Paypal 1099-k

[QuinEarlyDoucet]

Haha. Love it.

Originally Posted by asujbl

I saw the CPA signal in the sky. Had to get my calculator first.

[obzezzed]

Originally Posted by jetscollector10

Can someone clarify something for me? I thought, if I get a paypal form saying I earned $10k, I can just show that I spent $10k on cards this year, and it will be break even. Or, do I have to show how much I spent only on those cards that sold, and what I spent on other cards that didn't sell doesn't matter?

The former.

Source - my friend is an Accountant

[ottobord]

Just a thought everyone: Some people, like me, come to a baseball card forum to avoid the unpleasant realities in life such as taxes. Just saying.

[Stech36]

Another piece of advice, all revenue should be recorded, not just 1099

Aka F&F

[discodanman45]

Originally Posted by ottobord

Just a thought everyone: Some people, like me, come to a baseball card forum to avoid the unpleasant realities in life such as taxes. Just saying.

This will be entertaining though! Once people ignore the 1099-K forms and the IRS sends them a bill for $10,000 the posts will be epic!

[coachnip13]

Originally Posted by discodanman45

This is for non-profit activities. This is a gray area for baseball cards and can be argued both ways. So is card collecting considered a non-profit hobby? Read below...

https://www.law.cornell.edu/cfr/text/26/1.183-2

Right, which is what we are talking about when referring to hobby income. Not for a profit.

The item being sold doesn't matter with regard to business vs. hobby. What matters is how you conduct the activities.

[coachnip13]

Originally Posted by Sprewell8

If I bought more cards for my collection via paypal goods and services than the total gross amount it states I received on my 1099 when sold cards via paypal goods and services, does that mean i can report it as a loss and dont owe anything since technically i didnt make profit? Is that correct?

No it is not correct. You can only deduct an expense as Cost of Goods Sold if you actually sold it. Adding a bunch of cards to your collection isn't an expense.

[ottobord]

Originally Posted by discodanman45

This will be entertaining though! Once people ignore the 1099-K forms and the IRS sends them a bill for $10,000 the posts will be epic!

Yes, and the IRS computers won't miss it.

[coachnip13]

Originally Posted by jetscollector10

Can someone clarify something for me? I thought, if I get a paypal form saying I earned $10k, I can just show that I spent $10k on cards this year, and it will be break even. Or, do I have to show how much I spent only on those cards that sold, and what I spent on other cards that didn't sell doesn't matter?

You can only count what you sold.

[Soxfan26]

Originally Posted by coachnip13

You can only count what you sold.

Yes, of course. If you collect Trout for your PC but sold a bunch of Acuna cards as a flip, you could only deduct your basis into the Acuna cards.

[discodanman45]

Originally Posted by coachnip13

Right, which is what we are talking about when referring to hobby income. Not for a profit.

The item being sold doesn't matter with regard to business vs. hobby. What matters is how you conduct the activities.

The problem is if someone sold $80,000 in cards and had a $50,000 deduction. The IRS would then question this being a non-profit hobby, which would make deductions not allowed under the current code. A $30,000 profit will raise red flags in the filing. With all the insane profits people made this year we will see how the IRS treats this. They could ignore the "hobby" rules or go after people.

It is absolutely ridiculous that the made changes to the hobby code IMO and hopefully they will be back in 2025. This should be straight forward for any income, regardless of it being a for profit hobby. You should get taxed on net income, plain and simple.

[Soxfan26]

Originally Posted by discodanman45

You have three choices.

1. Treat it as a hobby and pay taxes on the entire 1099 form with no deductions.
2. Treat it as a business and file a schedule C. If you report loses on this it is a red flag and the IRS will tell you to treat it as a hobby.
3. Treat cards as a collectible and file a schedule D. If you received a 1099-K form you will need to redirect from the schedule C as the IRS expects the income to go there.

Removing the ability to deduct costs from hobby income was stupid and completely unfair. Anything I sell on eBay that I sold for less than I paid for it I treat as an online garage sale. All the cards I sell I treat as a collectible on the schedule D form. I keep spreadsheets in case I get audited. It would be low though since I don't get a 1099-K form since I am in California.

This is the most jarring post in the thread. So, Paypal sent me a $1500 1099-K which includes money for Paypal transaction fees, Paypal 2.9% fees, Ebay selling fees, state sales tax on each transaction, and the shipping costs for each item. That's all money that I didn't get to keep. That's gone, out the door. In my case, it was about $600 of the $1500 total shown on the 1099.

I'm being taxed on money collected to pay sales tax by the buyers (to their own state) which I never even received (it was directly sent to Ebay). Man, that seems bogus.

[coachnip13]

Originally Posted by discodanman45

The problem is if someone sold $80,000 in cards and had a $50,000 deduction. The IRS would then question this being a non-profit hobby, which would make deductions not allowed under the current code. A $30,000 profit will raise red flags in the filing. With all the insane profits people made this year we will see how the IRS treats this. They could ignore the "hobby" rules or go after people.

It is absolutely ridiculous that the made changes to the hobby code IMO and hopefully they will be back in 2025. This should be straight forward for any income, regardless of it being a for profit hobby. You should get taxed on net income, plain and simple.

Yeah, I know all of that, but it wasn't what I was answering. The post specifically referred to whether or not COGS could be deducted if you take the hobby route.

In your scenario, it's better to file as a business anyway, so I don't know why that person would try to treat it as a hobby. You get more deductions as a business. The IRS actually looks for people who do the opposite. They want to nail the guy who acts like he is running a business while claiming losses every year. That's when the IRS will say, no, you are engaged in a hobby, sir.

