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Selling records and the new tax law


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16 minutes ago, Derek™ said:

I guess there's value in now logging / monitoring the cost of every record I buy, but... man, what an unnecessary headache.  And even if an audit occurs – slim as that chance may be – simply referring to a spreadsheet won't be enough.  I'm pretty good about saving e-mail receipts these days, but shit from 10+ years ago that I won on eBay?  Not so much.

Honestly, for a some people - especially those who are only selling close to the $600 limit - it will be easier to just not write off the costs and pay taxes on the full amount rather than trying to keep up with recording costs and risk getting in trouble with penalty interest, etc. on the rare chance you’re audited.

 

They do do random audits, still, and I don’t see the government paying less attention to income taxes going forward. Quite the opposite, as the very fact this change was made shows.

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3 hours ago, crossedoutname said:

If I understand it correctly all PayPal/Venmo/cash app totals over $600 for goods and services get reported to the irs now.  
 

So any PayPal transactions through discogs or eBay will now be reported to the IRS on a 1099.

 

any thoughts?

This is nothing new, just a lower threshold.  I could be wrong,  but I think in the past it was $2k or X number of transactions, so it affected a lot less people.  
 

Edit:  Quick Google and found this.  Thought it was lower $ amount.  Taxes are fun.

 

Effective next year, sellers on certain online platforms like Etsy and eBay will receive a 1099-K if their sales are at least $600, down from the current threshold of $20,000 with a minimum of 200 transactions. Not all online sales are taxable, whether you receive tax form or not.

Edited by ZeroNowhere
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1 hour ago, Derek™ said:

Holy shit.  Is the IRS just getting desperate to pinch pennies or what?  What a leap.

$600 has always been the threshold you were supposed to report income, it’s just now they’re enforcing it.

 

Like, legally you were even supposed to report a garage sale if it cleared $600 in the past but I’m sure almost no one did. 

Edited by unknown pleasures
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This all went down a couple of years ago I thought? I remember getting a form from eBay and being so bummed. Literally this entire conversation is like deja vu for me when I was scrambling on a bunch of forums regarding the paypal and ebay change. Actually, I think when that went down it was specific to Massachusetts. is this a federal thing now? Either way it sucks.

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i was reading this doc (linked below) and am now wondering what would constitute "hobby expenses" in our case. like i'm sure we mostly all spend more on buying new records than we do on selling out parts of the collection we don't want anymore. in essence, we "lose" money each year by spending more on new stuff than we make on the occasional discogs or ebay sale. would our hobby expenses be limited to what we paid on the records we happen to sell in a given year? on records we sell and don't manage to sell but have listed for sale? on all the records we buy to facilitate the hobby? anyone have an educated guess here? if it's the last one (and i'm guessing it's not), one could report a "loss" and avoid additional income tax.

(going off of this very incomplete doc: https://www.irs.gov/newsroom/five-things-to-remember-about-hobby-income-and-expenses)

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2 hours ago, copelandkid said:

i was reading this doc (linked below) and am now wondering what would constitute "hobby expenses" in our case. like i'm sure we mostly all spend more on buying new records than we do on selling out parts of the collection we don't want anymore. in essence, we "lose" money each year by spending more on new stuff than we make on the occasional discogs or ebay sale. would our hobby expenses be limited to what we paid on the records we happen to sell in a given year? on records we sell and don't manage to sell but have listed for sale? on all the records we buy to facilitate the hobby? anyone have an educated guess here? if it's the last one (and i'm guessing it's not), one could report a "loss" and avoid additional income tax.

(going off of this very incomplete doc: https://www.irs.gov/newsroom/five-things-to-remember-about-hobby-income-and-expenses)

Woah, interesting.  I would keep a running total of purchases and sales and at the end of the year and then compare your profit/loss margin.

 

Whenever I sell, it usually just to funnnel money back in to make another purchase.  So if you spend $700 on records and sell $650, you’re fine 🤷‍♂️

also, can this new tax law be used as leverage to bring down the cost of overpriced or higher priced records?😉😉😉😉

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19 hours ago, ntslash said:

Discogs should add a field so you can record how much you paid for a record and upload a receipt. 

Discogs should maybe add a msrp of the original going price. So many of my records have jumped up in price dramatically in the past year. 

Also wouldn't this affect anyone on disability if this was just a hobby too? I wonder🤔

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Keep the distinction between reported and unreported sales in mind. Generally you have always obligated to report all income, most people just don’t and practically, it’s fine, even if it is technically a violation. 
 

This new rule applies to “certain” online retailers and if you exceed $600 in sales, they will send a 1099 to you and the government. You do not have to guess or even necessarily track you will be notified explicitly when you’ve met the criteria for reporting. 

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17 minutes ago, stl_ben said:

Paypal will send the form if you go over $600 regardless of if its F&F or not.

I’m not sure that is true. Gifts aren’t taxable and the law explicitly states “commercial transactions”.

 

I’m not clear how they are defining that but it could be possible to use Venmo and PayPal and not encounter this change. 

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