Good news for those of you who sell stuff online. Like eBay, Gunbroker, etc. The $600 reporting threshold for getting a 1099-K form has been put off for another year. So you don't have to worry about it for another tax year, you're safe for 2022. What a last minute deal; resolution to this situation wasn't able to come about through the recent government budget bill. So the IRS issued their own ruling on it which implemented the delay. I didn't know an executive branch department could do that, override something that came out of Congressional law. But I'm glad it did in this case.
The IRS issued some clarifying instructions about how to proceed next year. If you are selling personal property at no profit, you can report that on a Schedule 1 form as "additional income," then offset the appropriate amount in "adjustments to additional income." Basically, in and out on the same form, different sides.
If you sell personal property (or other stuff) for profit, that part of what was reported on the 1099-K form you report on Schedule D, Form 1040. Keep receipts, records and whatever documentation you need to support basis cost and sales cost of these items. Like a business.
If you sell on Gunbroker, this will concern you on aggregate sales over $600. You don't want to pay tax on the full amount that the 1099-K reflects, you want to offset what the gun cost you, plus expenses. That is, assuming you are making money on the deal. If you happen to be selling at a loss, I'd think it was wise to keep records anyway. In an audit, the IRS might want to see receipts on items of higher value that are being claimed as a sale of personal property. .
It looks to me like rule of thumb, if you are losing money on a sale, it's personal property and exempt from income tax. If you are making money on selling an object, it's a business sale and profits are subject to income taxation.
There does seem to be some silliness in this whole thing. Meaning, there is still a lot left for the individual to sweep under the rug. An audit of a taxpayer selling over $600 but substantially less than the old threshold of $20K and 200 items would cost more in IRS labor than revenue recovered. I'm thinking the law might bear more fruit from those sellers who are sailing closer to the old $20K limit.
www.irs.gov
The IRS issued some clarifying instructions about how to proceed next year. If you are selling personal property at no profit, you can report that on a Schedule 1 form as "additional income," then offset the appropriate amount in "adjustments to additional income." Basically, in and out on the same form, different sides.
If you sell personal property (or other stuff) for profit, that part of what was reported on the 1099-K form you report on Schedule D, Form 1040. Keep receipts, records and whatever documentation you need to support basis cost and sales cost of these items. Like a business.
If you sell on Gunbroker, this will concern you on aggregate sales over $600. You don't want to pay tax on the full amount that the 1099-K reflects, you want to offset what the gun cost you, plus expenses. That is, assuming you are making money on the deal. If you happen to be selling at a loss, I'd think it was wise to keep records anyway. In an audit, the IRS might want to see receipts on items of higher value that are being claimed as a sale of personal property. .
It looks to me like rule of thumb, if you are losing money on a sale, it's personal property and exempt from income tax. If you are making money on selling an object, it's a business sale and profits are subject to income taxation.
There does seem to be some silliness in this whole thing. Meaning, there is still a lot left for the individual to sweep under the rug. An audit of a taxpayer selling over $600 but substantially less than the old threshold of $20K and 200 items would cost more in IRS labor than revenue recovered. I'm thinking the law might bear more fruit from those sellers who are sailing closer to the old $20K limit.
Understanding your Form 1099-K | Internal Revenue Service
Form 1099-K reports payments from payment apps or online marketplaces and from credit, debit or stored-value cards. Use it to help figure and report your correct income on your tax return.
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