[rngrdanny22]

Originally Posted by Soxfan26

This is the most jarring post in the thread. So, Paypal sent me a $1500 1099-K which includes money for Paypal transaction fees, Paypal 2.9% fees, Ebay selling fees, state sales tax on each transaction, and the shipping costs for each item. That's all money that I didn't get to keep. That's gone, out the door. In my case, it was about $600 of the $1500 total shown on the 1099.

I'm being taxed on money collected to pay sales tax by the buyers (to their own state) which I never even received (it was directly sent to Ebay). Man, that seems bogus.

Wouldn't sales tax be deductible also?

[Sprewell8]

Originally Posted by coachnip13

No it is not correct. You can only deduct an expense as Cost of Goods Sold if you actually sold it. Adding a bunch of cards to your collection isn't an expense.

thank you so can only deduct the amount i originally paid for the items what were sold on my 1099. that makes sense. thanks!

[coachnip13]

Originally Posted by Sprewell8

thank you so can only deduct the amount i originally paid for the items what were sold on my 1099. that makes sense. thanks!

That is right. What stinks for a collector is that we often sell items that we bought years ago with no way to prove what we paid for it.

[nerdherd020]

Originally Posted by rngrdanny22

Wouldn't sales tax be deductible also?

Is sales tax collected by eBay even reported/included in the 1099? I don’t collect sales tax, eBay does.

[Sprewell8]

Originally Posted by coachnip13

That is right. What stinks for a collector is that we often sell items that we bought years ago with no way to prove what we paid for it.

stinks indeed

[Soxfan26]

Originally Posted by nerdherd020

Is sales tax collected by eBay even reported/included in the 1099? I don’t collect sales tax, eBay does.

Based on my calculations, it is. The Paypal 1099-K includes the gross Paypal payments made to me, which include the sales tax that is immediately collected by Ebay. The monthly Paypal statements show this amount as "collected by partner company". This really is bogus however, as Paypal applies their 2.9% to that sales tax also, which the individual sellers will never see. This is small beans in the long run for each person individually, but extrapolate that over every single ebay/paypal transaction for millions of people. A lot of money being made there bogusly by Paypal. That's a class-action lawsuit waiting to happen. IMHO, the 2.9% should only apply to the value of the item and shipping, not to the sales tax also.

[shrevecity]

Originally Posted by Soxfan26

Based on my calculations, it is. The Paypal 1099-K includes the gross Paypal payments made to me, which include the sales tax that is immediately collected by Ebay. The monthly Paypal statements show this amount as "collected by partner company". This really is bogus however, as Paypal applies their 2.9% to that sales tax also, which the individual sellers will never see. This is small beans in the long run for each person individually, but extrapolate that over every single ebay/paypal transaction for millions of people. A lot of money being made there bogusly by Paypal. That's a class-action lawsuit waiting to happen. IMHO, the 2.9% should only apply to the value of the item and shipping, not to the sales tax also.

You pay the fees because they are acting as a processor. Its not a class action waiting to happen its the way it is in retail. Wal-mart pays fees on the total amount of the card including the part that is sales tax any business that processes card payments does as well. The fees are also included in your total fees paid so they become deductible.

I consider it a cost of them doing it for me. You think the 1099 mess is bad imagine if you had to handle getting the sales tax to all the proper places.

[speedyjg13]

Originally Posted by discodanman45

You have three choices.

2. Treat it as a hobby and pay taxes on the entire 1099 form with no deductions.
3. Treat it as a business and file a schedule C. If you report loses on this it is a red flag and the IRS will tell you to treat it as a hobby.
4. Treat cards as a collectible and file a schedule D. If you received a 1099-K form you will need to redirect from the schedule C as the IRS expects the income to go there.

Removing the ability to deduct costs from hobby income was stupid and completely unfair. Anything I sell on eBay that I sold for less than I paid for it I treat as an online garage sale. All the cards I sell I treat as a collectible on the schedule D form. I keep spreadsheets in case I get audited. It would be low though since I don't get a 1099-K form since I am in California.

1) what is the threshold to get the 1099-K form in California

2) to pay taxes on the entire 1099 form, what percentage gets taxed?

3) I just checked my PayPal. I sold $1,175.00 in 2020. What percentage of that gets taxed?

[asujbl]

The amount of people that think a state 1099 is important compared to the IRS knowing you exist is mind bottling

[shrevecity]

Originally Posted by speedyjg13

1) what is the threshold to get the 1099-K form in California

2) to pay taxes on the entire 1099 form, what percentage gets taxed?

3) I just checked my PayPal. I sold $1,175.00 in 2020. What percentage of that gets taxed?

If you have zero deductions 100% would be taxable at whatever bracket you fall into with other income..

[oddstuff]

Originally Posted by rngrdanny22

Wouldn't sales tax be deductible also?

Paypal does include sales tax collected in their 1099K...but since the money never get to the sellers, in theory, it should be deducted from the gross amount on the 1099K. Where you do it though on the tax return, I'm not sure but this link seems to indicate a field in their tax program where you put that number in. I'm still waiting on my dayjob W2 so haven't started yet but if/when someone gets to that part of your taxes, would be great to hear when you put the sales tax deduction.

https://community.ebay.com/t5/Sellin.../td-p/30619022

[notfast]

So what exactly is the 1099k showing:

Is it your total of JUST goods/services transactions?
Is it transactions done via PayPal that used a debit/credit card?
Is it all paypal payments coming in?