Need Some 1099 Advice

[Mike Henderson]

I bought a new computer which uses PCIe SSDs. I took a 4TB SATA SSD out of my old computer and would like to sell it. But I don't want to list it on eBay because of the 1099 issue - I'd rather not have to deal with that at tax time.

I plan to list it on Nextdoor and Craigslist. Can anyone suggest another way to sell it without getting into the 1099 situation?

Maybe the 1099 thing is not a problem, but I've never had to deal with it for Garage Sale type items before. I may or may not have records of what I paid for things, but I'm sure that I'm selling for a lot less than I paid. Personally, I think having to deal with a 1099 for garage sale items is unreasonable.

Mike

[Bill Dufour]

I thought $600 was the minimum to have to report 1099 income?
Bill D

[Mike Henderson]

I thought $600 was the minimum to have to report 1099 income?
Bill D

It is, but over a year I could easily hit that amount if I sell garage sale stuff on eBay. When that $600 amount was set, it was a reasonable amount. But over the years, with inflation, it gets fairly easy to hit. The $600 amount is not adjusted for inflation.

I have a camera I want to sell, also. Between the camera and the SSD, I'll almost certainly exceed $600. One way to avoid the $600 is to sell things on multiple platforms, with less than $600 on each platform. The requirement is $600 per platform. I just have to figure out where else to sell the few "garage sale" items I have.

I don't know what you have to do about the 1099 when you file your taxes. Do you have to have receipts for what you paid for those items to show that you lost money on them?

Mike

[Michael Weber]

I had no idea about the 1099 issue. Occasionally I list a tool or other item on Facebook. If I mark it sold and even if not sold I get asked after a certain time if it did and if so, to who did it sell. Now I’m curious if that’s part of record keeping for 1099 reasons in addition to letting other interested parties it’s no longer available.

[Mike Henderson]

I had no idea about the 1099 issue. Occasionally I list a tool or other item on Facebook. If I mark it sold and even if not sold I get asked after a certain time if it did and if so, to who did it sell. Now I’m curious if that’s part of record keeping for 1099 reasons in addition to letting other interested parties it’s no longer available.

Somewhere along the line, they should have asked for your social security number (tax ID number) so that they can report the total value of your sales to the IRS (if over $600). All of those companies who facilitate sales are required to report sales, not just eBay.

Mike

[Thomas McCurnin]

Yeah, I think is $600 per transaction for a person who paid something to you to issue a 1099. Per transaction, not aggregate.

I've bought and sold thousands of dollars on Craigslist and eBay and never issued, nor received, a 1099. Maybe that is risky, but honestly I don't care, the penalty for a $700 payment would be less than a few dollars, and my accountant told me not to sweat it, and don't even report it. But you can report it under miscellaneous income if you are a upright citizen. Not me, I'm a scofflaw.

[Mike Henderson]

Yeah, I think is $600 per transaction for a person who paid something to you to issue a 1099. Per transaction, not aggregate.

I've bought and sold thousands of dollars on Craigslist and eBay and never issued, nor received, a 1099. Maybe that is risky, but honestly I don't care, the penalty for a $700 payment would be less than a few dollars, and my accountant told me not to sweat it, and don't even report it. But you can report it under miscellaneous income if you are a upright citizen. Not me, I'm a scofflaw.

I'm almost 100% sure that the $600 limit is for a year, not per transaction. So if you sell on eBay, when your sales exceed $600, no matter how many people you sell to, eBay will do a 1099 for you.

The reason they instituted this (this may be the first tax year for it) is to catch those people who have "stores" on eBay, Amazon, and others. But in the process, they're catching people who are doing "Garage Sale" selling of their own items (not things they bought for resale).

Mike

[Jim Koepke]

There are a few considerations on selling used items.

Was the item depreciated for tax purposes?

Was it sold for less than it originally cost?

Was it sold at a profit?

Found with search term > Is selling used stuff taxable?


The rule of thumb is that if you used the items and then sold them for less than you bought them for, then you owe no taxes on the sale. However, if you sold an antique or collectible that had appreciated since you first acquired it, you likely would be on the hook for taxes on the profit.


Sold goods aren't taxable as income if you are selling a used personal item for less than the original value. If you flip it or sell it for more than the original cost, you have to pay taxes on the surplus as capital gains.

If an item was sold for less than the original cost it may be able to lower your taxes.

