Ebay Sales
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Like a few folks, I've been selling excess "stuff" on Ebay. The IRS now requires a 1099K for such sales. I sold around $3500 of stuff on Ebay last year. If this were a business, I'd be operating at a substantial loss; however, reading a bit on this, it looks like the IRS likes to look at this as "income." So, you buy a thousand compact discs at $12,000 and sell them at $1,000, the IRS says, "wow, you made a $1,000."
I've not gotten to do the taxes yet - but curious how this will work out.
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My understanding is that a 1099K is not a record of income, just a record of transactions.
It's up to you to report it - based on if you made a gain (taxable income) or loss.
Fun note - if you use paypal alot to send money to friends or family, you'll get a 1099K if your incoming transactions add up to more than $750.
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It should prove interesting - "Not every eBay sale is subject to income tax, but most are. If you use the site to get rid of household articles you've used in the past, you may qualify for "occasional garage or yard sale" treatment. According to the IRS, if your online auction sales are the Internet equivalent of an occasional garage or yard sale, you generally do not have to report income from those sales."
My experience with yard sales is that I wouldn't earn $3,500.
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@xenon said in Ebay Sales:
My understanding is that a 1099K is not a record of income, just a record of transactions.
It's up to you to report it - based on if you made a gain (taxable income) or loss.
Fun note - if you use paypal alot to send money to friends or family, you'll get a 1099K if your incoming transactions add up to more than $750.
They will come back on you for a missed 1099.
I promise you.
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Ebay is going to see a huge drop in sales from the "little folks".
I made a good deal of money selling stuff on eBay in the past, but that's in the past.
From now on, it'll be person-to-person, Facebook marketplace for most things, LetGo or something like that.
Cash is king, again.
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Found this article by Kiplinger. It's funny that companies avoid paying taxes on almost a trillion dollars a year by keeping it offshore. The government takes more through civil forfeiture than all robberies and burglaries - and yet...they'll let you sell things at a loss and then want you to pay taxes on the gross of sales unless you can prove otherwise.
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https://pages.ebay.com/seller-center/service-and-payments/tax-information.html
Form 1099-K
If you’ve sold at least $20,000 in gross merchandise value and exceeded 200 transactions for goods and services* on eBay this year, you will be receiving a tax Form 1099-K for all your 2019 sales transactions including relevant internet sales tax.https://www.keepertax.com/posts/ebay-1099
Form 1099-K vs 1099-NEC
As an eBay seller, the IRS considers you an independent contractor that performs services for a company rather than being a direct employee. You will file a 1099-NEC if you sold more than $600 in goods as discussed. The 1099-NEC form is replacing the 1099-MISC form from last year for classified non-employee work as of tax year 2020.
If you sell $20,000 and have 200 or more transactions, then you will file a form 1099-K.
It is not a good idea to guess how much you owe the government, instead of filling out your own 1099-k you need to use the form they give you. Many first time sellers don't know that eBay doesn't send your IRS form 1099k. They say that you must get the information from any third party network transaction company that “settles” the payments for your eBay business. Since you are selling on eBay that usually means you will get your PayPal 1099 or your chosen payment processor company.
At the time of writing this article, there is one exception to this rule. If you live in Massachusetts or Vermont and have of $600 in gross payments in your eBay account, then you will file the 1099-K instead of the 1099-NEC. Remember to not report your eBay business income on the 1099-NEC if you are going to get a 1099-K from PayPal.
How to Get a IRS form 1099-K From PayPal
The IRS set up federal laws that require PayPal to send you a 1099-K to help track down eBay sellers who don’t report their profits. This means that taxpayers who have a credit card merchant account such as PayPal or similar service will receive a 1099-K in most cases.
PayPal is required to send the IRS form 1099-K by January 31st for managed payments from the previous calendar year.
If you don’t want to wait for your form to arrive, you can read it online by logging into your PayPal account. If you don’t see your 1099 form, then don’t make the mistake of thinking you don’t owe taxes. Many small business owners in the eBay community fall into this trap. PayPal reports your 1099-K to the IRS. Before they know it, they are issuing them a bill for the gross amount plus interest.
Call PayPal to confirm if your tax form is coming or not. I also suggest that you contact eBay’s customer service just to be sure.
