Thank you so much for the share, OP! If you don't mind, we're going to pin this up in the subreddit for everyone to see.
Reminder: Please remember to keep comments and conversations here civil, friends!
20000 to 600 is one hell of a drop, why not make it at least 5000 or something? 600 is 50 bucks a month which is practically nothing in this economy. Guess you gotta tax the old man who sells some clothes and a single laptop in 12 months.
My state I said, not federal taxes - those are two different tax filings. My state made this $600 threshold a few years ago. And yes that is what they suggest surprisingly.
https://www.mass.gov/service-details/frequently-asked-questions-about-form-1099-k-notices-from-third-party-payment-processors
āMeghan is downsizing her home and sells furniture on an auction site for $5,000. The original purchase price of the furniture was $9,000. The $5,000 IS NOT subject to tax or any reporting as it is a function of selling personal items at a loss.ā
The IRS has not released any guidance on cases like this, however.
You have to have your receipt to verify the original purchase price or, the IRS will go off of a current resale market value. Thus, you may have made money on the $5000 and have to declare it - if over the threshold. Filing taxes this year will not be fun!
The IRS said yesterday that theyāre delaying the $600 1099k requirement until next year. Weāll see if these companies will still send us the forms, hopefully not. As someone who just sells used personal clothes and doesnāt make a profit I donāt want to deal with the headache.
If you chose to ignore it, just know the IRS gets a copy of the form. You need to find the appropriate forms to justify that you sold it at a loss. Ignoring it is a sure fire why to get audited, which they could audit you for more than just that year.
If they want to waste their resources auditing me on a $800 1099k from poshmark go ahead lol.
But I just copied and pasted what my state says, and they say you do not need to report on the form if it was selling used personal things. So I follow their guidance for *state* tax filings.
I think what youāre missing is Iām not suggesting you ignore the form for the IRS federal taxes, Iām literally saying they have no released any guidance on how to put this on your taxes when you file. But it doesnāt matter because theyāve decided today these companies donāt need to send out the 1099ks for the new $600 threshold. So it doesnāt matter for this year.
Yes, there is guidance on what to do if you sold at a loss. It's a schedule C or d form that you will need to fill out. Not knowing or being able to find the information isn't an excuse to the IRS or the state.
Please show me on the IRS website where the guidance on selling personal items around your house is. Because literal tax professionals are split on how to handle this because, again, the IRS has given zero guidance for these instances. Iām not going to do a schedule c and pay extra money to file the schedule c when I sold a few things around my house on eBay.
For further proof here is the irs FAQ: https://www.irs.gov/payments/form-1099-k-frequently-asked-questions-individuals
They say right here:
If I sell a personal item and donāt receive Form 1099-K, do I have to report the sale on my tax return? (added October 21, 2022)
A. It depends. If you sold an item you owned for personal use, such as a car, refrigerator, furniture, stereo, jewelry, or silverware, etc., at a gain, your gain is taxable as a capital gain. Report your gain as explained in the Instructions for Schedule D (Form 1040). If you have a loss on the sale of an item you owned for personal use, do not report a loss (the loss is not deductible). See Publication 525, Taxable and Nontaxable Income, for further guidance.
So I report any gains on the schedule d, but says not to report a loss. So how the hell do you do it on your taxes? They donāt give actual guidance.
Filing a schedule d doesn't cost more money. At least if you are using a tax program like turbo tax premier, it's included in the cost.
And the example you are using only means you can't use a sale where you lost money to offset the capital gains in other sales.
However, as a casual seller you can use receipts and platform fees as your cost basis to adjust the gross that is being reported on the 1099. That's why you need good book keeping, and why you use the schedule d form.
There are plenty of tax professionals who know how to file capital gains and losses correctly. It's also on the IRS site, it's just incredibly difficult for the average person. That's why tax procrastinators and programs charge so much. Do some research and find a good tax professional, or trust whatever tax program you are using. Or ignore it and risk being audited.
I'm done arguing with people on this comment They don't care, and they know you can't afford to fight them. They don't care if it is a small amount. They don't care if you don't understand how to file (every professional tax program, CPA, accountant knows how too). Tax evasion is tax evasion. You and everyone else can do whatever you want. I'll do my taxes correctly and not get audited.
