Paypal Changes for 2022


If I understand this correctly, Paypal, along with all on-line payment sources like Venmo, etc. will now be sending out 1099 forms for all payments totaling $600 you receive in 2022 for goods or services.  The only way around this is to use Paypal friends and family for payment which eliminates any buyer protections.  Is everyone aware of this?

 

dave43

I believe this is $600 total for the year, not just transactions that each total $600 or more?  

If you own your own business or have a side hustle and get paid through digital apps like PayPal, Zelle, Cash App or Venmo, earnings over $600 will now be reported to the IRS. A provision from the 2021 American Rescue Plan, which went into effect on Jan. 1, directs third-party payment processors to report transactions received for goods or services totaling over $600 per year to the IRS. 

Prior to this legislation, a third-party payment platform would only report to the tax agency if a user had more than 200 commercial transactions and made more than $20,000 in payments over the course of a year. 

The key thing to know right now is that it doesn't apply to your 2021 tax return, which you'll file this tax season. But it will apply to the earnings you make throughout 2022, which you'll report when you file in 2023. 

Will never use PayPal as its a big ripoff also Zelle and the other turkey Venmo.

Some of us unfortunate to live in a few select states were already subject to the dreaded PayPal 1099-k tax forms: HERE

Copy / paste:

Several states have already closed this reporting loophole on the state level:

  • Maryland, Massachusetts, Mississippi, Vermont, and Virginia require a 1099-K to be filed with the state tax agency if a TPSO pays a state resident $600 or more during the year.
  • Illinois and New Jersey have a $1,000 1099-K threshold (plus, for Illinois, a requirement of at least four transactions).
  • Arkansas has a $2,500 threshold.
  • Missouri has a $1,200 threshold.

So, what's the solution?  Do we have to keep track of what we paid for an item vs. what we sold it for or won't that matter?  If you sell $5,000 worth of equipment this year, you'll get a 1099-K for $5,000 for additional income?

Unfortunately there is no way out. You have to keep track of everything and report everything. I had a thread running in here last year: 

 

 

Got it.  It looks like we have to file a schedule C to list cost of goods sold and can write off travel expense, packing materials, etc.  Seems like a real pain, but the only way to keep from paying tax on the total amount listed on the 1099. 

 

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As always, not just audio, crazies take over / hijack all discussions

It's not crazies @thyname , it's people pointing out the obvious. It isn't enough that you pay not only income tax, property tax, sales tax, gas tax. tons of hidden taxes, death tax. That isn't enough to satisfy the all consuming behemoth of government. Banking institutions are warning their clients the Biden admin is intent on having them report any transaction over $600.This will force them to hire more people and it will enlarge another Federal bureaucracy. The current reporting amount is 10k and it was instituted to help curb organized crime. The people who will be hurt most as always are the poor who will have a harder time making itemized deductions and end up just handing over more and more of their money.

I had to deal with PayPal reporting for all these years Trump was in power. And those “territories” I outlined above are mostly run from Republican governors. Mississippi, Arkansas, Missouri, Maryland, and now Virginia. Unless the crazies meant leaving US when saying “territories”. If so, where would you go? Canada? Europe? Or North Korea? And the new rules were set while Trump was in power. So much for draining the swamp. Nothing really happened in those four years.

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@carlsbad How would one report losses on sold equipment? 99% of people here are hobbyist, not business, they don't know about business tax laws.

Does this make all audiophiles who buy and sell equipment at profits and losses essentially a small business? Do we then have the ability to take deductions, business expense and home office deductions pertaining to the buying and selling of audio gear?

As always, not just audio, crazies take over / hijack all discussions

’Gon would have to be one of the most heavily politicised platforms on the planet, while also seeming to possess a seductive allure that attracts nutjobs like moths to a flickering flame. The outcome - threads resembling trench warfare. Why this is so has great research potential for many a doctoral thesis..

This is because of a deal that Sleepy Joe engineered early last year. 2021 was the last chance to sell. your old stuff. I did.

