eBay 1099

[CathyVT]

Hi, eveyone. I got a 1099 (I think -K) in the mail yesterday from eBay. I don't have it with me right now, but I think it said less than $700 in income from eBay. I check on eBay and I can't find a total for 2017, but I can look up fees, and my fees for 2017 were $57.15, and so since eBay takes 10%, that would mean my sales were about $571. That sounds about right - I don't sell much, it's just an occasional thing. So I was wondering if I really have to report this, and googled it, and everything I found says eBay sends 1099s if you have more than 200 transactions or $20K in sales - neither is true. So... why did I get a 1099 and do I really have to report it?

[brickvoyeur]

A 1099 from eBay? Do you mean from Paypal? Paypal will always generate a 1099 if you sell over 200 items for a total of 20k or greater, but I have read of instances where they send them out at lower thresholds.

https://www.paypal.com/us/selfhelp/article/how-does-paypal-report-my-sales-to-the-irs-will-i-receive-a-tax-form-1099k-faq729

 

But yes, you are technically supposed to pay taxes on any profit you make. And even with the lower number, the tax man has a copy of that 1099 as well and will expect to see it on your return.

Edited February 6, 2018 by brickvoyeur

[TANV]

6 minutes ago, CathyVT said:

Hi, eveyone. I got a 1099 (I think -K) in the mail yesterday from eBay. I don't have it with me right now, but I think it said less than $700 in income from eBay. I check on eBay and I can't find a total for 2017, but I can look up fees, and my fees for 2017 were $57.15, and so since eBay takes 10%, that would mean my sales were about $571. That sounds about right - I don't sell much, it's just an occasional thing. So I was wondering if I really have to report this, and googled it, and everything I found says eBay sends 1099s if you have more than 200 transactions or $20K in sales - neither is true. So... why did I get a 1099 and do I really have to report it?

I'm not sure about eBay but I got a 1099 a few days ago from PayPal. As a third-part payment merchant, PayPal is required to report the transactions to the IRS.  Thus, they're required to send this to you regardless of the thresholds.  By law, you are required to report whatever income is generated by your re-selling.

However, there is a difference between a "hobby" and a "business" and LEGO resellers typically fall into those categories.  From my brief take, you'd qualify as a hobby seller so you should report your selling and fees as itemized deductions on a Schedule C.  That's why you keep your receipts.  

If you start generating a larger income base and obtain a business license, then it gets a bit more complicated with paperwork and taxes.

Hope that helps!

[CathyVT]

28 minutes ago, TANV said:

 

However, there is a difference between a "hobby" and a "business" and LEGO resellers typically fall into those categories.  From my brief take, you'd qualify as a hobby seller so you should report your selling and fees as itemized deductions on a Schedule C.  That's why you keep your receipts.  

 

This is where I'm pretty much screwed - my husband and I don't itemize because we just paid off our house, so there's not enough mortgage interest + property taxes + state taxes + charitable contributions to exceed the standard deduction for a couple. So we don't itemize, so I can't deduct ANY expenses, if it's considered a hobby. Same thing happened when I won $700 in a chess tournament - if you itemize, you can deduct entry fees (often >$100), travel expenses, etc., but I couldn't do anything because I don't itemize. 

Maybe it was paypal and not eBay... I'll have to check. It's not a huge deal - for $500 in income it's $50-$60 in added taxes. It's just a pain in the butt.

[minicoopers11]

38 minutes ago, TANV said:

I'm not sure about eBay but I got a 1099 a few days ago from PayPal. As a third-part payment merchant, PayPal is required to report the transactions to the IRS.  Thus, they're required to send this to you regardless of the thresholds.  By law, you are required to report whatever income is generated by your re-selling.

However, there is a difference between a "hobby" and a "business" and LEGO resellers typically fall into those categories.  From my brief take, you'd qualify as a hobby seller so you should report your selling and fees as itemized deductions on a Schedule C.  That's why you keep your receipts.  

If you start generating a larger income base and obtain a business license, then it gets a bit more complicated with paperwork and taxes.

Hope that helps!

Unless it has changed recently, $20k AND 200 transactions (aka, the Paypal law) is the requirement for Paypal to file a 1099 with IRS and send you a copy. They can report when those thresholds are not met. They are REQUIRED to report when those thresholds are met. We are required to report profit whether thresholds are met or not.

