what you should know about ebay/paypal if you don't.

Nope. No dollar figure to apply for an EIN.

 

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I sold about $500 worth of coins. I have few receipts for what I paid. If paypal sends ever me a1099, I guess I'm getting hit hard. Hoping it is the $20,000 threshold as their site suggests.

 

Ok...I just got off the phone with paypal customer service, who then consulted a supervisor...

I was told that unless I reach the $20,000 threshold in sales, they will definitely not be generating a 1099 in my specific case. (Come to think of it, they didn't send me one for last year's taxes.)

I have a personal - not a business - account, as I only sold duplicates from upgrading and I am not a dealer. It might be different if you have a business account, or if you previously went over the threshold before even though this year you did not. There are also other reasons why you may have received a 1099 even of you didn't hit $20K, but those scenarios are too detailed for me to explain here.

Call paypal customer service for your specific circumstances.

I hope this eases a few peoples' nerves

 

Here is a FAQ answer (and do note the asterisk at the bottom for Vermont and Massachusetts).
https://www.paypal.com/us/selfhelp/...rs-will-i-receive-a-1099-tax-statement-faq729

 

I could not access the thread, just came up with a page with no info. I was generated a 1099 this year and had under $2K in sales, bad year. I live in Ma.

 

Do not carry this into the political arena. You can discuss tax regulations, but no political analysis!

 

I suspect it is your state of residence that is the reason you got the form. (I bolded the part at the end).

The cut and paste:

PayPal will track the payment volume of your account(s) to check whether your payment volume exceeds both of these levels in a calendar year:

• $20,000 USD in gross payment volume from sales of goods or services in a single calendar year
• 200 payments for goods or services in the same year*

You may be asked to provide your tax identification number (TIN), such as a Social Security Number (SSN) or Employer Identification Number (EIN), to your existing account(s), if you don’t already have one on file. If your TIN fails verification, you will need to fill out an equivalent tax Form W-9.

If you cross the IRS thresholds in a given calendar year, PayPal will send Form 1099K to you and the IRS for that year early in the following year.

You can access your 1099K from your PayPal account by January 31st annually. Only those customers that meet the 1099K eligibility requirements will see the 1099K available for download in their account.

If there are any discrepancies between what is reported by the IRS for your tax identification number and name and what PayPal has on file and used for Form 1099K, you may receive an IRS B-Notice.

You can find more information and FAQs by visiting the PayPal tax website.

*Except in Vermont and Massachusetts where the threshold is lower irrespective of the number of transactions.

 

Thank you. I did not know Ma. had a lower threshold. Looks like I'm going to be itemizing this year and that means filing for an extension. I was able to finally access my sales report and print it out. Now I have to go through 21 pages of items and figure out what were sales and what were purchases of supplies and postage to do this. Ughh.

 

Yeah the margins are super tight.

You make most of your money when you first buy the item you want to sell.

 

I am guessing many, if not most, individuals selling on ebay are not reporting their sales for income tax purposes. Most of my sales come through local antique males and I have filed taxes on those sales since 1975. Audited 3 times but they never got any money. There is a paper trail when you sell online or through a store. Odds of being audited are low but records are a must if it happens. I was always told overstating deductions is a misdemeanor; underestimating income is a felony. Don't know if that is true or not, but I have never seen the inside of a jail or prison I wanted to be in.

 

you had $2000 in sales and got something from paypal as well? I live in mass too. I only had a little under $2700.

 

Yes.

If you file your taxes as a collector and not as as a dealer, the maximum cap gain rate is 28%.

However, the rate will be lower if your main job earns under $200,000. I am working with "The Jobs and Tax Act" which is now the law.

Nonetheless, I see many benefits with the new law when filing as a "Coin Dealer".

One tax benefit will include a quick one-time expense write-off of what previously depreciated over many years.

And other stuff...

 

I only read through the first page of the thread, but it seemed like people were having a hard time grasping what the OP was saying.

If you sell a $100 bill for $150, then you have LITERALLY only made $50, because the $100 bill is LEGAL TENDER. Likewise, the buyer LITERALLY only spent $50. The coin analogies do not apply because the legal tender gap is basically the entire amount.

If you go up to a cashier needing change, and give them a $100 bill in exchange for 5x $20s, should you be taxed? That's essentially the same thing.

 

I convinced myself of this by consulting the ultimate tax authority around here, TurboTax . Opened last years return, entered a fake "collectibles" gain, and it was taxed at my marginal rate which is less than 28%. And note this was before the new tax law.

 

I think you're following a dead branch of the discussion. I think we all agree that you only get taxed on net profit. But I'd also say that it's only your cost basis that matters, not the face value of whatever you're buying or selling.