The worst aspect is that you get to pay tax on the inflation the politicians created.

Sell something for $200 that cost $50 (with receipt) in 1980.

IRS treats it as gain even though it’s treading water.

Back to the black market and barter economy.

The only result will be fake bills of sale de facto.

Lotso luck not paying tax on gains because of amateur status.

Leave PayPal out of this PITA of them too.

 

 

The IRS has lost 20% of it's staff in the last decade they already can't keep up with tax returns. Stop the hyperventilating over nothing more IRS staff will help the overall economy.

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This is how those brilliant politician’s said they would catch the rich and force them to pay their fair share...like Elon Musk, Jeff Bezos and Bill Gates.

well, thanks for the info. 

I gave a guy a loan, he has been paying me via Zelle. 

I just asked him to use money orders instead.

Any other ideas how to receive loan payments?

Just another way to get more of our money...even when the USED items we sell have already been taxed.

PayPal is a huge extreme violator od your 1st 2 nd amendment 

with Twitter, google, Facebook , stripe is better imo 

How can paypal violate your 1st and 2nd ammendment rights? Only the government can be considered when evaluating whether your rights have been infinged.

My fifth-grade (1959-60) teacher use to proclaim a loaf of bread had 39 taxes hidden in each loaf. Now it is up to 151 hidden taxes in same loaf of bread. My favorite tax saying is from the 1800’s ’Don’ tax me, don’t tax thee, tax the man hiding behind the tree.’ No one, that I know, of enjoys paying tax. It takes both houses of congress to pass new tax laws, after they make sure the maximum deductions apply to them. Kind of like the weather, complain all you want, but seek some shelter.  Taxes are neither red nor blue, they are red, white, and blue.  White socks, red necks, and blue-ribbon beer made this country great.

czarivey

4,694 posts

RUN away from democrap owned territories! It's safer and the best solution for savings!

Another Mensa candidate.

That is a political ploy to squeeze you on everything ,

UPS just pulled another one. I asked for insurances on the Duelund Loudspeaker purifiers I sell and they asked me how well they are packed,  they said we Donot

cover for damage just for theft or loss ,what kind of BS is that ,

what if I am selling a $5k amplifier and they damage it ,tough luck 

I think I Better see if FedEx too may now hav3 the same policy  this is getting crazy 

and over $1 per hundred , you need to buy from a outside insurance company 

I think I read FedEx too is pulling this crap, Ask first !!

I think what UPS and FedEx are really saying about damage is that they don't insure against damage of the contents unless the packaging is damaged enough to damage the contents. They don't know how the shipper has packed things, and they aren't willing to get into an (irresolvable) dispute about the adequacy of packaging for the item shipped, so they won't insure against damage of contents unless you pay them to package it.

It is what it is, hopefully the vast majority of people will stop using PayPal / eBay / Zelle. I’ll do all my buying at the used hifi shops and F2F deals if I have to. I’m not getting screwed by these a-holes…this is absurd.

Re the Form 1099 reporting to the IRS, some concepts above are being mixed together. The amount on the Form is not "income", it's only the total "gross proceeds from the sale(s)". To determine income (actually "gain"), you subtract your cost of the item. It's a lot like selling a share of stock or your house, the broker or escrow that closes the transaction reports to the IRS the gross proceeds from the transaction. It's then up to the taxpayer to report (generally on Schedule D, Capital Gains and Losses) both the proceeds and the cost of the asset sold, with only the excess of proceeds over cost being gain (income). So yes, you generally need to keep evidence of what you pay for items you sell.

If you are not in the "business" of selling (a muddy concept beyond what I can detail here), gains are taxable and losses are not deductible, but you may be able to offset losses against your gains ("see your tax advisor"). If you are in the "business" (probably rare for A-Gon), you get taxed on gains and deduct losses, and may be able to deduct losses against other income ("see your tax advisor"). Again, it's similar to selling stock through a broker or your house where an escrow agent closes the sale by processing payments and documents, and then reports gross proceeds to the IRS, and you have to figure out the gain, if any. Hope this helps.

