Metlupass2
Well-known member
I cant even find the fucking thing on my account. I have a feeling I've gotten them before but since it's not obvious when you log in I've missed it before.
Paypal 1099 From Gear Sales
- Thread starter Metlupass2
- Start date
LP Freak
Well-known member
There’s a little bell on the upper right hand corner of the main page next to where you log in. You should find it there.
glpg80
Well-known member
If you claim it as income, doesn’t that have the negative effect of potentially pushing your total income bracket up a notch, and anything you can’t write off on the schedule C could be taxed at the higher rate bracket regardless?
stratjacket
Well-known member
The OP got a 1099 from PayPal, is anyone getting one from Reverb as well?
stratjacket
Well-known member
Actually, I read back through and see a few did get from Reverb as well. I suppose from using Reverb payments
glpg80
Well-known member
I shouldn’t have to claim schedule C to offset a 1099 for used gear purchases if I’m not a registered business with a business license and the gear never leaves my house to be used as a income source. I just bought a used amp and had to pay state taxes on it even though it was purchased out of state. So stupid.
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thedeadzone
Active member
This is what I do. Even venues that pay in cash, I report the income. Between gear purchases, supplies, mileage for gigs and rehearsals, etc., my music-related expenses exceed my music-related income. I can even deduct a portion of my house and utilities, food expenses after the show, and anything else that goes with doing this. On some major gear purchases, I can also write off depreciation in subsequent years.
In the U.S. we're generally required to report the income and pay taxes on it. Some of my local peers scoff at giving the government more than they think they need to, and while I generally agree, I'm not willing to risk the civil/criminal liability of intentionally under-reporting income. And in doing things by the books, I'm able to lower my taxable income by several thousand dollars almost every year. So my friends who think they're being smart by not reporting their music income may well be paying more in taxes because of it.
Also, if we're using commercial services like Reverb and eBay to broker the transactions, and banks like Paypal to handle the funds, we need to quit acting shocked or outraged that we don't have the autonomy of a private sale. I don't know who needs to hear this, but interstate commerce isn't the same as a handshake deal with your buddy for cash. I'm sorry I had to be the one to tell you. The use of these services is entirely voluntary, so I find it hilarious when people whine like victimized martyrs for nothing more than being bound to the terms they agreed to. Some people are simply better-suited for classifieds and cash/money orders, and that's fine.
Some good info on this thread, but some wrong info. .1st off this started a few years back. I get one each year. It has nothing to do with REVERB or EBAY. . It's only PAYPAL transaction where people have paid you the 'non-gift' way, i.e. for something you sold. . YES it's already reported to the IRS as "INCOME" . . .I have a couple thousand /yearly . .It is NOT PROFIT of course. . You can have expenses/depreciation,etc,etc. . MIne definitely Zero out. . However if you're worried about that, talk to a tax acct.
Eric
Eric
Metlupass2
Well-known member
The 1099 is impossible to locate on the mobile app or phone browser. I had to log in on my laptop to be able to find the fucking thing. So my amount is just over $14,000. I didn't make that much but only maybe 1/10 of that as profit. I've definitely sold over 10k in a year in the past but never got a 1099 for it. There isn't even an option to pull any previous years on PayPal site.
glip22
Well-known member
Good question. You write off your expenses against this income. It will not put you into a higher tax bracket as long as you break even or have a loss on the amount listed on your 10-99. If you profit considerably, then the amount of profit could push you into a higher bracket. Most of us lose on gear sales.
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glpg80
Well-known member
I wonder if PP gift could be considered tax evasion if used for purchases? That’s scary.
glpg80
Well-known member
Reverb and PayPal both are. Basically the way the law is written is if the platform marketplace makes money off of your sales, they have to issue 1099s and charge tax like a store. It’s the reason Craigslist won’t issue 1099s because they don’t make a dime off of the items, so it’s not marketed as a marketplace for economic gain like Etsy, reverb, PayPal, etc.
Wizard of Ozz
Well-known member
Back to old fashioned USPS Money Orders kids... the old ways are sometimes the best ways. 
Like someone mentioned, file it and then write it off.
One year I sold $40k in guitars and received a 1099 but I ignored it. Later received an IRS letter stating I owed $10k in taxes from extra income. If you sale more than $20k, they look at it like you are a small business.
I questioned the extra taxes and argued that this was not profit and I had sold guitars that I had collected over many years. Had a super nice IRS rep. that only asked for six examples of price bought and sold. Ended up being dismissed but would have been easier to file correctly.
Good luck!
One year I sold $40k in guitars and received a 1099 but I ignored it. Later received an IRS letter stating I owed $10k in taxes from extra income. If you sale more than $20k, they look at it like you are a small business.
I questioned the extra taxes and argued that this was not profit and I had sold guitars that I had collected over many years. Had a super nice IRS rep. that only asked for six examples of price bought and sold. Ended up being dismissed but would have been easier to file correctly.
Good luck!
thedeadzone
Active member
Yeah, if it's done willfully to keep revenue under the radar. People want the convenience of these platforms without having to play by their rules. If their sense of integrity is that low, I wouldn't trust them to sell me strings. No thanks. If they can switch off their honesty the instant it becomes an inconvenience, then they're part of why these constructs have to exist in the first place.
thedeadzone
Active member
You would include the $4K for the guitar along with any of your music-related expenses and revenue as part of your 2018 taxes, then the $3K sale goes against your 2020 taxes. What else did you buy in 2020 that might offset the sale? You can record as an expense (and probably depreciate) anything whose sale you'll later have to report as income. Unless you're turning a profit flipping gear, you'll pay less in taxes overall by reporting everything. The alternative, as others have said, is simply not to use Reverb/eBay/Paypal. If you want the autonomy of private sales for your personal gear, then don't do it as eCommerce. The states don't want internet sales cannibalizing the sales tax they'd otherwise get from local brick-and-mortars, and now everything is on the radar.
My take is that if the government wants me to report all of my gig revenue as income, then I'm sure as hell also going to include my expenses too, and I'm going to find every penny I can. I report amps, guitars, cables, mileage, hotel costs, meals, portions of my house used for music, gear insurance, strings, and any other meaningful expenses. Almost everything I purchase is via eBay, Reverb, or Sweetwater, so it's very easy to compile at the end of the year. Music unfortunately isn't my full time gig, but doing it this way decreases my taxable income by a couple thousand (or more) almost every year.
I keep my receipts, keep records of gigs and rehearsals, and I pay a CPA $300 every year to do my taxes, and it's totally worth it. I pay less taxes because of it, and I never worry about getting caught for under-reporting. For those people who are looking for ways to bend the rules and do things under the radar, at least be smart enough not to advertise it.
I've got 1099-K's from Paypal for 3 years 2018, 2019 , and 2020. To see them on my computer I click on the 'bell' in the upper righthand corner. Then you'll see a 'notification' of '1099's are ready).. They you click on that, and it'll default to 2020.. But there's the little dropdown menu and you can chooose your 2019 1099 to read, or your 2018 to read. Hope that helps
Eric