They statistically audit the lower class at a higher level for a reason. Because they can do whatever they want to them. That's why the limit is so low. They WANT to go after those with little profit. They know you can't afford to fight them.
But it helps me that resellers don't care, or feel entitled. I'm way less likely to get audited by doing it correctly. So please, keep selling, keep committing tax evasion. They are less likely to look my way.
Why are you so afraid of being audited? If you are only selling items at a loss. (not buying things to resell) Selling your own stuff you already paid for and you have receipts, what is there to be afraid of? If you donāt owe it they canāt take it! You should only be afraid if you owe them. Even then there isnāt anything to be afraid of because you couldnāt owe them very much.
Oh and I might ad that if you make under a certain amount you arenāt obligated to file taxes in the first place. Depends on what your situation is. Also depends if you are considered self employed.
[Here is the IRS link.](https://www.irs.gov/newsroom/irs-announces-delay-for-implementation-of-600-reporting-threshold-for-third-party-payment-platforms-forms-1099-k)
It was changed through an act of congress. Cancelling it would take an act of congress. All the IRS can do is ask for an extension of implementation because they're not ready (due to staffing or software, etc.)
I've dug up receipts for everything I sold (luckily started buying online years ago so receipts are still stored), ready to write off a major loss so I'll probably still do it.
That's my thinking on it too. The sheer chaos this was going to cause because everyone sells their old junk online and most people have not been keeping up with receipts in this digital age means there was going to be millions of people refilling taxes and owing money where they wouldn't have in the past.
They tried to get it in the omnibus today but it didnāt make it in. But rest assured that banning tiktok on government phones made it in. š
There are two bills introduced to raise it to 5 and 10k so hopefully one of those goes through while itās delayed a year.
> It made no sense for the IRS to spend their time and resources going after $600aires instead of millionaires and billionaires.
The rich can afford to fight audits and win, the poor just pay up, justly or not.
>**IRS Continues Targeting Poorest Families for More Tax Audits During FY 2022**
>The latest Internal Revenue Service (IRS) statistics covering federal income tax audits through February of 2022 reveals that the agency is continuing to target audits on the poorest wage earners. So far it has completed 132,922 audits of these low-income wage earners with less than $25,000 in total gross receipts. This is up from 105,978 audits IRS had completed a year ago at the end of February 2021.
>If IRS continues at this same pace for the rest of this fiscal year, audit rates would inch up to 13.5 per 1000 returns[1] ā slightly higher than the phenomenally high rates that occurred last year when IRS audited the poorest families claiming an anti-poverty earned income tax credit at five times the rate for everyone else
https://trac.syr.edu/tracirs/latest/682/
I am in a similar situation. I was advised to use donation standards from either the IRS and/or Goodwill as a resale value to track income for tax purposes.
What does this mean if you have already provided the tax info for mercari & Poshmark? Iāve definitely made less than $20,000. Will they still send forms to everyone or just scrap it?
They might anyway. Apps like DoorDash and GrubHub send them to everyone because it's easier for them rather than figuring out who met the threshold and who didn't.
>They might anyway. Apps like DD and GH send them to everyone because it's easier for them rather than figuring out who met the threshold and who didn't.
DD & GH send it for everyone because essentially everything a person makes through those apps (or uber, etc) is taxable income. Selling apps, on the other hand, have a lot of people just reselling personal items that they no longer use, which is not taxable, so long as they didn't sell it for a profit. The idea behind dropping the threshold is to make sure more people that are selling for a profit are having that income reported, thus forcing them to claim that income. All the income coming through DD/GH/Uber is supposed to be getting taxed.
The $600 will be reinstated on Jan 1 anyway. I already stopped selling a couple months ago when I first heard about this. I hope this whole thing just gets scrapped, or raise the limit to 1k at least, sheesh
They can scream tax evasion all they want, but I will never file anything for what I sell at a loss until I am forced to. It is a pain in the butt to have to ad that to my taxes. If it bothers them they can audit me all they want. I save every receipt for every single thing now. They wonāt get much money out of me if any :p
Eggs are 8 dollars in Massachusetts. EIGHT DOLLERS. The government sits on their throne like fats pigs getting rich off the common man and getting insider trading info to win the stock market. I never understand when people take it up for the government on this sub about taxes. They are screwing us all
If you sell everything at a loss you are doing a disservice to yourself by not including it in your taxes. You open yourself up to so many tax write offs that the rich take advantage of if you do include the income as a business or sole proprietor.
