eHam
eHam Forums => Misc => Topic started by: KW4CQ on March 17, 2021, 01:22:40 PM
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This year was the first time I have ever receive such a form showing that I owe the IRS tax on my ham equipment I sold through PayPal in 2020. I'm stunned! What's going on with PayPal?
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The 1099K has to do with 'third party transactions', i.e. sales via PayPal, EBay, etc.
Your best bet is to take it to your tax advisor and let them deal with it.
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Yes, I am aware of that. Here is something I just discovered on-line and will pass it along for anyone else who may be interested:
PayPal will track the payment volume of your account to check whether your payment volume exceeds both of these levels in a calendar year:
$20,000 USD in gross payment volume from sales of goods or services in a single calendar year
200 payments for goods or services in the same year
Some US States require merchant reporting at a lower threshold:
Vermont, Massachusetts, Virginia, Maryland: $ 600 USD in gross payment volume from sales of goods or services in a single calendar year regardless of the number of transactions;
Illinois: $1,000 USD in gross payment volume of goods or services in a single calendar year with at least 4 payment transactions processed.
Note: If you are a ham living in Virginia, as I am, and you sell some ham gear and collect the payment via PayPal you will get an IRS-1099-K reporting the total amount of your transactions for the year if the total exceeds $600.00. You will have to report that to the IRS on your Schedule C when you file your tax return for the year.
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Unless you made tons of money selling your ham gear -
You may have to report it but there is no tax liability if your tax basis (cost) exceeds the net proceeds (i.e. sold at a loss)
Also - personal losses are not deductable
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So, you have to pay tax? Get over it, we all have to pay tax.
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Oh, something else. You might have to pay sales tax in Virginia.
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Even if you did sell the radio for more than you paid for it, you can claim the profit as hobby income. You can write off all your hobby expenses that year against it. That argument might work well with the XYL as well. But honey, if I don't buy this new radio before Jan 1st then *we'll* have to pay income tax on the sale of the old radio. :-)
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Oh, something else. You might have to pay sales tax in Virginia.
In Oklahoma, we're 'required' to pay sales tax on ANY sale, commercial or private. Thus, any revenue from a garage/private/flea market sale requires collection/payment of sales tax. The Oklahoma Tax Commission showed up at our local hamfest several years ago and distributed tax packages to the commercial and flea market vendors.
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An addendum. I sold a piece of equipment to a fellow ham. It turned out he wasn’t happy with what he bought. I refunded his full purchase price. Net zero profit on sale. PayPal showed this as a “sale” on the 1099-K. I still had to pay iRS tax on the net zero sale. Bummer!
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An addendum. I sold a piece of equipment to a fellow ham. It turned out he wasn’t happy with what he bought. I refunded his full purchase price. Net zero profit on sale. PayPal showed this as a “sale” on the 1099-K. I still had to pay iRS tax on the net zero sale. Bummer!
Then you need a new tax advisor. No tax is due if those transactions occurred in the same fiscal year. If it spanned fiscal years, the net tax is still zero if your overall financial situation hasn't changed.
- Glenn W9IQ
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Good point, Glenn. You saved me a tidy sum with that advice. Settle for a cigar?
73, Bob KW4CQ
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Will I have to declare its value?
- Glenn W9IQ
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Only if you smoke it! ;D
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And this kind of thing is what will give rise to the use of cryptocurrency for person-to-person transactions, along with a resurgence in cash-only sales at hamfests or in person...etc.
If the government has a money problem, the government should quit printing and spending money it doesn't have.
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If the government has a money problem, the government should quit printing and spending money it doesn't have.
That's what governments are all about. A major reason we have them. No government, no money.
Very tough for most people to live without it.
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What's a tax advisor? TaxAct online charges me $4.95.
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This is funny. Have any of you heard of Cryptocurrency? Impossible to trace.
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Even if you did sell the radio for more than you paid for it, you can claim the profit as hobby income. You can write off all your hobby expenses that year against it. That argument might work well with the XYL as well. But honey, if I don't buy this new radio before Jan 1st then *we'll* have to pay income tax on the sale of the old radio. :-)
I don't know how the Feds distinguish "hobby income" from other self-employed income, but I do know that the states want to collect "sales tax," either from the seller or the buyer, and they are increasingly putting the burden on sellers to charge and collect that sales tax.
I'd advise folks who buy and sell stuff to get advise from an expert in federal and state tax liabilities. Many folk are languishing in federal and state prisons because they believed plausible sounding BS from snake-oil salesmen promoting ways to avoid paying taxes which won't stand up in Court, if it ever comes to that.
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Hobby income & expenses. Read about it here: https://www.irs.gov/newsroom/five-things-to-remember-about-hobby-income-and-expenses
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Hobby income & expenses.
Bob is absolutely on the ball about this. There are clearly distinctive features of businesses that are designed to produce profit and hobbies that may, on occasion, produce sales income.
The bottom line for businesses is that losses can be fully deductible. That would seem to be the major focus for persons actually in business (and doing all the financial things required for a business to succeed). Hobby losses can only be declared up to a limit.
The concern for people attempting to run a business is to make certain that they are keeping the financial records and doing the planning that any business requires. There is unlikely to be any
financial benefit for someone who tries to run a business as if it were a hobby.
If ham radio is a hobby, which for most of us it is, your income from sales of gear should not be a problem Federal tax-wise. State rules on sales and related taxes will vary, but I very much doubt that any state which collects hobby sales taxes will have the resources required to enforce such. It would cost an economically-stressed state a lot of money to try to collect hobby-related sales taxes.
