If i sell a $4000 amp on Ebay/Reverb do i gotta pay IRS ?

[Donnie B.]

Not sure why.

I just think they got so damn big so fast they couldn't keep up trying to verify
which new member was a business and which was some kid in his bedroom.

EDIT: Just realized you might mean
"why does some kid just selling picks name themselves an Emporium"?

Ego?

 

[Texhex]

Mine's a "Gear Locker" so I'm good right?

 

[Samhain]

Unless your name is "Davey Jones".

 

[Donnie B.]

Don't laugh!

https://www.lagerstein.com/

 

[rstites]

That's the point; reverb eBay etc are not selling your item. You didn't sell it to them, to resell. It's a consignment.

It's still a private sale, and taxing it as if it wasn't is a dangerous precedent.

You appear to be unaware that you've been required to pay these taxes, by law, for decades at this point. It's nothing new. All that's new, is that common methods of paying/collecting now make it feasible for the government to collect those taxes. This isn't some new precedent. It's been this way for longer than most of us have been alive. All that's new is the government putting a mechanism in place to make it harder to evade those taxes. You can still avoid those taxes exactly the way it's traditionally been done: buy and sell in person with cash, and of course you can even do it remotely if both parties trust each other to exchange funds in a way that avoids taxation.

I'll grant that it's a PITA, and I'll miss the free ride of buy/selling over state lines to avoid sales tax, and buying/selling to other individuals to avoid sales taxes and gains taxes. It's been nice, but we all knew all long that it was skirting the law and it'd one day come to an end. I don't think any of us like it.

 

[rstites]

I just think they got so damn big so fast they couldn't keep up trying to verify
which new member was a business and which was some kid in his bedroom.

EDIT: Just realized you might mean
"why does some kid just selling picks name themselves an Emporium"?

Ego?

The line there is pretty hard to figure out. My daughter made enough money in middle school in a combination of Etsy shop and youtube commercial revenue that she could buy a $14k car a couple of years later cash. Is she a business? Some 12-14 year old making crafts in her room for the fun of it and just selling them to cull the junk? Is it a hobby or a business? (I'll grant it's a little skewed since I funded materials and shipping.....of course.)

Also, I don't really think either ebay or reverb care. They really want the businesses on there to move lots of goods through them. If the extra overhead chases smaller sellers off, I don't really think they care that much.

 

[Candiria]

Technically yes, but practically speaking no. There are thresholds that need to be reached in order for you sales to generate a 1099. A single $4,000 sale won't trigger that. I believe Reverb is 200 annual transactions or $20,000 in sales during the year.

 

[Rick Lee]

eBay, Reverb and PayPal don't care about your cost basis. Their rules for 1099s have nothing to do with that. One you get a 1099, it's your problem to document your cost basis or expenses to wash out as much of that 1099 revenue as you can. That can include mileage to/from the post office, all eBay, Reverb and PayPal fees, packaging, original purchase price, etc.

 

[glpg80]

eBay, Reverb and PayPal don't care about your cost basis. Their rules for 1099s have nothing to do with that. One you get a 1099, it's your problem to document your cost basis or expenses to wash out as much of that 1099 revenue as you can. That can include mileage to/from the post office, all eBay, Reverb and PayPal fees, packaging, original purchase price, etc.

I mean technically if they are treating your house as a location of business, then even the costs associated with your home could be included such as mortgage interest, home insurance, utilities, repairs, and depreciation. If they want to play the 1099 game then you get to claim all you want for a home business write off as long as there’s a paper trail.

 

[Rick Lee]

Good luck with that. We claim home office deduction because we both have offices in the home and conduct 100% of our work in them (when I'm not out in the field). If you're washing out all your 1099 income with deductions, that will be considered hobby income and that really ain't worth the scrutiny a flimsy home office deduction can attract. Furthermore, you have to measure the area of your home used for business and the percentage of that space vs. your total sq/footage is the percentage of home maint. costs you can deduct. Really ain't worth it for a side hustle unless you're really making some money.