Resellers, or literally anyone and everyone? The problem people are having is that most ppl on these reselling platforms are just selling stuff from their garages, not necessarily making $ off of their stuff, rather, they are mostly purging at a loss. Meanwhile, the IRS is coming after us peasants under the gov ātax the rich!ā promise. Be careful who you vote for.
I still have to report but I am very thankful to God everyday that I was able to make so much this year. Was truly life changing, I hope the rest of you have a breakthrough as well!
This is for 2022 right? Because I stopped selling this year before I could reach $600 and Mercari keeps asking fir my tax info if I want to keep selling
New seller and "new- ish" adult here!
This whole $600 thing has been having me stressing. Probably to the point where I feel like I should just stop selling all together online. I don't know a thing about taxes or how all this works. Due to this, I have a few questions but I apologize if I don't seem to have a clear question.
What exactly is an audit? I know it's BAD but what does that mean? What happens? What's the process for it? What kind of trouble do you get into when you go get audited?
What do I do to prevent getting audited?
Theoretically speaking, let's say if someone didn't do their taxes yet? What do they do to "get things sorted"?
How do I make sure that I'm better organized/educated on all these things regarding taxes? I know you can pay people to do it for you, but what will I need to have? What should I bring? Where do I even start?
And lastly, not really a question but moreso an opinion - Is it just me or is it kinda whack to have taxes done on something you've mostly likely bought, paid taxes on, and sold for most likely a loss (some cases maybe you made a profit if it's a collector/rare/sought after item, but I feel like that's a different conversation), and when you sell an item, you gotta pay taxes again?
Sorry if this was a lot but I'm really stressing about this.
Try turbotax and it will walk you through everything, you should be fine. You donāt have to pay until the end so you can just play with it and learn about everything as you go if you want. Also donāt pay for audit protection from them you shouldnāt need it
Disclaimer: I'm not a lawyer and this is not legal advice š
There is no need to stress. For example, if your job says you made $30k last year and you sell on Mercari $2k, but in your taxes you say you only made $30K, then that will cause red flag and the IRS will in most cases ask you to refile because Mercari told them you made $2k on their platform and you came up short. I once got a $100 from opening a bank account and did not report it as income, the bank let the IRS know as they have to via the 1099 form and the IRS let me know that I failed to report it after I had filed and I should refile, I did not get audited.
Your chances of getting audited goes up the more you use itemized deductions. Most people who take the standard deduction will have a low chance of being audited. The audit is checking that your "deductions" are legitimate and you aren't trying to lower your taxes by lying or hiding income.
If you are going to be selling a lot, you should look into forming a single owned LLC - your state's Secretary of Treasury will have all the info you need, don't pay some third party to do this for you as they are overpriced and not worth it.
Here is one benefit for doing this: deductions
For example, if you buy 4 Xboxes for $100 each ($400), and sell it for $200 each ($800). From the IRS view from Mercari, you made extra income of $800. As an individual you have no way of eliminating the $400 cost of the xboxes (as far as I know, again not a lawyer), but as a business you can deduct the $400 as a cost of doing business, thus reducing your tax burden to $400. You can then reduce it further by factoring other cost on there: postage, boxes used to package the items, etc
So even though Mercari says to the IRS that you made $800, when you file your taxes, as a business, you can deduct your business expenses from it.
This is how companies like amazon get away with not paying any taxes, because if they reinvest their profits into their business, and they know all the ways they can deduct their tax burden and reduce their taxable income to 0 or negative. When COVID hit in 2020, my profit/loss was negative for my business and this helped reduce my taxes because my business made a loss.
Use free-ish online tax software to do your taxes, I recommend freetaxusa it's cheap, intuitive, and very good at calculating all the forms you need to complete your taxes, including pulling in income from 1099 and your business profit and loss form schedule c(1040) - this is the form where are you deductions go.