So I buy a pair of speakers for $5000 & sell them a few years later for $3000 on Audiogon using PayPal, isn’t that then a $2000 “loss” that I can deduct from my taxable income? It should work both ways of at all. That $3000 Isn’t income or a capital gain. Our government is so corrupt 

Again, I think that those of us who may multiple times a year or maybe one to two times per month sell gear, may now have been put into the audio “business” by the IRS. If they want to play it that way, then I can deduct my expenses involved in this business. These are the unintended consequences of over regulation. 

When you have a government that gives away $T in money……You shouldn’t be  surprised to see taxes increased, and new ways of grabbing your money invented.

Never knew so many sovereign citizens resided in the borders of America.
Is that like cosplaying Americans? It's hard to tell you guys from the real ones.

All the best,
Nonoise

Yes they will report and send you a 1099k but for personal items you most likely bought it for a similar price or maybe even more so no gain, no tax.

Notice how Amazon and Ebay now charge the buyer sales tax?

This was not the case before but stems from the Wayfair vs south Dakota ruling in 2018.

For sites that do not collect sales tax I imagine states could use this form to collect thier share.

AND you will pay sales tax always but only the buyer pays. 

That's where this new ruling will get it's money. 

 

Imagine paying 8% more for everything you buy on Agon?

It seems like this is to help get a little more revenue from cottage type businesses, but will be another way the IRS can flag any one of us. This is just a quick search of the taxes we already pay...

  1. Air Transportation Taxes
  2. Biodiesel Fuel Taxes
  3. Building Permit Taxes
  4. Business Registration Fees
  5. Capital Gains Taxes
  6. Cigarette Taxes
  7. Court Fines
  8. Disposal Fees
  9. Dog License Taxes
  10. Drivers License Fees
  11. Employer Health Insurance Mandate Tax
  12. Employer Medicare Taxes
  13. Employer Social Security Taxes
  14. Environmental Fees
  15. Estate Taxes
  16. Excise Taxes On Comprehensive Health Insurance Plans
  17. Federal Corporate Taxes
  18. Federal Income Taxes
  19. Federal Unemployment Taxes
  20. Fishing License Taxes
  21. Flush Taxes
  22. Food And Beverage License Fees
  23. Franchise Business Taxes
  24. Garbage Taxes
  25. Gasoline Taxes
  26. Gift Taxes
  27. Gun Ownership Permits
  28. Hazardous Material Disposal Fees
  29. Highway Access Fees
  30. Hotel Taxes (these are becoming quite large in some areas)
  31. Hunting License Taxes
  32. Import Taxes
  33. Individual Health Insurance Mandate Taxes
  34. Inheritance Taxes
  35. Insect Control Hazardous Materials Licenses
  36. Inspection Fees
  37. Insurance Premium Taxes
  38. Interstate User Diesel Fuel Taxes
  39. Inventory Taxes
  40. IRA Early Withdrawal Taxes
  41. IRS Interest Charges
  42. IRS Penalties
  43. Library Taxes
  44. License Plate Fees
  45. Liquor Taxes
  46. Local Corporate Taxes
  47. Local Income Taxes
  48. Local School Taxes
  49. Local Unemployment Taxes
  50. Luxury Taxes
  51. Marriage License Taxes
  52. Medicare Taxes
  53. Medicare Tax Surcharge On High Earning Americans Under Obamacare
  54. Obamacare Individual Mandate Excise Tax
  55. Obamacare Surtax On Investment Income
  56. Parking Meters
  57. Passport Fees
  58. Professional Licenses And Fees (another form of taxation)
  59. Property Taxes
  60. Real Estate Taxes
  61. Recreational Vehicle Taxes
  62. Registration Fees For New Businesses
  63. Toll Booth Taxes
  64. Sales Taxes
  65. Self-Employment Taxes
  66. Sewer & Water Taxes
  67. School Taxes
  68. Septic Permit Taxes
  69. Service Charge Taxes
  70. Social Security Taxes
  71. Special Assessments For Road Repairs Or Construction
  72. Sports Stadium Taxes
  73. State Corporate Taxes
  74. State Income Taxes
  75. State Park Entrance Fees
  76. State Unemployment Taxes (SUTA)
  77. Tanning Taxes
  78. Telephone 911 Service Taxes
  79. Telephone Federal Excise Taxes
  80. Telephone Federal Universal Service Fee Taxes
  81. Telephone Minimum Usage Surcharge Taxes
  82. Telephone State And Local Taxes
  83. Telephone Universal Access Taxes
  84. The Alternative Minimum Tax
  85. Tire Recycling Fees
  86. Tire Taxes
  87. Tolls
  88. Traffic Fines
  89. Use Taxes
  90. Utility Taxes
  91. Vehicle Registration Taxes
  92. Waste Management Taxes
  93. Water Rights Fees
  94. Watercraft Registration & Licensing Fees
  95. Well Permit Fees
  96. Workers Compensation Taxes
  97. Zoning Permit Fees
  98. The tube amp you bought in the heat of summer and sold in the fall! 

