Metlupass2
Well-known member
There was nothing but 2020 in the drop down so maybe this was my first time.
spanny
Active member
Not to cut to the chase, but since it appears a lot of got a 1099 from PayPal for the first time, if you didn't sell at least $20,000 (or hit that 200 transaction threshold), will you be claiming it on your taxes?
I for one am not a small business and occasionally sell old gear on eBay/Reverb, but far least than $20K/year and certainly not making much of a profit, if at all.
I for one am not a small business and occasionally sell old gear on eBay/Reverb, but far least than $20K/year and certainly not making much of a profit, if at all.
Spaceboy
Well-known member
I honestly sold less than $5000 online this year, mostly pedals that were bought new and sold at a loss. I tend to hoard things these days, but did a small purge towards the end of 2020. I do most of my amp sales locally for cash due to skyrocketing skipping rates. I won't be claiming any of that on my taxes. I think it's rather absurd to be sent a form, to be honest. I won't be paying taxes on my purchases, and then again on the way out the door.
glip22
Well-known member
You can write every penny off, as posted, and show a loss, which will reduce the rest of your taxable income for a win. It's not a big deal. What is a bigger deal is to not report income. IRS doesn't like that very much and it is considered tax evasion. They probably won't prosecute you, but legally they could. Accounting 101, never lie on the income side. Better to claim it and exaggerate your deductions. Worse they can do is make you pay some of it back. If you lie by not reporting, you can have a much bigger problem.
RedB4Black
Well-known member
if it’s considered hobby Income, which is probably what 99% of the people here would have to consider their guitar playing, Then you can only write off expenses to the extent you have revenue. You cant deduct a net loss on hobby.
again theyre just reporting proceeds. So you report proceeds then subtract cost of what you sold... probably nets to less than zero. So in the end you have zero income and zero expense on your return. so basically a reporting exercise. Just maintain records that support the cost side of things if you ever get audited
L
LeftOurEyes
Member
I think this is where things get convoluted. If done as a gift I don't see why you'd have to pay taxes or report it. Legally you can give anyone up to $15k a year as a gift tax free (this includes items worth up to $15k). This is also from each person, so for example, your parents could each give you $15k for a total of $30k tax free per year.
Technically if I send money through paypal as a gift, there should be no tax unless I go over the gift threshold. I could legally say that I gave the person the money as a gift, then they gave me an item (guitar, amp, whatever) as a gift. Paypal only knows about you sending money, not that the other person is sending you an item anyway unless put in the notes, so they shouldn't even be aware that an actual transaction took place. This is assuming that you are not a business of course as well.
I believe the government is trying to tighten control of small businesses that use these kind of loopholes to operate. In the process it looks to me that Paypal is just sending it to anyone who meets the threshold regardless of reason.
Here is a link about gift tax btw:
https://blog.taxact.com/gift-tax-do-i-have-to-pay-gift-tax-when-someone-gives-me-money/
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