Wealthy states with huge budgets don't enforce sales tax requirements. They get their income via significant, highly-productive, income tax legal machinery.
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Oh boy I was wondering about this. Ive got a ton of studio equipment, ham radio equipment, etc. Was thinking about selling some of the inventory. Better stick to hand to had or ham fests. Im still spry enough to meet guys face to face. I refuse to pay taxes on personal private possession transactions. This is just more government overreach. Anyone that can justify this is not thinking clearly.
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This is funny. Have any of you heard of Cryptocurrency? Impossible to trace
The money may be impossible to trace, but the transaction itself might not be.
If you are advising people not to report income, you're inviting them to be the next Al Capone.
Read up on how they nailed him before you advise people to try and hide economic activity.
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Anyone that can justify this is not thinking clearly.
Nice magical thinking you have going there.
The tax laws are a mess and they do things that defy your intuition or mine, but that doesn't exempt you from following them.
You probably won't get caught, and they probably will not prosecute you for small sums, but there's a lot of guys in jail that relied on probably.
As far as the Feds go, you'd almost certainly have to be making net money on the buying and selling -- that wouldn't apply to most of us. Sales tax is another question and you'd have to know the local law to know what risks, if any, you are running.
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Thanks Joey . I miss Donnie.
Nuff Said. Keeping it real. 73s
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Thanks Joey . I miss Donnie.
Nuff Said. Keeping it real. 73s
??? ??? ???
Charlie
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Anyone that can justify this is not thinking clearly.
Nice magical thinking you have going there.
The tax laws are a mess and they do things that defy your intuition or mine, but that doesn't exempt you from following them.
You probably won't get caught, and they probably will not prosecute you for small sums, but there's a lot of guys in jail that relied on probably.
As far as the Feds go, you'd almost certainly have to be making net money on the buying and selling -- that wouldn't apply to most of us. Sales tax is another question and you'd have to know the local law to know what risks, if any, you are running.
You are truly hilarious. What a silly statement. Sales tax? Lord help us.
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The money may be impossible to trace, but the transaction itself might not be.
If you have cryptocurrency, you know how to make transactions impossible to trace.
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The crypto currency impossible to trace.
That is a FALSE STATEMENT.
cryptocurrency can be traced if it is online it can be traced.. Jeez
Wow know what your posting before you post it.
Nuff said.
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Yes, got an email this morning. Not what I was hoping to see when I opened my emails.:(
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This thread is 2 years old; this is old news and the limit now is $600. It will not be implemented by the IRS until next year. (tax year 2023) Keep careful records of your buy/sell transactions; write your federal representatives for a more reasonable limit.
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IRS. What a bunch of BS. And Crap.
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So I got a 1099-K but they are not going to enforce it till next year? What I heard was any PayPal transaction over $600 would be reported. Not sure on the Ebay sales?
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If you got a 1099K for tax year 2020 you must have had at least $20,000.00 (and 200 or more transactions) in total third party payments made to you. Are you an online seller, perhaps?
The new $600 threshold is now in effect for tax year 2023 so next year many will be hit with 1099-Ks...
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Oh, something else. You might have to pay sales tax in Virginia.
These days, most states are requiring the payment of sales tax (sometimes called "use tax") on online purchases as well. This is why the likes of Amazon have started collecting sales tax on purchases.
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AK5B, yes I sell on Ebay. May need to change that :)
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what you post here can be traced too.
The crypto currency impossible to trace.
That is a FALSE STATEMENT.
cryptocurrency can be traced if it is online it can be traced.. Jeez
Wow know what your posting before you post it.
Nuff said.
what if one had multiple EBay and PayPal accounts and sales were split up between them so they are all under the $600 threshold? Is the IRS, paypal and ebay smart enough?
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Only if you lie about your SSN.
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No the IRS would not be smart enough. They are a bunch of dumb ass bozos.
Sorry for my French.
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Hams are such an honorable and honest bunch of folks. They have forums to learn how to cheat on taxes.
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No the IRS would not be smart enough. They are a bunch of dumb ass bozos.
Sorry for my French.
Actually we are the dumb @$s bozos. We dont learn the codes and statutes they use against us. Show me one tax code that says we have to pay those taxes. Taxes are actually voluntary but we choose to pay them. Once you choose to pay then you are required to keep paying unless you learn how to file and not pay. I recently started learning this.
Also in the process of ending my papypal account as they extort people. I sold an Icom Ic7610 i had for a few years and paypal held 24% of my money unless I give them my tax info. Thats extortion. I live on disability so thats a lot of money to me. I have no business of any kind but periodicaly buy a radio to try and sell it in a few years to try another. So there is no profit. Its always a loss.
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I also had to pay tax on radio gear I sold on EBay last year. This is the first time it's happened. Granted we have to pay our share of taxes but this is government overreach in my opinion since sales tax was already collected when these items were purchased. From now on I will donate items in the future to a worthy cause, ham clubs or to friends instead.
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Actually we are the dumb @$s bozos. We dont learn the codes and statutes they use against us. Show me one tax code that says we have to pay those taxes. Taxes are actually voluntary but we choose to pay them. Once you choose to pay then you are required to keep paying unless you learn how to file and not pay. I recently started learning this.
Also in the process of ending my papypal account as they extort people. I sold an Icom Ic7610 i had for a few years and paypal held 24% of my money unless I give them my tax info. Thats extortion. I live on disability so thats a lot of money to me. I have no business of any kind but periodicaly buy a radio to try and sell it in a few years to try another. So there is no profit. Its always a loss.
What's the difference between government and organized crime? One is public and the other is private.