 

[Candiria]

Guys.... Selliing gear will not meet the standards of a business for IRS purposes UNLESS you're doing it at the level to meet the thresholds to have 1099s sent. In which case you are actually a business and you need to pay your taxes. Otherwise it's a hobby and there are different rules for recordin income and what can be deducted. You also cannot record any losses.

 

[glpg80]

Good luck with that. We claim home office deduction because we both have offices in the home and conduct 100% of our work in them (when I'm not out in the field). If you're washing out all your 1099 income with deductions, that will be considered hobby income and that really ain't worth the scrutiny a flimsy home office deduction can attract. Furthermore, you have to measure the area of your home used for business and the percentage of that space vs. your total sq/footage is the percentage of home maint. costs you can deduct. Really ain't worth it for a side hustle unless you're really making some money.

It takes two seconds to get a room measured with a tape measure, and I know my square footage fairly easily. They make it difficult for a reason.

Guys.... Selliing gear will not meet the standards of a business for IRS purposes UNLESS you're doing it at the level to meet the thresholds to have 1099s sent. In which case you are actually a business and you need to pay your taxes. Otherwise it's a hobby and there are different rules for recordin income and what can be deducted. You also cannot record any losses.

Certain states have lower merchant thresholds for 1099s than others. Where you live does negatively impact you, not all states are $20k and 200 transactions. MD and Virginia are only $600 gross income sold regardless of number of transactions per year, in which I operate my gear sales 100% out of my home being treated as a business.

 

[Donnie B.]

I was able to deduct a certain amount of my home bills as 'office' back between 2015-2017.

The last adminstration did away with that which was quite the sticker shock doing taxes that year.

 

[Devin]

This thread got me craving breastmilx

 

[scottosan]

Yep. This is why, for high dollar items, I don't use reverb/eBay etc. Most of my high dollar used gear has been from rigtalk, actually.

What I DONT understand, is how the gear community either doesn't understand, or doesn't care, that perpetually charging sales tax on resale is a gross violation of their rights as well as a monumental government overreach.

It's fucking ridiculous.

But it’s not a personal sale. You are using a virtual store front and participating in interstate commerce.

 

[Philo Beddoe]

Technically yes, but practically speaking no. There are thresholds that need to be reached in order for you sales to generate a 1099. A single $4,000 sale won't trigger that. I believe Reverb is 200 annual transactions or $20,000 in sales during the year.

That changes 1 January 2022..then everyone will receive a 1099-K if their sales are at least $600 at any point during 2022.

 

[Donnie B.]

That changes 1 January 2022..then everyone will receive a 1099-K if their sales are at least $600 at any point during 2022.

So Billy, you want to be a capitalist when you grow up and run your own internet business?
Good for you son!

 

[Candiria]

That changes 1 January 2022..then everyone will receive a 1099-K if their sales are at least $600 at any point during 2022.

Wow. That's shitty. That's such a low threshold. Does that impact what gets constituted as a business vs a hobby so that you can get deductions back and record losses?

 

[LPMojoGL]

Wow. That's shitty. That's such a low threshold. Does that impact what gets constituted as a business vs a hobby so that you can get deductions back and record losses?

Wait what?
So we have to pay taxes on stuff we buy, used or new, and then pay taxes again when we sell over $600 worth, or prove that we didn't make a profit? Is this right?

 

[Candiria]

Wait what?
So we have to pay taxes on stuff we buy, used or new, and then pay taxes again when we sell over $600 worth, or prove that we didn't make a profit? Is this right?

Basically yes, but if they don't change the rules on what constitutes a business vs a hobby you won't actually be able to deduct any expenses related to it because they did away with deductions for hobbies a couple years ago.

Regardless, it's basically already relegating us to local deals or maybe forums with PayPal friends and family (gift). I'm not sure about how the change will affect PayPal's reporting requirements for friends and family transactions though.