I know this is teethering into politics territory, but I wanted to bring awareness in case some members didn’t know. In the stimulus package that is sure to get signed on March 14, there is a provision in there that all online sellers (from eBay to Air BnB and rideshare) will have to report earnings that are made above $600.
While the main thing is to always pay your taxes, I also understand that some people make it through a calendar year under the current $20k threshold and don’t report what they make. If you want to continue selling into 2022, you’ll need to start reporting and most likely file for an LLC.
Here is an article where it talks about this potential but almost certain change:
I really want us to discuss what this could be for future online vendors. Will we have more people signing up or will people get scared to give out their SSN? Does this mean those of us that do get a bigger piece of the pie? Will some vendors stick to local shows and cash only?
Obviously, if we derail into attacking political leanings and each other, the mods will kill this post, so let’s avoid that
Some shows require you to provide a tax Id or social already. Bigger shows that is. Technically you are supposed to report any money you warn selling stuff. I have been for years. Run my eBay and other online sales as a business. It makes decent money so I am honest in my reporting.
Wow…this isn’t good. I’m going to have to start keeping receipts of every comic i buy…because some day I might sell it on eBay and have to report the sale…almost all my “profits” go ink buying more comics. Lately I was using the profits from sales just to cover new comics and future spec…was really just breaking even, but having fun.
I assume you can’t claim “bulk comic buying” as an expense? For example, if it bought 5 new comics this week for $20 I can’t use that as an expense against a $20 profit from selling different comics that same week on eBay? Or do I need to set up an LLC in order to claim expenses in that way?
I gotta start getting smart and stop having fun…bleh…!
How does it work if Ive purchased the book in (example 1994) and then sold it this year?
Take for example comic A I happen to remember I bought for $5 in 94 and sold for say $500 this year.
On the ledger is that $5 purchase for the “business”, and $495 in profit?
And honestly, how the heck would I remember what I purchased books for so long ago?
Is that really expected? Is there supposed to be a record of that $5 purchase in an audit I am expected to present?
This is not so difficult if one is buying and selling within the same year or two or three. But it really is a problem for those with collections surpassing 20, 30, … 100 long boxes dating back to the 70’s, 80’s when the collection began
At a certain point, everything is inventory. What you buy is inventory in a given year. What you sell is profit. I’d imagine what you bought 20 years ago and sold today is just reported as income (profit). You don’t have to necessarily setup an LLC to sell online but if you do sell a lot of stuff, might not be a bad idea as it separates you as an individual from the company for liability, etc.
So yes, moving forward, you may want to keep track of all purchases as that becomes “inventory” and then of course you keep track of all “sales”.
Seek a tax professional though…
For a couple years when I was selling a lot more, I did sort of what Anthony did but now recently as I don’t sell as much online, I just report it as income and eat the $3 or $4 cost the book might of cost me initially, etc.
I tend to be a cash buyer…especially at shows. Has always seemed to work in my favor…it will even more so now.
I’m not concerned with how the seller reports their sales-that’s on them…but I guarantee they will look more fondly on my wad of bills if this new system comes about.
So the way it works for me in the state of Maryland. Everything I buy in a year goes against sales in that year. So if I buy a book today, the cost is an expense this year. If I sell it next year, I cannot claim the cost against next year. I am considered a cash in cash out business.
Let me preface all of this by saying I pay my taxes. I have owed taxes almost every year for 5 straight years and I have paid them. I would never condone not paying your taxes. My key point here is that we pay too much. My problem here isn’t that the government taxes Americans. It’s that they criminally mismanage our tax dollars as it is, and their solution seems to always be “just take more from John and Jane Doe”.
I think the big takeaway here is that once again Uncle Sam has his hands in our pockets. The government believes that every penny out there in circulation belongs to them, and out of kindness of their hearts they have allowed you to keep some for yourself.
Hell, when you read the article from the OP, just replace “government, senate, house” with “mafia” and replace “tax” with “vig” and you’re suddenly reading an article from the New York Post circa 1973.
I mean, look at the world we live in. Costs of housing, food, goods & services are only climbing. Americans are trying to carve out a better existence for themselves by earning some more money on the side. The Congressonino family needs to take their cut though. Couldn’t have the Godfather starving…
So you can write off the purchase of a book this year, even if you don’t sell it… but you can never write it off again. Once you sell it, you report your earnings accordingly. Easiest way to manage and track your side hustles…
I started keeping track of what I am buying and selling this year for tax reasons. Mostly because when I retire I was going to sell toys and comics as a business online. I am going to file a Schedule C. Many years ago I had a little shop in an antique type Mall and did the same thing.
I am not happy with this new Tax law. I think it will affect a lot of online sales. I have never sold over $20,000 online. I have usually sold old things that I had gathered over the years on eBay. Last year was the first year I actually purchased “New” things to resell online. I usually take any “Profits” and buy things that I collect. I have been using the hobby to support my hobby. Now I have to pay taxes on it…
I pay what I owe, but this seems like it is going to cause a huge headache for a lot of people. Time to start meticulously counting money-in-versus-money-out. Hell, considering the money I make selling comics goes right back into buying them along with extra money I may operate at a loss and the IRS will OWE me money. Wouldn’t that be ironic!
I did very well in my this first quarter. Seems like the last 3 quarters are all going to be about making revenue to pay for those profits.
I’d think eBay is concerned about how this is going to effect their bottom line. I may just go the route Of Poyo and basically quit. It’s not so much I have to pay taxes on it…but I’m not sure it’s worth it anymore given the additional headaches and risk of an audit…Not until I know now about what my options are.
For example, if I claim it as additional income not associated with a business, does that mean I can’t get credit for expenses until I overcome my standard deduction?
This is where setting up an LLC might be beneficial.
The other thing I need to look into is the rules on the stimulus checks. I know the runout is insanely steep.
So if this stimulus is against 2020 reported income but they base it in 2019…will you have to “pay it back” if you make more in 2020 such that you cross that threshold?
I think that was the case with the 2019 stimulus package…selling to many comics could get me in trouble that way too…
I mean ultimately it’s kind of ridiculous. Yes I get that people should be reporting this anyway, but there are a LOT of other loop holes and rules that could be changed for companies or higher income folks that would generate more tax dollars and be a lot less of a headache than this change.