That is why having a professional doing your taxes is important if you have more than a simple income source. Yes, I hate paying a tax preparation service a few hundred dollars for less than an hour of work, but at least there is no hair tearing or headaches involved.

jtk

[Kev Williams]

Who thought up this stupid double/triple/quadruple taxation strategy? --it took taxed money that was sales taxed to buy the original, and they want you to pay tax when you sell it?
480320

Your tax burden should be zero but what a paperwork nightmare... you get a 1099 for the $600 you sold the drive for, which must be claimed on your return. From there deduct your shipping/selling costs, if any, and you get to deduct the original cost, which should be more than you sold it for...
Regardless, your "income" should be a negative value. --But just try to deduct that from your OTHER income...

nothing but time-sucking crap just to prove a negative...

[Jerome Stanek]

Yes $600 per person so if you sell to different people and it is under $600 then you don't need to send a 1099. Also you need the buyers ssn for the 1099

[Mike Henderson]

Yes $600 per person so if you sell to different people and it is under $600 then you don't need to send a 1099. Also you need the buyers ssn for the 1099

Just to clarify - If you sell on eBay, or Amazon, or any other platform, the test for a 1099 to you is whether you sell more than $600 in the tax year. It doesn't matter how many, or how few people you sell to. In essence, you are treated as a business that has received more than $600 in sales and the platform will do a 1099 on you.

You do not have to sell more than $600 to one person or business - it's your aggregate sales on that platform.

Businesses do not cut 1099s to people they sell products to. You can sell a million dollars to one person (or business) and you don't have to issue a 1099 to that person. If you had to cut a 1099 to a person you sold something to, when you purchased a car, the dealer would have issued you a 1099.

If you hire someone on contract and pay that person more than $600 in your tax year, you have to issue a 1099 for that person.

It's all about tracking income and forcing people to report that income so that taxes are paid on it. So when you sell on eBay, you receive income and that income is going to be reported if it's over $600 in a tax year.

Mike

[Lee DeRaud]

Yes $600 per person so if you sell to different people and it is under $600 then you don't need to send a 1099. Also you need the buyers ssn for the 1099
You're not getting sending anybody a 1099. The 1099 would be coming to you from Ebay/Paypal/CL/whoever to reflect the (potential) income that you received from the sale(s) made through them.

And good luck asking somebody for their SSN so you can sell them something.

[Lee DeRaud]

It's all about tracking income and forcing people to report that income so that taxes are paid on it. So when you sell on eBay, you receive income and that income is going to be reported if it's over $600 in a tax year.
The whole 1099 thing rests on the default assumption that, if you are selling something, you must be a business. So if you're being treated as a business on the basis of a few person-to-person sales, sooner or later the state will be requiring you to collect sales taxes and pass them up the food-chain and file the requisite sales tax returns. Of course, to do that, you need the appropriate state sales tax license...which the state will share with your local authorities, who then force you to get a city/county business license. And lo and behold, now you ARE a business. All things considered, I'd rather shovel all my unwanted stuff into the Goodwill bin, and no, I don't need a receipt thank you very much.

(There's a reason I don't have an Etsy store anymore...)

[Mike Henderson]

The whole 1099 thing rests on the default assumption that, if you are selling something, you must be a business. So if you're being treated as a business on the basis of a few person-to-person sales, sooner or later the state will be requiring you to collect sales taxes and pass them up the food-chain and file the requisite sales tax returns. Of course, to do that, you need the appropriate state sales tax license...which the state will share with your local authorities, who then force you to get a city/county business license. And lo and behold, now you ARE a business. All things considered, I'd rather shovel all my unwanted stuff into the Goodwill bin, and no, I don't need a receipt thank you very much.

(There's a reason I don't have an Etsy store anymore...)

Nobody can succeed with a business if all they make is a few dollars over $600. What they want to do is catch the people who really are running a business. The trigger for a 1099 should be much higher than $600. Maybe a few thousand dollars. Even if they collect tax from a few people who collected a few dollars over $600 the amount of tax is minimal.

Mike

[Brian Elfert]

I haven't figured out how you deduct your cost basis from your Ebay 1099 for tax purposes for sell personal goods. You can't really do it as a business because the IRS expects you to eventually make a profit. I quickly sold a personal item on Ebay last year right before Christmas once I heard about the new 1099 rule.

[Rich Engelhardt]

IIRC - it's $600 profit on a sale of an item or items, not just a flat $600.