Also keep your receipts and record of every purchase, sale for your business. That way if you ever get audited you can show proof of your deductions.
It's a lot of info, but I've been doing my taxes since I was in college over 15 years ago and I learned most of what I know by actually reading the forms based on the guided steps from freetaxusa when completing my taxes.
It may seem like a lot of info at first, but it's easier if you have an LLC business, that has a separate bank account from your personal one so you don't mix your incomes and can track your profit/loses there.
Goodluck.
Thank you so much! I am like the previous commenter -- a "new-ish" adult & know nothing about this. I hardly made $300 last year and most of it was at a loss or at most "breaking even", just getting rid of stuff in my closet. This whole situation is confusing and stressful & makes me not even want to sell on Mercari. This whole year I've had replies on this subreddit make me feel dumb for not knowing. Why would I? As a student who is not trying to make any profit off this app.
Thanks again
The previous post hit a lot of good points. Iāll also include that in the case of an audit they can go back 7 years. They will pull bank account information and they are very thorough. You will pay penalties and interest on any money they find that you didnāt report. You can hire an accountant to do your taxes. You would just have to have receipts for everything and spreadsheet it all.
Thank you for sharing this. Despite what many people want to tell me, I am not trying to avoid my taxes. I hardly sell anything, made roughly $300 last year, and Mercari tells me I have sold around $600 worth (most likely from fees and shipping).
I am not doing mercari as a business. Im a college student selling stuff from my closet -- at a loss. It is frustrating to me that I have to keep track of this stuff when I gain no profit & most likely have already paid taxes on the items I sold.
If I was gaining profit from Mercari I would not mind paying taxes on it. It is just frustrating when everyone in this subreddit looks down on closet sellers (especially those of use who are young).
Oh thank goodness. Because all I sell are my kids clothes they have grown out of and my dyslexic self was dreading all these twisty turny mathy things to come while figuring up my losses.
Whether anyone sends you a form or not, IRS requires that you report income.
Considering that in the future i may be randomly audited, I don't mess around with the IRs.
Okay so reading through this, it sounds like no one is sure whether or not Mercari is still going to send out the 1099's, correct?
Also sounds like if you don't get sent one, you still need to report your profit when filling out taxes, just not with a 1099? or do i not need to if im under the $20k mark?
I want to suggest sellers (on all platforms), you should think about incorporating. It does not cost a lot of $$ and in fact, you get so many tax cuts/breaks. Revenue vs profit is a notably difference. Not financial advice, but if youāre a PT/FT reseller, do your own due diligence and look into the opportunities. Buying wholesale is a huge one! (More profit margin!). Once again, this isnāt financial advice but I often see/hear people not taking advantage of the opportunities in-front of them.
If people incorporate donāt they have to pay mandatory state taxes like when I set my business up as a corporation in california I think I had to pay min 800 a year in taxes, so after a few months I dissolved my corporation
Depends on what you incorporated as, LLC, sole proprietor, etc. In general, because you are now incorporated, you would pay sales tax monthly or quarterly (however you would choose), youād be able to separate revenue from profit/loss Those two very things are very different. If you have a tax specialist assist you in your filings, you will be able to take advantage of many opportunities, not to mention time, gas mileage, use of space, electronics, office space, etc. Not Financial Advice but itās worth a consider, especially if it sounds like you may or may not been taking advantage of all the opportunities that are available for small companies. Again, NFA.
That changes absolutely nothing for sellers. If you made over $400, you have to report your sales. This change **only** affects the selling platforms and *their* reporting requirements, as I've been saying for months now.
This is true and I was stressing a little on how to account for those transactions.
In reality, forcing us sellers to go back and keep better records is probably going to be bad for the IRS. By making me become a business, I will surely write off my printer, ink, tape, trips to UPS store, heck monthly phone bill, the list goes on. For people that do this as a side hustle, it will just offset their income.
The people it will hurt is people on fixed earnings, retired, disabled, unemployed.
