IRS delays tax-reporting rule on Venmo, PayPal payments over $600
IRS delays controversial tax reporting rule on third-party payments over $600
The IRS announced on Tuesday that it is delaying a controversial
tax reporting requirement targeting Americans who made more than $600 online through third-party payment apps like Venmo or PayPal.
The rule change – approved by Democrats in March 2021 with the passage of the American Rescue Plan – would have required payments platforms, including Venmo, PayPal, Etsy and Airbnb, to send Form 1099-K to the IRS and users if their transactions totaled more than $600 over the course of the year.
https://www.foxbusiness.com/money/irs-de...yments-600
Don't be fooled though, you still have to pay taxes but you won't have a form sent to you. It's not that they aren't tracking it or can't come after you if you don't pay the taxes on any profits you made selling something.
Sent from my SM-T970 using Tapatalk
If you sell stuff on Venmo or PayPal, your profits should be taxed as ordinary income. That part is simple. All the forms you might have to fill out to show what your revenue and cost were, people like you and me would want that to be as simple as possible. But the H&R Block lobbyists want it to be as complicated and confusing as possible. That's all this is. Not a partisan issue.
I don't see how this new rule would "hurt average Americans," except the ones who don't want to pay their taxes.
(11-23-2023, 12:46 PM)The Real Marty Wrote: [ -> ]I don't see how this new rule would "hurt average Americans," except the ones who don't want to pay their taxes.
Ever been audited bu the IRS?
(11-23-2023, 12:46 PM)The Real Marty Wrote: [ -> ]I don't see how this new rule would "hurt average Americans," except the ones who don't want to pay their taxes.
I wonder how many average Americans regularly sell more than $600 on online platforms? My sense is that it’s a small percentage but I could be wrong. I’ve seen a figure of 7.5 million but I’m sure that includes online businesses who are already filing business taxes. The impact of the reporting law probably impacts individuals who sell at a low quantity like they would in a garage sale. Many of
those probably report their extra income as required. So the revenue recovered may not actually be worth the effort of implementing the law.
(11-23-2023, 11:35 AM)mikesez Wrote: [ -> ]If you sell stuff on Venmo or PayPal, your profits should be taxed as ordinary income. That part is simple. All the forms you might have to fill out to show what your revenue and cost were, people like you and me would want that to be as simple as possible. But the H&R Block lobbyists want it to be as complicated and confusing as possible. That's all this is. Not a partisan issue.
(11-23-2023, 12:46 PM)The Real Marty Wrote: [ -> ]I don't see how this new rule would "hurt average Americans," except the ones who don't want to pay their taxes.
(11-24-2023, 09:04 AM)MarleyJag Wrote: [ -> ] (11-23-2023, 12:46 PM)The Real Marty Wrote: [ -> ]I don't see how this new rule would "hurt average Americans," except the ones who don't want to pay their taxes.
I wonder how many average Americans regularly sell more than $600 on online platforms? My sense is that it’s a small percentage but I could be wrong. I’ve seen a figure of 7.5 million but I’m sure that includes online businesses who are already filing business taxes. The impact of the reporting law probably impacts individuals who sell at a low quantity like they would in a garage sale. Many of those probably report their extra income as required. So the revenue recovered may not actually be worth the effort of implementing the law.
Here is the issue. The IRS and these companies will just report every transaction you have. Unless you are listing items on ebay, mercari, etc, paypal and venmo don't know what the money is for. They just list all transactions, and unless you fix it, all transactions would be considered taxable.
I sold some used equipment well over the limit last year but for a loss as it was used. The 3rd party site and IRS have no clue what I paid for it, I could have bought it at a yard sale, fixed it, and made a big profit. The forms are simple to fill out but you have to have the receipts.
It will affect the average American because they don't keep records for the cost of the items that they paid. Will you be able to provide the proof if the IRS audits you? I doubt most will, so it turns into a huge gotcha item. Then, once they are auditing you, how much other stuff can they find?
Sent from my SM-S901U using Tapatalk
(11-24-2023, 01:44 PM)flsprtsgod Wrote: [ -> ] (11-24-2023, 01:40 PM)The Real Marty Wrote: [ -> ]Zero.
Wow, so you did nothing?
I'm not sure what you're asking. It was a long time ago. It was a routine random audit, the agent was a nice lady, I handed over all my files and records, answered all her questions, and after a few days of her working on it, she said I had made an error, and I was owed a refund. As I recall, it was just over $3,000.