[Curt Harms]

Here's what Ebay has to say. It sounds like it may be a new thing. I can see this for Ebay sellers that are indeed businesses. Some sellers have 1000+ transactions; those are not garage salers. The limit does seem low though, maybe they missed one zero. $6000/yr would be more reasonable.

https://www.ebay.com/sellercenter/payments-and-fees/2022-changes-to-ebay-and-your-1099-k


Here’s what you need to know

Starting on Jan 1, 2022, eBay and other marketplaces are required by the IRS to issue a Form 1099-K for all sellers who receive $600 or more in sales.
The new tax reporting requirement will impact your 2022 sales and taxes that you file in 2023—it will not apply to your 2021 sales and taxes that you file in 2022. Throughout 2022, look for updates from us that will help explain what’s changed and what you need to do next.
If you haven’t already given us your Social Security number (SSN) or Individual Tax Identification Number (ITIN), we’ll ask you to provide it once you reach $600 in sales.
No need to worry— you only pay taxes on profits. You won’t owe any taxes on something you sell for less than what you paid for it. For example, if you bought a bike for $1,000 last year and then sold it on eBay today for $700, that $700 you made would generally not be subject to income tax.
While eBay is unable to give tax advice to our sellers, we want to help make dealing with taxes as easy as possible. Our goal is to help all sellers, casual or those selling as a business, with these new requirements.

[Mike Henderson]

IIRC - it's $600 profit on a sale of an item or items, not just a flat $600.

I'm afraid that's not correct, Rich. There's no way for eBay or Amazon to know what your profit is. The test is simply that you received over $600 on a platform - total of all sales on that platform.

If eBay (or PayPal, or Amazon or Etsy, etc.) sent you more than $600 in a year, you will receive a 1099 from them. When you file your taxes, you deduct your cost of the items sold, and the remaining amount (if positive) is taxed.

Mike

[Lisa Starr]

There are detailed instructions on filing your income tax return to report 1099-K receipts and associated expenses. The instructions I located were for TurboTax, when the transaction is personal, not business related, but the gist of it would work for any prep software, You will need way to provide an initial cost for each item sold.

[Jerome Stanek]

You're not getting sending anybody a 1099. The 1099 would be coming to you from Ebay/Paypal/CL/whoever to reflect the (potential) income that you received from the sale(s) made through them.

And good luck asking somebody for their SSN so you can sell them something.

Your right I was paying out to subcontractors and had to send them a 1099 and had to file other forms also

[Thomas McCurnin]

You're not getting sending anybody a 1099. The 1099 would be coming to you from Ebay/Paypal/CL/whoever to reflect the (potential) income that you received from the sale(s) made through them.

And good luck asking somebody for their SSN so you can sell them something.

OK, Lee

You officially made me laugh out loud today. Thanks!

[Brian Elfert]

There are detailed instructions on filing your income tax return to report 1099-K receipts and associated expenses. The instructions I located were for TurboTax, when the transaction is personal, not business related, but the gist of it would work for any prep software, You will need way to provide an initial cost for each item sold.

Do you have a link to this? The IRS information on the form 1099-K says nothing about personal sales. It assumes all business transactions.

[Lisa Starr]

I can't get the link to work, but here's a copy/paste of the instructions.

This can be reported as the sale of items not associated with a business so this won't be considered as self-employment income.
For reporting Form 1009-K for personal items sold not associated with a trade or business, you can report this as Miscellaneous income.



From the left menu, go to Federal and select the first tab, Wages & Income
Add more income by scrolling down to the last option, Less Common Income, and Show more
Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C, and Start
Choose the last option, Other reportable income and Start and Yes
Enter the applicable description and amount and Continue

First, enter Form 1099-K as received. It is essential that the full amount be entered.
Next, enter an adjustment as a negative number to reflect the cost of these items and the sales expenses (but not more than the sales price. You can't produce a loss.)

​

[Bill Dufour]

I used to sell a little stuff on ebay. I would add sales tax onto the price if the buyer was in California. I just pocketed the extra money. i had no idea how to pay it to the state anyway. Not that I was making enough to report it.
If you used the item for business did you depreciate the cost already? If you have a stack of lumber seasoning, does it get depreciated if it not out in the weather?
Bill D

[Lee DeRaud]

If you have a stack of lumber seasoning, does it get depreciated if it not out in the weather?
Pretty much the only way to make money woodworking, innit? :)