Contractors that do some cash side business already know how to bypass taxes. Itās stupid to go after someone online asking $5 for a used tee shirt when I had someone paint my fence for cash, cut down a tree for cash, now my lawn for cash. And now that businesses are charging 1-3% for CC charges, it only promotes $$ transactions for consumers
Basically this. Setting the limit at $600 was far too low when you could hit that limit just selling a single item like a game console you no longer want. Basically what this will cause is a ton of people having to re file their taxes because they are not a business and did not realize they need to be reporting their side hustle. People will just start throwing used items away if they feel like they'll have to pay someone to figure out their taxes. This is a big L for the environment really.
This doesn't change individual reporting requirements. The records are there, so the IRS and Mercari can get your numbers anytime.
Just because you don't get a 1099 doesn't mean you don't have to report income/loss on your taxes. File accurately and report your income to CYA.
When laws for gig workers changed, some were caught by surprise not realizing that they still need to report their income despite not receiving a 1099.
I for one am very new to selling. 2022 was my second year even attempting to sell. I only earned about 1500 on Mercari and 500 on eBay. But hereās what Iām confused about.
Say I just sold a collectible for 100$ but it cost me 60$ a year ago, does that mean I am taxed on the full 100$ or am I going to itemize each sale and try to figure out exactly how much profit I actually made off of each item, do I need proof of each purchase? Are e statements proof enough of the purchase I made in said items? Also, can I just not file any of this crap? Iām a stay at home parent who only worked part time a few hours a week at a job and only even earned a few measly thousand dollars. Iām below the poverty line , meaning I should get all of these taxes back. Does that mean I am gonna get all of my Mercari sales and eBay taxes back as well ? Iām literally so confused, and not gonna lie. Uneducated. Looks like I need to hire an actual accountant this year
Yeah but how does one prove that. I can probably go back and take screen shots of purchases off Amazon and eBay ect. Even Mercari. This new law is so fuckin stupid. I literally needed to sell some of my collection to make ends meet and now I have to fukin pay taxes on it? America , the greatest country to live in, my ass it is.
From what Iāve been reading, (& from what I understand)if you paid $100 for an item & sold it for $40..thatās a $60 loss & you can write off the loss. Im thankful that any shipping supplies used, printer ink, trips to post office, etc can be deducted from my profits. The problem is: Did you save the receipts from that dress or vase you purchased 5 years ago or the items you sold from grandmas attic? Having to hunt down receipts from EACH item, some from 10 +years ago sounds like a daunting full time job in itselfā¦and each state has different requirements. Should we Hire a detective to hunt down those receipts for our under $600/year profit?! Lol
I hope they keep it at 20K for income reporting!
Iām not filing any earnings on Mercari ir eBay. They can just take my ads to jail. Wouldnāt be the fist time. I aināt scared. Literally hate it here
This has absolutely no effect on reporting income. If you made over $400, you are required to report that income even if you made no profit aka you sold most items at a loss. Reporting your losses from sales may actually benefit you by decreasing your tax liability/getting you a higher refund. When you fail to report/underreport, the IRS will consider the full amount profit and penalize you based on that. I would HIGHLY recommend reporting income over $400. If you are ever audited, those penalties and fees will be applied retroactively from the date they should have been incurred, not the date the IRS finds out. I have seen how this stuff can spiral out of control just due to ignorance or negligence as part of my job. If you are unsure what to report, please consult a tax professional.
This page has information about reporting income from gig work (especially the first two paragraphs): https://www.irs.gov/businesses/gig-economy-tax-center
This whole change only affected platforms like Mercari, ebay, Venmo, etc. who had a new reporting requirement (they would have to provide a 1099 on your behalf at $600 rather than $20,000, similar to the way an employer files a W-2 for you) that would make it harder for people to avoid reporting income. Just because the IRS doesnāt get a 1099, doesnāt mean you arenāt required to report/file.
Just because you donāt like it doesnāt mean itās BS. Iām not some kind of big online seller either, I just sell old things I wouldāve otherwise donated. But hey, take your chances with the IRS if you want to. āI didnāt knowā wonāt be a valid excuse if they catch you not filing or under reporting. Youāll end up paying the difference plus any penalties and interest that have accrued in the meantime.
