Happy New Year: $600 Federal Threshold for 1099 Reporting

Don't forget the new law goes into effect on Jan 1 if you sell more than $600 worth of anything instead of the old $10,000 in a single year.

https://newsroom.paypal-corp.com/20...eporting-Requirements-Your-Questions-Answered

 

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Personally I admit nothing but good luck tracking the cash deals at many coin shows where there’s no paperwork

 

They hook the little guppy while the big fish swim freely.

 

Per your link -
Form 1099-K is an IRS informational tax form that is used to report goods and services payments received by a business or individual in the calendar year. While banks and payment service providers, like PayPal and Venmo are required by the IRS to send customers a Form-1099K if they meet the $600 threshold amount, there are certain amounts that may be included on the form that are generally excluded from gross income and therefore are not subject to income tax. This includes:

• Amounts from selling personal items at a loss
• Amounts sent as reimbursement
• Amounts sent as a gift

So, for example, if you purchased a couch for $1200 and sold it for $800, this amount would not be subject to income tax.

In any case even if a 1099-K is issued, you don't have to report all sales as "profit" you still factor in your cost basis - what the coin (or whatever) cost you. So if you bought a Morgan for $100 and sold it for $125, you don't have $125 in income, just in gross sales, your "profit" is just $25. Also, hobby income is not subject to self-employment taxes.

Also, this change is for 2022 - it won't affect anyone's 2021 tax filing this year.

 

Regarding the above comment, I've been wondering about this. You only have to report your profit, but what if you have no way to accurately determine that? I don't keep track of what I paid for individual coins. I want to follow the law but I want to be fair to myself too. I should just be paying tax on profit, not gross income. And would you ever be asked to prove it? Without itemized receipts you could never do so.

 

You don't have to have itemized receipts, though those are helpful, you DO need to keep track, however. If you exchanged emails or messages that have been preserved, those can assist with same. You can often reconstruct the necessary information from old emails and such. It will be interesting to see how the IRS decides to implement this and if Congress does anything to change it. Call or email your Congressperson if you have input, it really does help.

 

Here's an example of how impossible it is. I collect foreign coins, mostly from junkboxes, though in the past I bought a lot on eBay. So I'll go to a coin shop and look through their junkboxes. I'll buy a few hundred coins. I'll get a sales receipt that says like "261 from 25 cent bin = $62. $235 from foreign silver bin."

Then I go home and I sort through them. Some of them go into my collection as new additions. Some replace existing coins as upgrades, and I sell off the ones that they replaced. Some I will sell outright. There's no way to know what I paid for anything or calculate profit.

 

Personally, I'd look at the $62 and extrapolate a reasonable cost basis from that, and make a contemporaneous note of same. If you're comfortable using Excel, that's a good way to do it, but pen and paper work too. Old school!

 

i posted it too, the ebay warning, great liberal times we are in..good grief

 

When I purchase a lot of coins, I divide the total amount by the number of coins and that is my cost per coin.

 

The IRS will accept a good faith estimate.

 

I started collecting coins as a kid back in 1968. Saving receipts was not a concern when you're just 10 years old. What do those of this generation do?

FYI I still have every one of those coins too. Never sold anything.

 

Another step toward a cashless society and move to digital commerce.
This is a great thread to get in trouble in, so that's all I gotta say about that.

 

It’s a foolish law that will do nothing but create headaches. $600 today is chump change and I have to wonder where this idea even originated!

 

As mentioned, good faith estimate or just pay on the entire sale price

 

Well, it wasn't the (Lets Go) Brandon guys..........

 

I have helped out a few friends who don't have ebay accounts sell off coins in the past 10 years or so. Guess that's over with. I understand why they're doing it though. Alot of people make a living off of ebay while paying no income tax. although $600 is ridiculous amount. $6000 would be reasonable.

 

It originated from the IRS requirement to report any gambling "winnings" over $600. Same idea.