13. Meanwhile, Dumpy Boy and many corporations pay just about nothing

[Yavin4]

14. Not just pay nothing but he gets huge refunds. n/t

[judesedit]

41. You're right about that

[Sanity Claws]

17. Many items on EBay are sold for less than their original purchase price

Because they are used items.
So if I sold old dishes, I would recoup less than I paid but they are so old that I wouldn't be able to show original purchase price.

[Shermann]

19. It is so difficult dealing with used merchandise

So much of eBay sales (the majority?) involve people trying to get whatever value they can from their old junk that they no longer need. There's always a cost basis, often for more than the used sale price, but who has those old receipts?

I was already over $600 and worried about paying tax on the full amount. I don't know what the right number is, but $600 is too damn low. That net is catching too many small fish.

[mathematic]

20. Small business tax cheats get let off the hook again.

Just an FYI, you may not get the forms but your tax obligations have not changed.

Small businesses, man. Half their competitive advantage is tax evasion and the other half workplace regulation avoidance by staying under regulatory thresholds. AirBnB is part of the Coalition for 1099-K Fairness, btw. I can't think of anything that's a payment on that app that wouldn't be taxable income.

So nice that many "professional groups" are looking out for a bunch of non-professional users. Surely they won't stand to gain anything if tax enforcement stays lax.

[Shermann]

23. Those advantages might win small businesses a few battles here and there

...but the trend of the overall war is clear. Big business for the win!

[Rebl2]

24. If I

buy something on eBay or Etsy and the person lives in my state, they tack on sales tax and have for several years now. I am pretty sure I remember my state passing a law that required it.

[kelly1mm]

28. Sales taxes and income taxes are totally separate. nt

[Rebl2]

31. I know

[ProudMNDemocrat]

25. Good. I sold one of my Renaissance gown ensembles...

For $675 used in very good condition I made in 2017 that was paid for via PayPal. The customer in Tennessee was thrilled to get it.

2 others were paid for in installments.

[Grasswire2]

29. yes, and PayPal is a mandated reporter and will send a 1099 to you, likely.

They have to report any transactions over $600 in a month.

[sl8]

32. Are you sure about that?

I'm pretty it's $600 in aggregate(any number of transactions), not per transaction. Also, I don't remember any "per month" qualificaton.

[Grasswire2]

34. read the law as it was. $600 in a month triggers it, afaik.

I've read so many horror stories about PayPal seizing/freezing money (they did it to me) that I refuse to use it any more. Too bad, it was great for a time.

[sl8]

35. "exceed a minimum threshold of $600 in aggregate payments, regardless of the number of such transac

https://tax.thomsonreuters.com/news/irs-delays-implementation-of-600-1099-k-reporting-requirement/

For returns for calendar years beginning after December 31, 2022, a TPSO is required to report payments in settlement of third party network transactions with any participating payee that exceed a minimum threshold of $600 in aggregate payments, regardless of the number of such transactions.

That's from the delayed version, but I don't think that part changed.

I haven't seen the "per month" part anywhere, I was hoping you could tell me where you saw it.

[Shermann]

36. Correct, $600 total per year is the threshold

Link direct to IRS

https://www.irs.gov/newsroom/irs-announces-delay-for-implementation-of-600-reporting-threshold-for-third-party-payment-platforms-forms-1099-k

There is so much disinformation flying back and forth on this.

[Grasswire2]

30. Link to my OP on this law in April this year.

[link:https://democraticunderground.com/10262424|