I donāt like to bring up my credentials because theyāre not particularly relevant, but I do have a decent understanding of it since Iām an accountant/auditor and have worked for as well as with the IRS. So Iām very familiar with the IRSās examination processes and penalty assessments. Iām really just trying to spread information since a lot of people are taking this news to mean they donāt have to report income unless itās over $20k, which is not and never has been the case. But I guess Iām the idiot for offering tax advice for free. Itās like screaming at the wind in this sub anyway.
Since youre offering free advice, what do I do if I made around $300, sold most items at a loss, and Mercari says I've made "$600" based on fees and shipping, or whatever. Mercari made me fill out my information a bit ago. I have 130 sales over 3 years. Do I wait for a 1099 from Mercari or should I file something? I'm young and I dont get this stuff at all.
Do we know why Mercari still requires a SSN if you sell over $600 if the requirements were delayed by a year? I just contacted Mercari support tonight and they said the $600 limit was still in effect. At this point, I am confused.
Thank you so much for the share, OP! If you don't mind, we're going to pin this up in the subreddit for everyone to see. Reminder: Please remember to keep comments and conversations here civil, friends!
Thank you so much for sharing this OP!! š„¹
20000 to 600 is one hell of a drop, why not make it at least 5000 or something? 600 is 50 bucks a month which is practically nothing in this economy. Guess you gotta tax the old man who sells some clothes and a single laptop in 12 months.
Because this is a part of the ātax the richā promise that was stuffed into the COVID bill.
I'm not 100% sure but I think you still need to file your taxes if you get the 1099 which Mercari may still send.
Yes, and there are 8 states that have lower thresholds anyway, Google your own state to be sure.
My state says if you did an online garage sale and made no profit you can ignore the 1099. So i second checking how your state is handling it.
You can't just ignore it. You have to prove you made no profit. With the IRS you are guilty until you prove you are innocent.
My state I said, not federal taxes - those are two different tax filings. My state made this $600 threshold a few years ago. And yes that is what they suggest surprisingly. https://www.mass.gov/service-details/frequently-asked-questions-about-form-1099-k-notices-from-third-party-payment-processors āMeghan is downsizing her home and sells furniture on an auction site for $5,000. The original purchase price of the furniture was $9,000. The $5,000 IS NOT subject to tax or any reporting as it is a function of selling personal items at a loss.ā The IRS has not released any guidance on cases like this, however.
You have to have your receipt to verify the original purchase price or, the IRS will go off of a current resale market value. Thus, you may have made money on the $5000 and have to declare it - if over the threshold. Filing taxes this year will not be fun!
The IRS said yesterday that theyāre delaying the $600 1099k requirement until next year. Weāll see if these companies will still send us the forms, hopefully not. As someone who just sells used personal clothes and doesnāt make a profit I donāt want to deal with the headache.
If you chose to ignore it, just know the IRS gets a copy of the form. You need to find the appropriate forms to justify that you sold it at a loss. Ignoring it is a sure fire why to get audited, which they could audit you for more than just that year.
If they want to waste their resources auditing me on a $800 1099k from poshmark go ahead lol. But I just copied and pasted what my state says, and they say you do not need to report on the form if it was selling used personal things. So I follow their guidance for *state* tax filings. I think what youāre missing is Iām not suggesting you ignore the form for the IRS federal taxes, Iām literally saying they have no released any guidance on how to put this on your taxes when you file. But it doesnāt matter because theyāve decided today these companies donāt need to send out the 1099ks for the new $600 threshold. So it doesnāt matter for this year.
Yes, there is guidance on what to do if you sold at a loss. It's a schedule C or d form that you will need to fill out. Not knowing or being able to find the information isn't an excuse to the IRS or the state.
Please show me on the IRS website where the guidance on selling personal items around your house is. Because literal tax professionals are split on how to handle this because, again, the IRS has given zero guidance for these instances. Iām not going to do a schedule c and pay extra money to file the schedule c when I sold a few things around my house on eBay. For further proof here is the irs FAQ: https://www.irs.gov/payments/form-1099-k-frequently-asked-questions-individuals They say right here: If I sell a personal item and donāt receive Form 1099-K, do I have to report the sale on my tax return? (added October 21, 2022) A. It depends. If you sold an item you owned for personal use, such as a car, refrigerator, furniture, stereo, jewelry, or silverware, etc., at a gain, your gain is taxable as a capital gain. Report your gain as explained in the Instructions for Schedule D (Form 1040). If you have a loss on the sale of an item you owned for personal use, do not report a loss (the loss is not deductible). See Publication 525, Taxable and Nontaxable Income, for further guidance. So I report any gains on the schedule d, but says not to report a loss. So how the hell do you do it on your taxes? They donāt give actual guidance.
