Hadn’t thought about that, but you’re right, if someone did breach them in a major way they might get access to your bank account and your social security number.
New PayPal IRS tax reporting requirements
- Thread starter thehutch
- Start date
Bumping this thread, are sellers now resort to friends and family payment now to avoid this hassle?
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 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
dougq
500+ Head-Fier
I will not sell through f&f and specially on large purchases.
There’s nothing here that will actually impact your taxes unless you are making some type of profit. This isn’t going to trigger any type of audit any more than other things.
I have a personal Paypal account that I use for all of my audio transactions for both the buy and sell side. I am just going to track all of the transactions and provide it to my accountant for filing purposes. My tax return is complex enough that this won't add too much extra work. It is a nuisance since the trigger value for a 1099 is so low at $600. When it was $20,000, it was much more reasonable.
Ficcion2
500+ Head-Fier
I just paid my last transaction via F&F and was hit by the fee instead….
This sucks cause just like many others here; we’ve gotten and try to make good deals happen for anyone in the classifieds but now someone has to pay up either way.
I hadn’t bought anything via PayPal since last year so this is my first audio purchase of the year. (Got a sweet deal though!)
This sucks cause just like many others here; we’ve gotten and try to make good deals happen for anyone in the classifieds but now someone has to pay up either way.
I hadn’t bought anything via PayPal since last year so this is my first audio purchase of the year. (Got a sweet deal though!)
If you were still charged a fee I am guessing you must have used a credit card. Link your bank account and use that as the payment method to avoid the fee.
CoryGillmore
Headphoneus Supremus
I would say 95% of my transactions on head-fi with Paypal have been "friends and family" transactions. Even with complete strangers. I only deal with well-known members, no newer accounts. Never had an issue doing this. In over a decade.
CoryGillmore
Headphoneus Supremus
Oh and this new tax requirement has no effect people selling used gear at a loss....So really it's not even worth stressing over.
The person on the other end of the transaction must have requested buyer protection. If you had worked about with them that it would be F&F, they probably didn’t understand what they were clicking.
ckhirnigs113
Headphoneus Supremus
I’ve always used the “goods and services” for buying and selling on Head-Fi and other online forums. The problem is I now have higher end equipment that goes for much more than the $600 threshold. I buy and sell quite a bit throughout the year, so this could make taxes much more complicated unless I can get every seller I deal with to use an invoice on PayPal, a feature missing from the iOS app for some reason and unfamiliar to a lot of sellers.
I think I’ll take the approach mentioned by @CoryGillmore and limit my transactions to users I know and trust or at least those that have a history of positive transactions or forum involvement. That way a “friends and family” transaction is a calculated risk.
I think a few more important steps should be taken such as establishing someone actually owns what they are selling and not just hacking someone’s account, which seems to be on the rise here lately. Timestamped pictures with the names/usernames of both parties written on a piece of paper next to the item goes a long way to weeding out scammers.
I would also recommend the seller getting full insurance on the package in case it is damaged or lost. That way you can reimburse the buyer if need be and get your money back from the insurance. I’ve also read it helps in a potential claim dispute to have pictures of the item’s packaging to prove it was adequately protected.
With these few simple steps taken, a “friends and family” transaction can be used with very little risk. That being said, there will always be some risk in online transactions no matter what method you use for payment.
I think I’ll take the approach mentioned by @CoryGillmore and limit my transactions to users I know and trust or at least those that have a history of positive transactions or forum involvement. That way a “friends and family” transaction is a calculated risk.
I think a few more important steps should be taken such as establishing someone actually owns what they are selling and not just hacking someone’s account, which seems to be on the rise here lately. Timestamped pictures with the names/usernames of both parties written on a piece of paper next to the item goes a long way to weeding out scammers.
I would also recommend the seller getting full insurance on the package in case it is damaged or lost. That way you can reimburse the buyer if need be and get your money back from the insurance. I’ve also read it helps in a potential claim dispute to have pictures of the item’s packaging to prove it was adequately protected.
With these few simple steps taken, a “friends and family” transaction can be used with very little risk. That being said, there will always be some risk in online transactions no matter what method you use for payment.
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...
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...
dougq
500+ Head-Fier
It really isn’t a big deal. I’m no expert but I got a 1099k for last year and turbo tax explained how account for it so it doesn’t count as income. It wasn’t a factor in the end.
I had about 16k of sales in used items last year.
Users who are viewing this thread
