What if I buy a piece of gear through goods and services and make two payments of $599? One for the headphones and one for the cable, for example. Does that get around the situation? I suppose that could get sticky in a bad transaction. Meh.
My understanding is a 1099 will be generated if you receive $600 or more during the calendar year using the “Goods and Services” payment method on PayPal. It doesn’t matter if it’s one transaction or 50. It’s a big pain for people like us. I often sell audio equipment that I’ve had for a while with no “invoice” to show what I paid for it. I’m resolved to do trades moving forward or very careful “Friends and Family” transactions. Either way, I’m not a fan of this new policy.
So according to the guidelines i've seen, selling personal items as a loss is not considered 'income' by the irs. So by that standard there should be nothing to pay from your paypal 1099, unless you're one of those people who buy items on sale somewhere and resell them at a higher price. (Like from B&H photo recently, you know who you are!). However, if the 1099 is being sent to the IRS, is an explanation or some other reporting needed to explain/justify that the money is not 'income?' I don't feel like getting audited because I buy a piece of gear and sell it 6 months later to try new gear.
What if I buy a piece of gear through goods and services and make two payments of $599? One for the headphones and one for the cable, for example. Does that get around the situation? I suppose that could get sticky in a bad transaction. Meh.
This whole situation is a pain in the tuckus. It really hurts hobbyists. I have a couple pieces of higher end gear I was planning on listing; they might end up being "For Trade" instead...
I've had a PayPal account since 2005, and they've always had my SSN
I've never linked a bank account to my PayPal account. I have always linked a credit card (balance of which I pay in full every statement).
Like others, going forward, I'll likely restrict myself to selling only to long-term head-fi'ers with a demonstrated worthiness of being trusted, requesting F&F payment.
I remember many years ago F&F payment is quite the norm on headfi and I was selling and buying a lot with F&F then maybe starting in 2018 G&S becomes a lot more popular due to rampant frauds and mods made the rule to not send F&F in listing as well.
Given the new tax law change I’m anticipating we go back to the F&F but with a lot more caution as to the seller’s transaction history and forum social credit. And the other angle of attack is when the seller’s account got compromised and the people listing the item isn’t who the seller is. Timestamping will also defeat stolen accounts so a few things to consider
1) Enforce 2FA logins
2) Headfi provides escrow service to facilitate transaction with a fee
Paypal supports 2 factor authentication. It's pretty safe. I have been doing business on Paypal for 18 years.
If Headfi provides an escrow service, it will need to issue 1099s, so you aren't avoiding this law by doing that. Any settlement service will need to issue 1099.
It's not that big of a deal. Just track your purchases and sales and maintain records of them. Then, file the relevant tax form for it. Its really not that bad. PINA yes, total disaster, no.
I've had a PayPal account since 2005, and they've always had my SSN
I've never linked a bank account to my PayPal account. I have always linked a credit card (balance of which I pay in full every statement).
Like others, going forward, I'll likely restrict myself to selling only to long-term head-fi'ers with a demonstrated worthiness of being trusted, requesting F&F payment.
Yeah, but you are limiting your access to buyers and that should net you less money in the long run. You aren't going to incur any profit, so you won't owe any taxes.
Everything I am seeing is saying that you only get taxed if you're selling an item for a profit; more than you purchased. The question I still have is how to show that. For example, I sold my HD800 which I had owned for 2 years this January, along with a nice cable. Although I paid about 1k overall for both over the two year period and sold for 700, I don't have a receipt for the hd800. Meh. I'm probably making a mountain out of a molehill.
The point is that unless you have documentation that the items totaled on your 1099 were not profit and therefor not taxable you will be liable for the taxes on the items. It requires us to keep records of prices paid to buy items and funds received when they are sold. Most of us here are not making a profit on these transactions but even with perfect documentation there will be accounting expenses to document this on your tax return. High volume traders may deal with this with no problem but the occasional seller may be better using non goods and services selling options.
Saw an intersting article on the history of the $600 amount of the reporting requirement - apparently it hasn't been changed since 1954, and would now be $6200 if adjusted for inflation- no wonder it seems like a low threshold!
$6,200 would be a lot easier to stomach. At least you could trade a few mid-tier or even TOTL headphones and stay under the reporting threshold. But I doubt they’ll increase it since closing the payment processor loophole was one of the pay-fors in the stimulus bill.
You need to provide your tax ID to any banking institution. For any bank account, you need to provide it. Same is true for any investment company like Fidelity Investments. When you take a Paypal payment, you in essence have a merchant account and they all require tax IDs.
I know you’re just being a troll, but how do you think lowering the 1099 reporting threshhold from $20,000 to $600 is going to make corporations pay? A lot big conglomerates you know that sell less than $20,000 a year on PayPal?
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