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Quoted from daly124:A couple of weeks ago I was listing a machine for sale on Facebook Marketplace. Before I finished, a pop-up said that they will be asking for my SS or TIN number in the future. I'm assuming this is part of the American Rescue Plan Act of 2021 where the IRS wants you to report any warnings over $600.00.
So what does this mean for the hobbyists who sell/trade a machine on any selling app including on Pinside?
It means that if you sell a game for a profit, those profits are subject to tax. Just like they always have been. Only now, they are cracking down in the year and years and years of people not paying tax on income they have received from selling games.
The only way pinside will send out 1099s is if they start running all the payment processing of sales transactions here. It’s my understanding they are not doing that.
Quoted from purbeast:But what if you sell a game for cost or at a loss? It could still be a multi thousand dollar sale that reports as "income" but it's not actually any profit.
Then you pay no tax. Get with a professional if you have any questions about your specific situation.
Quoted from Gribbs:Yes. All people, even the "little guys", should have to hire a professional to wade through onerous, oppressive and confusing tax laws from their government. Winning!
Or find one willing to help for free for 20 mins. Either way. We aren’t all crooks.
Quoted from beelzeboob:That looks like a headline The Onion would post...but then you read the article and find out it's real. (Cue the folks that say it can't possibly be real because of the source...)
I love criminals getting extra kicks to the nuts like this.
Quoted from OLDPINGUY:It doesnt matter if you are successful.
Yes it does. If you always lose money, you’ll be relegated to a hobby business.
Quoted from rvdv:This does not apply to “friends and family” transactions I’ve been told.
Correct. Unless it was a receipt for providing goods and services, you will not get a 1099 from anyone.
Quoted from rvdv:Public Service Announcement
**********
you have to explain to the IRS why you gifted your bestie money and then you might have to pay taxes on the money you loaned them when they pay you back.
People concerned about giving friends money in any form, please research gift tax rules. You don’t pay any tax, you may have to report it via a gift tax return, but no taxes are owed unless you pay out millions and millions of dollars.
This tax isn’t new. That’s what everyone doesn’t understand. You’re just not able to lie as easily anymore. Haha
Quoted from Concretehardt:Im glad you think it’s funny, but what about the people who are not lying and who are on a fixed income (like me). I have literally been slowly selling off my possessions since I lost my job to help make ends meet? Case and point I just sold a gun stock on gunbroker for $680. The stock came off of a gun that I paid $3800 for 8 years ago, so can you explain to me what I’m supposed to write/pay on the 1099 when I receive it? How the hell do I separate the value of what I paid for the stock (it wasn’t free) from what I paid for the gun and then prove what I paid for the gun? I can’t find the receipt for the gun but I know approximately what I paid for it.
You need to try and determine the value of the stock. Find others like it for sale around the time you got it or simply do a percentage of cost of the full item. Deduct that from your sales price. What’s left is the gain you owe tax on.
You don’t write/pay anything on the 1099. Think of a 1099 as another W2 except it doesn’t have the taxes withheld from it already. It’s on you to then report that income on your return less any deductible expenses related to the sale of the item that generate the income which includes the original cost of the item, shipping costs on sale, etc.
Quoted from 6S3NC3:You buy something for 920 plus tax is $1000 bucks so another $80 to the tax man. Then sell it for 700 and pay tax again.
This is incorrect. In this scenario you’ve incurred a short term or long term loss (depends on how long you owned it), and would owe zero tax on the sale. You have to make money on the sale to owe tax.
Or it would be business income that you take on your schedule C that you can offset with expenses to eliminate your tax liability.
Best to get with TurboTax or another professional to help identify the best ways to handle these transactions to help limit your tax liability.
If you’re doing it a lot you’ll have to most likely do schedule C. If it’s a one off, you can do it via capital gains and sch D.
Quoted from Sleal16:True. I'm in multiple collectible hobbies were I have to frequently unload to clear room for other stuff... So too many sales to not make it look like a store
Yeah it can be tricky. I’ve been close to break even on all my game sales and only do a few a year so I haven’t had to do anything too complex yet.