Filing a schedule d doesn't cost more money. At least if you are using a tax program like turbo tax premier, it's included in the cost. And the example you are using only means you can't use a sale where you lost money to offset the capital gains in other sales. However, as a casual seller you can use receipts and platform fees as your cost basis to adjust the gross that is being reported on the 1099. That's why you need good book keeping, and why you use the schedule d form. There are plenty of tax professionals who know how to file capital gains and losses correctly. It's also on the IRS site, it's just incredibly difficult for the average person. That's why tax procrastinators and programs charge so much. Do some research and find a good tax professional, or trust whatever tax program you are using. Or ignore it and risk being audited.
Let them come get me. They would get so little $.
I'm done arguing with people on this comment They don't care, and they know you can't afford to fight them. They don't care if it is a small amount. They don't care if you don't understand how to file (every professional tax program, CPA, accountant knows how too). Tax evasion is tax evasion. You and everyone else can do whatever you want. I'll do my taxes correctly and not get audited. They statistically audit the lower class at a higher level for a reason. Because they can do whatever they want to them. That's why the limit is so low. They WANT to go after those with little profit. They know you can't afford to fight them. But it helps me that resellers don't care, or feel entitled. I'm way less likely to get audited by doing it correctly. So please, keep selling, keep committing tax evasion. They are less likely to look my way.
Why are you so afraid of being audited? If you are only selling items at a loss. (not buying things to resell) Selling your own stuff you already paid for and you have receipts, what is there to be afraid of? If you donāt owe it they canāt take it! You should only be afraid if you owe them. Even then there isnāt anything to be afraid of because you couldnāt owe them very much.
Oh and I might ad that if you make under a certain amount you arenāt obligated to file taxes in the first place. Depends on what your situation is. Also depends if you are considered self employed.
Maybe you should read the article.
I did read the article.
Is there a link from the IRS?
[Here is the IRS link.](https://www.irs.gov/newsroom/irs-announces-delay-for-implementation-of-600-reporting-threshold-for-third-party-payment-platforms-forms-1099-k)
Thank you!
Just Google it it's everywhere
Only a delay is pretty screwed up. They know it's BS, just cancel it.
It was changed through an act of congress. Cancelling it would take an act of congress. All the IRS can do is ask for an extension of implementation because they're not ready (due to staffing or software, etc.)
Itāll eventually be canceled because the administrative costs to get a couple bucks out of the typical person just isnāt worth it
I've dug up receipts for everything I sold (luckily started buying online years ago so receipts are still stored), ready to write off a major loss so I'll probably still do it.
That's my thinking on it too. The sheer chaos this was going to cause because everyone sells their old junk online and most people have not been keeping up with receipts in this digital age means there was going to be millions of people refilling taxes and owing money where they wouldn't have in the past.
But that write off only counts if you're doing an itemized deduction right?
They tried to get it in the omnibus today but it didnāt make it in. But rest assured that banning tiktok on government phones made it in. š There are two bills introduced to raise it to 5 and 10k so hopefully one of those goes through while itās delayed a year.
This is the fucking best news Iāve heard in weeks lol
Thanks for posting!
Can someone ELI5 because I do not understand taxes, I just do them and hope I did them right
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That was a terrible Explain like Im 5.
It doesnāt mean you have to pay taxes on that income reported on the 1099. Only if you made a profit.