(11-24-2023, 03:15 PM)The Real Marty Wrote: [ -> ] (11-24-2023, 01:44 PM)flsprtsgod Wrote: [ -> ]Wow, so you did nothing?
I'm not sure what you're asking. It was a long time ago. It was a routine random audit, the agent was a nice lady, I handed over all my files and records, answered all her questions, and after a few days of her working on it, she said I had made an error, and I was owed a refund. As I recall, it was just over $3,000.
Ah OK, you haven't been audited recently. My last one took 26 hours of prep plus a defense by my CPA.
(11-25-2023, 12:51 AM)flsprtsgod Wrote: [ -> ] (11-24-2023, 03:15 PM)The Real Marty Wrote: [ -> ]I'm not sure what you're asking. It was a long time ago. It was a routine random audit, the agent was a nice lady, I handed over all my files and records, answered all her questions, and after a few days of her working on it, she said I had made an error, and I was owed a refund. As I recall, it was just over $3,000.
Ah OK, you haven't been audited recently. My last one took 26 hours of prep plus a defense by my CPA.
Why in the world would you need to prepare for 26 hours? I know you wouldn't want to reveal a bunch of personal information on this message board, but I don't understand why an audit wouldn't demand anything but transparency and willingness to answer questions, and if you have a CPA who prepared your return, the burden would fall on him to answer the questions.
(11-24-2023, 12:37 PM)p_rushing Wrote: [ -> ] (11-23-2023, 11:35 AM)mikesez Wrote: [ -> ]If you sell stuff on Venmo or PayPal, your profits should be taxed as ordinary income. That part is simple. All the forms you might have to fill out to show what your revenue and cost were, people like you and me would want that to be as simple as possible. But the H&R Block lobbyists want it to be as complicated and confusing as possible. That's all this is. Not a partisan issue.
(11-23-2023, 12:46 PM)The Real Marty Wrote: [ -> ]I don't see how this new rule would "hurt average Americans," except the ones who don't want to pay their taxes.
(11-24-2023, 09:04 AM)MarleyJag Wrote: [ -> ]I wonder how many average Americans regularly sell more than $600 on online platforms? My sense is that it’s a small percentage but I could be wrong. I’ve seen a figure of 7.5 million but I’m sure that includes online businesses who are already filing business taxes. The impact of the reporting law probably impacts individuals who sell at a low quantity like they would in a garage sale. Many of those probably report their extra income as required. So the revenue recovered may not actually be worth the effort of implementing the law.
Here is the issue. The IRS and these companies will just report every transaction you have. Unless you are listing items on ebay, mercari, etc, paypal and venmo don't know what the money is for. They just list all transactions, and unless you fix it, all transactions would be considered taxable.
I sold some used equipment well over the limit last year but for a loss as it was used. The 3rd party site and IRS have no clue what I paid for it, I could have bought it at a yard sale, fixed it, and made a big profit. The forms are simple to fill out but you have to have the receipts.
It will affect the average American because they don't keep records for the cost of the items that they paid. Will you be able to provide the proof if the IRS audits you? I doubt most will, so it turns into a huge gotcha item. Then, once they are auditing you, how much other stuff can they find?
Well, I don't see much point to the new rule which is why I said I don't think it's worth the effort to implement it. But the IRS has a FAQ for 1099-K forms and this is a question for which they have an answer.
Q. During the year, I sold my personal guitar for $800 on a social media platform's marketplace and I received Form 1099-K. I purchased the guitar several years ago for $3,000. How do I prove how much I paid if requested by the IRS? (added December 28, 2022)
Generally, you should keep accurate records for personal items you may sell. If your records are lost, destroyed, or are not available due to circumstances beyond your control and your return is audited, examiners may allow you to present reconstructed records. Additionally, examiners may accept oral testimony when records do not exist. In this example you have a nondeductible personal loss. $800 sales price - $3,000 purchase price = ($2,200) loss amount. You can offset the proceeds reported on the Form 1099-K using some of your purchase price as shown here:
Form 1040, Schedule 1, Part I – Line 8z, Other Income. List type and amount: "Form 1099-K Personal Item Sold at a Loss…. $800" to show the proceeds from the sale reported on the Form 1099-K.
Form 1040, Schedule 1, Part II – Line 24z, Other Adjustments. List type and amount: "Form 1099-K Personal Item Sold at a Loss…. $800" to show the amount of the purchase price that offsets the reported proceeds. Do not report the $3,000 you paid for the purchase because a personal loss is not deductible.
Link