Paypal Changes for 2022

Thanks @rodman99999, I wish these qualify as capital loss, but I am afraid this is too good to be true. More likely a personal item kinda thing, that you cannot take a tax loss for, or a hobby classification. Hopefully a CPA can chime in here. Thank you though 

@dadork :

no I don't and that's the point. Why does the government feel they are entitled to be involved in the minutia of everybody's every day life? My solution would be the Flat Tax 

The progressive tax system is not new. Look up 16th Amendment from over a century ago, circa 1913. 

I did not create the US tax system, and frankly I don't understand why is so bloated to the point of an entire industry of CPAs, tax advisors, tax attorneys, financial advisors, etc. etc. get paid a lot of money to "help" people with their taxes. But it is what it is. Good luck undoing it. Republican and Democrat governments have come and gone over that century, and nobody has done anything about it, other than making it worse. 

@rbertalotto : and that's great, as this is a side business for you. However, the vast majority of audio enthusiasts selling gear here or in other places using PayPal, do this for pleasure, not a business (i.e. selling something to upgrade to a better / newer unit). THAT is the problem.

@ghasley :

Are you angry that taxes may be owed or that it has become more difficult to hide profits?

Are you asking me? If you did, there is no profit, so I have nothing to be angry about hiding anything. And I keep all my receipts, including shipping receipts, PayPal receipts, etc. etc. I know there is no tax as I did not make a profit. I was just inquiring on how to report that 1099-K in the tax return, as I am not a business. What do you suggest?

So let's go back to my earlier example:

Say for example, I sold something for $1,000, that I bought a few years back for $2,000. Clearly a loss. It’s reported in that 1099-K form that also gets sent to IRS. What do I do with the form? Do I ignore it? Or do I have to report it in my return, and if so, how? Which schedule? Again, not a business, just an audio enthusiast upgrading.

@johnk : That's exactly right! you nailed it. What you described IS the problem.

Everyone receiving a PayPal payment that is NOT family & friends will get a 1099-k tax form, if above the dollar limit. Business or not.

I do my own taxes using TurboTax. Including last year when I had the 1099-K from PayPal. I reported the PayPal form on Schedule D of form 1040, accompanied by a detailed Form 8949 that I mailed over, which I reported on form 8453 of my electronic tax return. That's the best I could do based on the information I had gathered. I printed all the receipts (buy and sell, shipping, etc. etc.) and I am keeping them just in case of an audit. 

I did contact a few CPAs I knew, but they had no answer. They were looking things up in the Internet, no different than me. Not all CPAs know what to do. I guess I am just unlucky to not know a good CPA.

That's all I have to offer. I will stop it right here. If anyone has a better idea I am all ears. I will keep an eye in the subject matter, needless to say. But I have nothing left to contribute. Good luck everyone 

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.

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: 

🤦‍♂️

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

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.

@8th-note : very informative! Question: what schedule would you file this under?

Also, I believe for hobby transactions, losses are disregarded, but gains are recognized. They cannot be offset with each other. I may be wrong

@8th-note : They do get itemized. I received already a PayPal 1099-k for 2020 last year. I am in one of those 9 states I mentioned above (see reference below) that already had and have the PayPal reporting requirements for much lower amounts. The 1099-k form had each transaction listed separately with dollar amount and date of transaction.

Are you saying we just ignore the form if we know we did not make any profit?

Say for example, I sold something for $1,000, that I bought a few years back for $2,000. Clearly a loss. It’s reported in that 1099-K form that also gets sent to IRS. What do I do with the form? Do I ignore it? Or do I have to report it in my return, and if so, how? Which schedule? Again, not a business, just an audio enthusiast upgrading.

_————-

• Maryland, Massachusetts, Mississippi, Vermont, and Virginia require a 1099-K to be filed 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.

@tubebuffer : what do you exactly know about US tax system AND baseball?

Please…. Let the adults take this thread on, and tackle the real issue at hand. Please 

Any CPAs here? Let’s put this out there. Example:

———-

Say for example, I sold something for $1,000, that I bought a few years back for $2,000. Clearly a loss. It’s reported in that 1099-K form that also gets sent to IRS. What do I do with the form? Do I ignore it? Or do I have to report it in my return, and if so, how? Which schedule? Again, not a business, just an audio enthusiast upgrading.

———-

I appreciate it.

Well, I've about reached the end of my knowledge on this issue. I didn't realize that Paypal itemized all of the transactions.

That’s OK. I appreciate the effort

You would normally list any income and account for a 1099 on Schedule C. On this schedule you have the opportunity to deduct expenses. In our case we would deduct the original cost of the item(s).

Schedule C is for self employed people. Business. I ran no business. This is my audio hobby. 

@rodman99999 may I humbly suggest you establish a militia?
 

Don’t you have other internet sites for this kind of stuff?

Breaking news! redistribution of wealth is the foundation of a modern society. Otherwise you would have the vast majority of not wealthy people take up on tools to take the wealth off the vast minority of wealthy people. Why is this so hard to comprehend.

Funny thing is these folks calling foul are more often than not, in the receiving end of the government handouts.

@dadork : other than the righteous speech, do you have any solutions to the PayPal reporting issue this thread was initiated? Read the OP. Or this does not pertain to you as you never bought or sold anything here? There are plenty of other sites for your kind of thing. Why is it so hard to stay on topic