If you file a sch C and report an overall loss that should be deductible on your income even if you’re a standard deduction filer. Make sure for your specific situation this is true with a professional.
Same thing if you get a K-1 with a loss on it from a business. Doesn’t matter if you’re standard or itemized.
Quoted from Concretehardt:Ok so same with bribes then? (Asking for a friend) [quoted image]
Bribes are income. Yes. So get busted for those, get ready for tax penalties too.
Quoted from Miguel351:And how do we get out of paying these bogus "taxes" by proving we took a loss on all our garage sale items? I typically don't keep receipts from all the clothes, old toys, chairs, pots and pans, and other crap that I'd sell at a garage sale, I've purchased over the years. But I can guarantee that I'll be taking a loss on every item I'm selling at a garage sale. I just don't have any way of proving it.
No need. You’ll never get audited for reporting these pointless losses on minor garage sale items. If you do, then you do your best to prove what you paid for them. Easy as finding listings of the items from approximately when you bought them. But again, you’ll never be audited for stuff like that.
Quoted from Miguel351:Even if I use Venmo or Paypal for all the payments? And they total over $600? Seems to me like the opposite is true.
I sell a lot of items on eBay and some of my upcoming items are going to be worth more than all the little stuff from previous months, meaning there's a real potential for reaching that $600 amount super quick. They're all at least 20-30 years old and I'm definitely taking a loss on them. Now with this new cash grab from the little guy, ahem...tax code, I have next to zero desire to list these items thinking of the future headache it might bring.
Are you selling items goods and services or friends and family? Friends and family implies it was a gift, so that’s not income. Not taxable.
If you’re selling lots of stuff on eBay, track the expenses associated with all the sales and take those as deductions. Tons of stuff you can claim to offset those sales including the cost of the item you sold.
There’s no headache if you just do your homework and understand what this new rule is meant to do.
Quoted from loneacer:I've had an online resale business since 2004. I file schedule C on all items I buy with the intent of reselling for a profit. I've paid hundreds of thousands of self employment income taxes. I also have a separate selling account I use for the odd personal item I'm selling off that I no longer want. Most of those are sold at a loss. A few at a profit. Those sales are the ones that are now going to cause me a headache. Some are $5-10 items like used books, but others can be $500+. A couple weeks ago I sold the tumbler I used when restoring my TAF. Paid $340 for it. Cleared about the same after fees and shipping. That's the type of sale I don't want to report.
Then don’t. Do your tiny business transactions with Friends and Family or Venmo. But if you want the protections, you’re going to have to operate as a legit business. But that tiny stuff doesn’t matter. Don’t overcomplicate things. The IRS doesn’t care about anyone that is worried about this new rule.
If you think you’re going to owe more tax from this new rule, contact a professional immediately because you’re probably mistaken.
Quoted from sbmania:So now they owe the Gov taxes on 1k "income"???
Not necessarily. But unless you have some other expenses to the sale to help offset that gain you incurred, yes. It’s no different than buying and selling a stock for the same amounts. You earned a profit. That gets taxed just like your work wages.
By the way, you should’ve done that all along. This new rule changes nothing in that regard.
Quoted from arcademojo:This tax isn’t new. They just changed the threshold from $20,000 to $600. Nothing to see here folks just move along. Just pay a professional more money then you actually make on your sales to keep you from paying more taxes. It’s simple. Now you can spend hours on hours trying to keep records and receipts on every thing you ever buy use or drive for your pinball hobby. I’m sure this is easy for those of you that run businesses but for the ever age Joe pinball hobbyist this is going to be a nightmare.
I suggest TurboTax. It’s very user friendly and will handle this new rule perfectly.
Quoted from sbmania:doesn't the gov have bigger fish to fry?
Yes. So deal in cash or friends and family and be done with it. Or make up expenses to make it a net zero. They don’t care about your couple pinball deals a year. They have bigger fish to fry.
Quoted from Miguel351:At this hypothetical garage sale, all sales would be to strangers using Paypal or Venmo. If that total is over $600, it'd be taxed as income according to this new rule.
