Might be old news on 2022 tax law but just in case...

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Vhunter

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Feb 27, 2018
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Ohio, United States
I think this topic may have been discussed before but in case everyone is not already aware. I wanted to inform members selling their used items or labor services, starting this year the Federal Govt. required companies like Ebay, Amazon, Paypal, Venmo, etc. to send 1099-K tax forms to anyone that receives more than $600 for the year. This amount used to be $20,000 mainly intended for smaller or side businesses but now the government has lumped in individual transactions.


Basically means that when selling your used airguns, accessories, or anything for that matter exceeding $600 for the year, you will be sent a 1099-K during tax time next year. A few instances you don't get a 1099-K is an in-person cash transaction, Paypal F&F, personal check or money order.


It's unfair that you are paying income tax on items you paid sales tax on when purchased new even if you are selling at a loss. There is supposedly an effort to have this legislation reversed back to the way it was before but for now unless you can prove that you paid more than you sold for, you will owe income tax on payments received for goods or services. If you have receipts for everything you sell, you can avoid having to pay the income tax. Unfortunately it's more time wasted doing tax paperwork.


Couple links below with more detailed info on the tax law.

www.ebay.com

1099-K and Tax Withholding FAQs | Seller Center

Starting on Jan 1, 2022, IRS regulations require all businesses that process payments, including online marketplaces like eBay, to issue a Form 1099-K for all sellers who receive $600 or more in sales
www.ebay.com www.ebay.com

Will PayPal report my sales to the IRS? | PayPal US

IRS new reporting requirement for payments for goods and services lowers the threshold to $600 USD starting in 2024. PayPal will report these transactions.
www.paypal.com www.paypal.com
 
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I read this before but I want to be sure I clearly understand it.

I may pay 2000.00 for a gun and sell it for 1000.00.

In this case I would be subject not just to sales tax but also INCOME tax?

In CA I pay nearly 10% sales tax which means the GVT gets 200.00 for me buying the gun, then selling the gun subjects me to a 20% (minimum) income tax for another 200.00.

If this is the case then those who use PAYPAL will not only need to request the +3.5% for goods and service sales but an additional 20%!

It may be cheaper to fly across the country to do a face to face cash sale.
 
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Lewis,
That is what the law appears to say. I quit selling on Ebay when it started this year because it's just unfair to get double dipped for tax on your personal used items. You are also right about sellers might request an extra % fee to cover the income tax when filed next year. I believe this is why most members request F&F which is a risk but will also prove who is a dishonest seller or buyer when the transaction feedback is given or reported to a moderator.

I've been fortunate to deal with some pretty cool members here so far. No deals that were scams or anything like that. I feel that a high percentage of people in the airgun and firearm community are honest folks and tend to treat others as they would like to be treated.
 
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I had heard if item as sold as a loss from your purchase price, no additional taxes was owed. However, since I do not speak tax, I simply will not be bothered with it at all. If paypal and venmo , etc take enough loses. It may get repealed. Threaten a politicians job and then maybe we get better results. But as my accountant said when I inquired about this, if item was sold as a loss- no extra taxes due, which means e need to keep receipts of purchase.
 
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rangur1 said:
I had heard if item as sold as a loss from your purchase price, no additional taxes was owed. However, since I do not speak tax, I simply will not be bothered with it at all. If paypal and venmo , etc take enough loses. It may get repealed. Threaten a politicians job and then maybe we get better results. But as my accountant said when I inquired about this, if item was sold as a loss- no extra taxes due, which means e need to keep receipts of purchase.
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From my understanding, even if you have the receipts to show you are selling it at loss, you still have to claim the entire amount as profit and pay income taxes on the whole sale amount. Individuals don't get the same cost of goods minus the sale price (or vice versa) consideration as a registered business. Any individual selling anything has to claim the entire amount of a sale as income. I'd have your accountant check the new laws.

