So, , , , 1040 rude awakening, , , ,

So, , , , you decide to get some extra cash by selling some of your old stuff on ebay. Not unusual.

But, , , , did you know, that if you "clear/net" equal/more than $434 for the year you are "self employed" and will owe a "self employment tax"? Because, you have been running a "business"! Even though you are selling your own possessions! Oh, and, , , ,

Yep. Got wrapped up in this crap because PayPal is now required to issue a 1099-K when your sales are over "X" number of sales, and over "X" dollars.



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Dora Hates You

People do run businesses on Ebay and derive true income from it, a lot of which was being hidden from IRS, hence the new law requiring paypal to submit 1099.

Maybe the $434 floor needs raised though.

I guess you have to keep a receipt when you buy something so that if you sell it at a loss you can offset the sales with a negative net.  That'd be a pain in the butt. 

Edit:  I see from subsequent posts that you've got to do a bit of volume before the 1099 is generates.  Feds aren't going to come a'callin because you sold granny's antique armoire for a good price.

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Edited: 04/16/2014 at 08:00 AM by scombrid

I'm well over that and didn't receive anything.

But I also do charity auctions for St Jude hospital.

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I was right.

Scombird ..... racing what??


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"Most people would die sooner than think; in fact, they do." - Bertrand Russell


"Morality is doing what is right, regardless of what you are told. Religion is doing what you are told, regardless of what is right.


If I do not answer you .... nothing personal, I just have you on ignore.

According to this, it's $20,000?



https://cms.paypal.com/us/cgi-bin/marketingweb?cmd=_render-content&content_ID=marketing_us/IRS6050W

Sorry for the block and copy, can't get the @#%*#@ link to work.

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I was right.

From FAQ:

Will all sellers receive a Form 1099-K?
No. Only sellers who exceed the IRS thresholds will receive Form 1099-K. Sellers exceed the IRS thresholds when they receive over $20,000 USD in gross payment volume for the sale of goods or services AND receive over 200 separate payments for goods or services in the same calendar year.

That sounds fair.

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“It is the heart of US policy to use fascism to preserve capitalism while claiming to be saving democracy from communism “ - Michael Parenti

" St Jude hospital"

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Well, , , , no problem with the "business" part (OK, I did make some fins and sell them).

But, , , , if you had a garage sale last week and sold all your own old junk for $434, or more, and you do not have any receipts to show that what you sold was "at a loss", , , ,. You have conducted "business", you have performed "self employment", and you are liable to file, and pay, "self employment" taxes and any amounts due on your 1040 that qualify as taxable income! My taxable income for 2013 was $0, and yet I'm still being hit with close to $2000 in self employment taxes! WTF?

Oh, and, , , , that Monopoly game set that you bought for $5 in 1980, and sold this week for $20, , , , you'll have to report that $15 "profit" as Capital Gains!!!

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Dora Hates You

not if u stay off of PayPal! Don't sound like much of a "pal" to me!!!

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Water dissolving...and water removing
There is water at the bottom of the ocean

Cash is king.


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“It is the heart of US policy to use fascism to preserve capitalism while claiming to be saving democracy from communism “ - Michael Parenti

 

To who do you owe this $$? Is this tax on business profits or other money from retirement etc.?  The feds, state, dept of revenue? Are you a C corp, s corp, llc, sole proprietor?  Something sounds odd if this is considered business profit from selling fins. It's not really my business but either you need some expenses, or fly under the radar more. I've bought and sold tons of stuff on ebay/paypal and never heard anything, nor does my accountant say much about it. Having run a business for almost 10 years now with employees, something sounds strange on the surface. 

Although, I don't use them much anymore because paypal now doesn't give a damn about sellers and just protects buyers. Same with ebay. They wanna be amazon and want out of the used junk market. 

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Well, , , , the PayPal 1099 triggers the Schedule C; wherein, I am a "sole proprietor". The Schedule C triggers the Schedule SE (Self Employment).

My 1040, Line 43, reports that I have 0 (zero) taxable income, after all deductions and exemptions. But, "Other Taxes" (Line 56) carries over the amount from Schedule SE. The amount of tax derived from the Schedule SE is based on 1040 Line 12 (Business Income) regardless of what your final "Taxable Income" is. Therein, lies the rub.

Now, even if I had not made and sold any fins, I would still have gotten a 1099 from PayPal. So, point being, even if you are selling your 40 year old stamp collection a stamp at-a-time on Paypal, and you hit the 200 sales/$20K threshold, , , , BOOM, you are self employed.

And, , , , if not for the 1090-K from PayPal, , , , "I dint sell nuttin". LOL

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Dora Hates You

Here is another one:

Amazon to start collecting sales taxes in Florida
http://www.floridatoday.com/st...es-in-florida/7785213/

If you're making 20K selling, you better man up and pay taxes. That's no garage sale.

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“It is the heart of US policy to use fascism to preserve capitalism while claiming to be saving democracy from communism “ - Michael Parenti

brain cells, is my guess!!!!

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Water dissolving...and water removing
There is water at the bottom of the ocean

I think he's a pro kayaker of some kind.

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A gentle answer turns away wrath, but a harsh word stirs up anger.