Why would you do goods and services for these garage sales? Just do friends and family or use non business Venmo. Or do cash. This only applies to business accounts. A garage sale is not a business.
I understand this seems awful, but it’s the same it’s always been. If you’re not operating a business or selling big ticket items for large profits, you’re fine.
Quoted from Miguel351:True, a garage sale is not a business, but sales from it would be considered income. Doing anything other than goods or services is lying and technically illegal. I keep my law breaking to speed limits only. I don't want to give the IRS any reason to come sniffing my way.
No they aren’t. It’s extremely rare that any item sold in a garage sale is sold for profit. Profit is taxable, not gross receipts. The IRS doesn’t care about garage sales.
Do what you want, but garage sales have never been reportable to the IRS, and never will be. Remember, you have to make profits to pay tax. Having a garage sale gives the IRS zero reason to thinks profits were made.
One thing the IRS will always do is take any money you’re willing to give them whether they should be getting it or not. Haha
So don’t want to have to explain to the IRS that you’re receipts were from a garage sale and no profits were made? Just deal in cash and friends and family. You’re not doing anything illegal.
Quoted from JohnnyPinball007:(First of all, I have owned a small business for over 25 years, and I have used an accounting firm for all of those years).
But what I just quoted you about reminded me about a few months ago that I received a letter from the IRS that they had received my payment, but they had lost the other paperwork and did not know what the payment was for.
I called my accounting firm, and they laughed about it.
So it is not quite true that the IRS will just take any money, in my case I had to send paperwork 2 times to show what the payment was for.
Want to know what is very funny?
That payment with all of the extra paperwork on my part was for just $18.00.
True true. That does happen. What doesn’t happen is when you overpay the government, and it takes them over a year to get that overpayment back to you, they don’t (with rare exceptions) ever pay you penalties and interest for that late payment back to you. But if we’re late on paying?!? Look out.
Quoted from Jmckune:I believe it was my 2020 tax return. They were behind processing times due to Covid. They actually did pay me penalties for having to delay my payment. Granted, I believe it was only about $100 but it was something.
Yeah. The covid delays were especially insane and the only times I’ve seen them do that.
Yes. If you’re a self employed business owner this affects you.
If you choose to use goods and services on PayPal and other online business payment processing services for garage sales, this affects you.
But if you were a small business owner before, you were already reporting these receipts even though you didn’t get a 1099k. So this new rule will change nothing for you. If you weren’t reporting those receipts (which is illegal), then you will have to change some things starting 1/1/2022.
Again. Get with a CPA or other qualified professional to see how this does or doesn’t affect you and you’re small business if you have one.
If you sell a game for a profit, get with a professional to see how to legally report it.
This is nothing new. This affects the payment processing companies more than anyone else. Their workload just exploded as of 1/1/2022.
If you are selling items with the intention of making a profit, you’re a business. Doesn’t matter if it’s 600 bucks or 6 million bucks.
If you do not intend to make profits, look into capital gains rules and hobby business rules.
Quoted from Miguel351:I'm well aware that this is nothing new. I've input those numbers on TaxCut every year, only to have it tell me that since it doesn't meet the thresholds, it'll left off of my return. The change is that those thresholds have been lowered to a ridiculously low amount. That's what I have the issue with. As a hobbyist/non-business owner, I shouldn't need to spend more money by having to consult a CPA or other tax professional.
Continue to use tax cut and you should be fine. There is no way you sold something that’s 20 years old and made a profit unless it’s a collectible. And if it’s a collectible you should have plenty of information to calculate the gain you incurred. If it’s your couch or household items then list the cost equal to the sale and be done with it. I understand this answer isn’t good enough. I’m sorry this causes so much heartburn. It’s hard enough to do this stuff on your own, let alone keep up with all the changes each year.
Can you share anywhere that states this only applies to business accounts, and not personal venmo or PayPal friends & family transactions?
While this is not from the IRS (isn’t updated yet), but everything here looks right with IRC code references except for the thresholds. Those are prior 1/1/2022 thresholds.
https://www.zenledger.io/blog/does-paypal-report-to-irs-on-friends-and-family
Basically, friends and family transactions are gifts and fall under gift tax rules. These cannot be put on a 1099. Those are only for business transactions.