@secretguy @jond 

Ok Mr. Do Right, give me a friggin’ break…paying taxes is one thing, this nonsense is a blatant overreach by the govt. I get destroyed in taxes, I’d like to know what snow globe you two are living in. 

@taxguy

I heard about this tax change on YouTube and immediately thought of a couple points:

  • Gov is wanting to increase revenue - this is about expanding control
  • This will affect mostly low & middle class (tax the ’side-hustle’)
  • Gov is prepping for (cashless) digital currency future

My question to you... If audio gear (or anything else we sell) generates one of these 1099’s, does depreciation need to be factored in? That could significantly reduce/eliminate the value of the original cost - resulting in the entire transaction being taxable gain. Example: In 2016, I buy a new amp for $3000. Depreciation schedule for electronics is short (think maybe only a couple years), so in 2022, that item is likely fully depreciated. I sell it in 2022 for $4000 (due to it’s popularity and inflation). Can the gain be offset by the original cost in this case?

 

@nonoise Americans are always on the lookout for government tyranny, because patriots and government are usually at odds with each other. Governments endeavour to control, while patriots endeavour toward freedom. Example: The 2nd US constitutional amendment provides the right to be free of governmental infringement to maintaining a weaponized civilian militia specifically for the purpose of defending against tyrannical government. US founding fathers had the foresight to prepare for this by making it the 2nd amendment (just after free speach) - that’s how important it is.

This is a nothingburger. How many people routinely make money on their audio sales?

@nonoise  it is not unpatriotic to try to avoid paying what you can. I suggest everyone who thinks otherwise to pay more than you should. They will allow you to do that if you feel so strongly. We have roughly half the nation that pays nothing into income taxes while at the same time chanting for the rich to pay "their fair share". It has gotten so absurd that people who pay no income tax are receiving money from other taxpayers for their decision to have a child. People chanting fair share that don't realize the top 1% account for 70% of the monies paid into federal treasury. For some reason a political segment believes there is a limited amount of money and if that rich arsehole weren't so selfish I'd be rich too. It doesn't work that way. 

Our federal government is bloated and it's tax laws are what allows it to be bloated. If you don't believe me look at maps by county + wealth over the last 6 decades. That wealth was distributed across the nation. Today the richest counties are congregating around DC. I don't have a problem paying taxes; I have a problem paying for mass bureaucracy and other people's decisions in life. If you choose to have a kid, great! I don't want to pay for that choice.

@dadork 

If you choose to have a kid, great! I don't want to pay for that choice.

I agree with you. That’s why new laws like those in Texas are head scratchers.

 

Alot of people gripe about their high taxes, alot of other people chuckle at what those others think are high taxes.