They're looking to hire over 85k new IRS agents and the IRS just bought 5 million rounds of powder burner ammunition. They need to collect money to pay for all the free programs and line the pockets of the elite. Welcome to the new America.
 
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there is a question asked when doing your taxes, did you receive any income other than what your w2's reported ?
thats where they got you ! if you do not report it, thats fraud and it can be costly !!
no matter if you have any proof of buying something new and taking a loss when you sell it.
you better have your paperwork in order and answer the questions truthfully !
BTDT & got the prize........... :cautious:
 
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gendoc said:
there is a question asked when doing your taxes, did you receive any income other than what your w2's reported ?
thats where they got you ! if you do not report it, thats fraud and it can be costly !!
no matter if you have any proof of buying something new and taking a loss when you sell it.
you better have your paperwork in order and answer the questions truthfully !
BTDT & got the prize........... :cautious:
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If they send you a 1099 the IRS already knows about it.
 
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I would wipe a small country from the face of the earth to just pay 10 % sales tax.
In Denmark it is 25%.
Add to that ( insult ) the 30 - 35 % on income tac, and what not taxes on things like gasoline ASO.
Well the choice of country to wipe out are right in front / under one. :)

Sadly the days where i could adorn myself a tight spandex outfit, and pedal my a,,,,, behind around this small country on a bicycle are long gone, if i tried today i think i would have a heart attack before i got 5 miles from home.
 
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Vhunter said:
Rangur1, you're correct about no tax owed if no profit was made. The catch is all the effort involved in keeping track of receipts and filing the 1099-K. I'm sure there's a lot of us that do our own tax returns (myself included) and I think the IRS is betting on most of us just paying the tax to avoid the hassle.
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Probably, either way, I've dealt with them before and have NO inclination to have a second go around with them.
 
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Mycapt65 said:
From my understanding, even if you have the receipts to show you are selling it at loss, you still have to claim the entire amount as profit and pay income taxes on the whole sale amount. Individuals don't get the same cost of goods minus the sale price (or vice versa) consideration as a registered business. Any individual selling anything has to claim the entire amount of a sale as income. I'd have your accountant check the new laws.

They're looking to hire over 85k new IRS agents and the IRS just bought 5 million rounds of powder burner ammunition. They need to collect money to pay for all the free programs and line the pockets of the elite. Welcome to the new America.
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Simply put, I'll let other members elaborate on how the changes in the law affected things next year. I simply refuse to have a second go around with these people. So I have opted to not sell anything and wait for the congress to flip next January and possibly set these rules back to where they were before.
 
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IANA accountant. We should probably scare one on this forum. But lack of knowledge never slowed me down, so...

I think this ebay 1099-K reflects a sale made through ebay. Ebay is telling the IRS, "We gave this person some money." It doesn't say why. So to keep from getting it counted as pure income, you'll have to account for it as a capital gain/loss, not as pure income. Your income will be the sale price - what you paid for it. If it turned out to be a loss you can claim up to $3000 of it as a deduction. Guns are treated as collectibles, and are taxed at a higher capital gains rate.

Again, we need to scare up an accountant.
 
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Part of the point I was trying to make everyone aware of on my first post was that it wasn't just an Ebay thing and members should be aware of the 1099 if they have payments received as "goods or services". The Feds required all internet marketplace type sites and electronic payment companies to send a 1099 when individuals receive over $600 for goods or services. So if you sell an airgun for $1000 and the buyer makes the payment through Paypal as "goods or services" you will get a 1099 next tax season. If they pay by check, money order, or F&F. It is similar to a donation and is not taxed.
 
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Getting a 1099-K doesn't mean that it's taxed, it means that the IRS is made aware that you have received some money from whoever sent you that 1099-K. The IRS website says, "reportable payment transactions," both taxable and non-taxable. Ex: a $1000 rebate sent to you by ebay/paypal/whoever is recorded, but not taxable.

The method of payment doesn't determine whether or not it's taxable.
 
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