I can also see lots of people getting rid of these cash apps due to the new rules.
The crappy thing about new rules is nobody really knows what’s gonna happen with some things until they happen. PayPal shouldn’t be sending out 1099s for friends and family activity, but they may anyway. And that will indeed be a pain in the ass for us.
Quoted from BeachPickle:Having to keep track of and prove that every non-taxable dollar given to you was in-fact a non taxable transaction is definitely something new.
You don’t have to do this. Personal Venmo accounts and friends and family PayPal activity should not result in a 1099. If they do, that’s not right and you don’t owe any tax on it. If you get one for this non taxable activity get with a professional to see how to make it go away. We won’t know if this happens or not until 2023 though.
Venmo’s website:
https://help.venmo.com/hc/en-us/articles/4410097047315-What-to-Expect-for-Tax-Season
This should not change in 2022. Business accounts only get 1099s
Which tax forms can I expect to receive from Venmo?
For the 2021 tax year, Venmo will issue a Form 1099-K to business profile owners who have passed the IRS reporting threshold for their state of residence
Quoted from BeachPickle:Thanks for your info and taking the time to respond. I guess my worry is that for the 2022 year this is the exact thing that WILL change.
Valid. We won’t know for sure until the IRS updates their website and Venmo and PayPal update their terms of service.
If you use Venmo for personal and business right now, best to create a separate business account to make it easy come year end.
Glad Venmo already confirmed no 1099s on personal payments.
Won’t stop me although I’ve only sold one game for a decent profit and don’t plan to buy an LE again. But if I buy one and it sits in a box for a year and I sell for 5k more, definitely just reporting it and paying tax and take the free 3500-4000 gladly. Easy peasy. Not sure why having to pay tax on the profit would stop anyone.
Quoted from metallik:I wish! Haven't hit 15K but HWN was 9K. Some of us aren't rich, we just keep rolling over old games into new games.
Hobbyists need something similar to the real-estate thing where if you sell something for a profit but immediately buy a replacement, the profit doesn't get taxed. If I trade my TZ for a TAF straight up, the IRS doesn't care, but if I sell TZ and immediately buy a TAF for the same price, they want a piece of the TZ profit?? Fuck 'em. I just want something new to play.
Filing a hobby business is what you seek.
Zero tax owed in your hypothetical.
Looks like IRS changed the rules on hobby businesses. Ignore this. Never messed with that before.
If I was doing more than a few profitable deals a year, I would just make it a business and put it on sch C possibly.
Quoted from JohnTTwo:I think this applies to entities who handle the money. Pinside is safe.
Correct. All pinside is doing is connecting buyers and sellers. Just like Craigslist.
Quoted from Pdxmonkey:it will hurt lower income people and families much worse.
Why do you think this? Yes while people with more money can get more lawyers and accountants, but why would lower income people even need that? If they are filing their taxes, they are unlikely to get audited.
If you run a business and don’t know the basics about tax, you need to hire an accountant. That’s just how it works. Low income people don’t run businesses. They file their W-2s and that’s it it. Easy peasy.
The way the government is going to get more money is to go after those that actually have it.
Quoted from Concretehardt:Last post on the subject, but it sounds like even if you’re not running a business you may need to hire an accountant to figure some of this stuff out, or at least for the account to tell you that you didn’t need an accountant. Either way if you’re low income it hurts you and your family to have to hire an accountant and deal with this, if you’re rich you of course have the accountants on staff and have work around for all of this.
If you get a 1099 and it to your W2 and do TurboTax or HR block. That will be all you need. Not too complex.
Quoted from arcademojo:What part of any individual that makes over $600 a year profit don't you understand??
What part of I wasn’t responding to you didn’t you understand? 
If low income people are flipping lots of games during the year, that’s a business. If they are doing one offs here and there, it’s fine. Deal in cash or if you don’t get with TurboTax or HR block to help you. They are both cheap and take their modest pay out of your refund.
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