[minicoopers11]

8 minutes ago, CathyVT said:

This is where I'm pretty much screwed - my husband and I don't itemize because we just paid off our house, so there's not enough mortgage interest + property taxes + state taxes + charitable contributions to exceed the standard deduction for a couple. So we don't itemize, so I can't deduct ANY expenses, if it's considered a hobby. Same thing happened when I won $700 in a chess tournament - if you itemize, you can deduct entry fees (often >$100), travel expenses, etc., but I couldn't do anything because I don't itemize. 

Maybe it was paypal and not eBay... I'll have to check. It's not a huge deal - for $500 in income it's $50-$60 in added taxes. It's just a pain in the butt.

We're talking capital gains here, no? Different from when you're deciding to take the standard or itemize. You can still have business deductions against your business income.

[CathyVT]

2 minutes ago, minicoopers11 said:

We're talking capital gains here, no? Different from when you're deciding to take the standard or itemize. You can still have business deductions against your business income.

IF I can justify it as a business, then yes, I can have deductions. If it's a hobby, then no, I can't deduct because the deductions are listed on schedule C like other deductions (like charitable contributions) and I don't itemize. That was the case for the chess tournament - I go to several, but certainly can't justify it as a business - it's hobby. I'm not sure I can justify this as a business (I'd like to make a little profit, but I'm very small scale for now) but if I can claim it's a business, can I deduct money I've spent on inventory that I haven't sold yet, or only deduct what I paid for the sets I have already sold? (I assume the latter. But what if I bought a set, broke it up, and have sold some of it but not all?). 

The bummer is that if you have more than one business, you can't use the simpler Schedule C (EZ) - you have to use the more complicated one. And I already have another (the small newspaper stipend - I definitely want to be able to deduct from that). Looks like I'll be paying for tax software this year rather than doing it myself...

[minicoopers11]

3 minutes ago, CathyVT said:

IF I can justify it as a business, then yes, I can have deductions. If it's a hobby, then no, I can't deduct because the deductions are listed on schedule C like other deductions (like charitable contributions) and I don't itemize. That was the case for the chess tournament - I go to several, but certainly can't justify it as a business - it's hobby. I'm not sure I can justify this as a business (I'd like to make a little profit, but I'm very small scale for now) but if I can claim it's a business, can I deduct money I've spent on inventory that I haven't sold yet, or only deduct what I paid for the sets I have already sold? (I assume the latter. But what if I bought a set, broke it up, and have sold some of it but not all?). 

The bummer is that if you have more than one business, you can't use the simpler Schedule C (EZ) - you have to use the more complicated one. And I already have another (the small newspaper stipend - I definitely want to be able to deduct from that). Looks like I'll be paying for tax software this year rather than doing it myself...

Oh right, yeah. This is not EZ.

[emazers]

It hasn't changed, Over 200 Paypal Transactions, thats people sending and paying you money, and over $20,000 in sales. It has to be both. Thats how the Law was passed 5 or so years ago.

[CathyVT]

Just now, emazers said:

It hasn't changed, Over 200 Paypal Transactions, thats people sending and paying you money, and over $20,000 in sales. It has to be both. Thats how the Law was passed 5 or so years ago.

Well, neither is true, and I got a 1099.

[longshot]

12 minutes ago, CathyVT said:

Well, neither is true, and I got a 1099.

As did I and no where near $20,000..............

[emazers]

16 minutes ago, CathyVT said:

Well, neither is true, and I got a 1099.

Not sure why you got a 1099 as Paypal do not mail them out anymore, go to your paypal accout, and it will show if Paypal sent a 1099 to the IRS.

[CathyVT]

1 hour ago, emazers said:

Not sure why you got a 1099 as Paypal do not mail them out anymore, go to your paypal accout, and it will show if Paypal sent a 1099 to the IRS.

Yeah... I am going back to my original statement that it came from eBay. But you're right, that makes no sense because eBay didn't give me money, PayPal did. But it was one or the other, because I looked at it and thought, "crap, I'm going to have to pay taxes on my eBay sales?" I'll check as soon as I get home and can look at it again. I logged into paypal and they don't have my SS# (there's a link that says "add SS#" so I assume that means they don't have it). As far as I knew, neither did eBay. And my paypal account is not a business account (there's an "upgrade to a business account" link, so it isn't now). ...  a mystery... but a little will be solved when I get home and look at it again. 

[supergtp1]

Yeah... I am going back to my original statement that it came from eBay. But you're right, that makes no sense because eBay didn't give me money, PayPal did. But it was one or the other, because I looked at it and thought, "crap, I'm going to have to pay taxes on my eBay sales?" I'll check as soon as I get home and can look at it again. I logged into paypal and they don't have my SS# (there's a link that says "add SS#" so I assume that means they don't have it). As far as I knew, neither did eBay. And my paypal account is not a business account (there's an "upgrade to a business account" link, so it isn't now). ...  a mystery... but a little will be solved when I get home and look at it again. 

Sounds like a possible scam. I’d forward it to Ebay [email protected] to ask if it is legit

[brickvoyeur]

"During tax year 2017, Massachusetts (MA) and Vermont (VT) implemented Form 1099-K reporting requirements that are different from federal tax reporting requirements. These different reporting requirements mandate that PayPal report on account holders who receive payments for goods and services in excess of $600. "

So, are you in MA or VT? If so, and you received more than $600, you'll get the 1099

[CathyVT]

Huh. VT. But if they don't have my SS#.... I'll have to see if my SS# is on the 1099. But my checking account is linked to paypal (so I can extract money and pay if I'm buying something and the balance is too low) so maybe they got it from the bank... 

So if Vermont mandated it... do I only have to report it on my VT state taxes? Hmmm...

I sure hope VT isn't going to say I have to collect/pay sales tax - that will be a royal pain in the butt. I thought sales tax depended on where the buyer was located, not the seller, and I think no buyers were in VT. 

And I vaguely remember the amount was about $700 on the form, yet my fees for the year from eBay were only $57 so it seems like the sales on eBay couldn't have been more than $570 (since they want 10%).

[CathyVT]

Interesting:

"We will send this information to MA and VT tax authorities to comply with respective state tax reporting regulations. 

Note:  For tax year 2017, PayPal will not report this information to the IRS since the payment volume is below the IRS federal reporting requirements."

But state taxes are based on my federal taxes... it just says to take numbers from certain boxes on the federal form. So if I don't report it to the IRS, because it's below the threshold necessary... I've looked at the state forms and I don't see any place where they have you add that in... confusing. I'll have to do some more googling. 

And to the person who messaged me privately to say, that I was wrong, paypal doesn't send these out for less than $20,000 or less than 200 transactions, go look, I been on ebay for XXX years...  ?

[Pebble&Park]

What threshold do you refer to? The 20k is just for a 1099 to get filed, not for when you have to report income. All income needs to be reported.

Sent from my SAMSUNG-SM-G900A using Brickpicker Forum mobile app

[CathyVT]

1 hour ago, Pebble&Park said:

What threshold do you refer to? The 20k is just for a 1099 to get filed, not for when you have to report income. All income needs to be reported.

Sent from my SAMSUNG-SM-G900A using Brickpicker Forum mobile app
 

It depends. From the IRS website, "If your online auction sales are the Internet equivalent of an occasional garage or yard sale, you generally do not have to report the sales. In a garage sale, you generally sell household items you purchased over the years and used personally. If you paid more for the items than you sell them for, the sales are not reportable."

One of the things I sold was my old used laptop (for less than I bought it for) and some old Lego sets I sold (used) for less than I paid for them. I sold the Scooby Doo Mystery Mansion after owning it, assembling it, and playing with it for almost a year. There are limits to what you have to report. If I give a neighbor a ride to the airport and they give me $5 for gas, I don't have to report that as income. In terms of items I bought, didn't use, and sold new for more than I bought them for, it's a few hundred bucks - not everything that's on that 1099-K (i.e. all the items I sold for less than I bought them for I don't have to include), and is below the legal $400 threshold for reporting self-employment income.

So, it was from paypal, and there is no SS# on the form. Which is odd - they're required by the state to report it, but not required (or perhaps even permitted) by the federal government to ask for SS#. I'm ignoring it.