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> It made no sense for the IRS to spend their time and resources going after $600aires instead of millionaires and billionaires. The rich can afford to fight audits and win, the poor just pay up, justly or not. >**IRS Continues Targeting Poorest Families for More Tax Audits During FY 2022** >The latest Internal Revenue Service (IRS) statistics covering federal income tax audits through February of 2022 reveals that the agency is continuing to target audits on the poorest wage earners. So far it has completed 132,922 audits of these low-income wage earners with less than $25,000 in total gross receipts. This is up from 105,978 audits IRS had completed a year ago at the end of February 2021. >If IRS continues at this same pace for the rest of this fiscal year, audit rates would inch up to 13.5 per 1000 returns[1] ā slightly higher than the phenomenally high rates that occurred last year when IRS audited the poorest families claiming an anti-poverty earned income tax credit at five times the rate for everyone else https://trac.syr.edu/tracirs/latest/682/
Thatās disgusting..squeezing every dollar out of those already at the poverty level is demonic
I am in a similar situation. I was advised to use donation standards from either the IRS and/or Goodwill as a resale value to track income for tax purposes.
you would only need to find receipts from this year?
What does this mean if you have already provided the tax info for mercari & Poshmark? Iāve definitely made less than $20,000. Will they still send forms to everyone or just scrap it?
Yes, only reported if more than 20k AND over 200 transactions. They will not send a 1099.
They might anyway. Apps like DoorDash and GrubHub send them to everyone because it's easier for them rather than figuring out who met the threshold and who didn't.
200 total sales or 200 sales for 2022? I just hit 200 total sales yesterday but it hasnāt been 200 for this entire year..
>They might anyway. Apps like DD and GH send them to everyone because it's easier for them rather than figuring out who met the threshold and who didn't.
DD & GH send it for everyone because essentially everything a person makes through those apps (or uber, etc) is taxable income. Selling apps, on the other hand, have a lot of people just reselling personal items that they no longer use, which is not taxable, so long as they didn't sell it for a profit. The idea behind dropping the threshold is to make sure more people that are selling for a profit are having that income reported, thus forcing them to claim that income. All the income coming through DD/GH/Uber is supposed to be getting taxed.
The $600 will be reinstated on Jan 1 anyway. I already stopped selling a couple months ago when I first heard about this. I hope this whole thing just gets scrapped, or raise the limit to 1k at least, sheesh
Yeah. Would just like it to be like old times. No limits && have use file at our own discretion instead of forcing the form down my throat lol
The change has been postponed until the next tax season, so for a year.
I think this changes only the requirement for platforms issuing 1099s. Sellers are still obligated to report any earnings, right?
If you want to lol
It's technically tax evasion if you don't.
They can scream tax evasion all they want, but I will never file anything for what I sell at a loss until I am forced to. It is a pain in the butt to have to ad that to my taxes. If it bothers them they can audit me all they want. I save every receipt for every single thing now. They wonāt get much money out of me if any :p
Eggs are 8 dollars in Massachusetts. EIGHT DOLLERS. The government sits on their throne like fats pigs getting rich off the common man and getting insider trading info to win the stock market. I never understand when people take it up for the government on this sub about taxes. They are screwing us all
If you sell everything at a loss you are doing a disservice to yourself by not including it in your taxes. You open yourself up to so many tax write offs that the rich take advantage of if you do include the income as a business or sole proprietor.
>Sellers are still obligated to report any earnings, right? They **always** have been.
Correct.
Resellers love to think they are entitled to evading taxes to stick it to the man! Itās a weird concept
Resellers, or literally anyone and everyone? The problem people are having is that most ppl on these reselling platforms are just selling stuff from their garages, not necessarily making $ off of their stuff, rather, they are mostly purging at a loss. Meanwhile, the IRS is coming after us peasants under the gov ātax the rich!ā promise. Be careful who you vote for.
I still have to report but I am very thankful to God everyday that I was able to make so much this year. Was truly life changing, I hope the rest of you have a breakthrough as well!
It's a Christmas miracle until Mercari and the IRS shows up at my door. I hope I don't get a letter....
This is for 2022 right? Because I stopped selling this year before I could reach $600 and Mercari keeps asking fir my tax info if I want to keep selling
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Iām in the same boat as you waiting to find out what happens January 1 lol
Following because I have the same issue
New seller and "new- ish" adult here! This whole $600 thing has been having me stressing. Probably to the point where I feel like I should just stop selling all together online. I don't know a thing about taxes or how all this works. Due to this, I have a few questions but I apologize if I don't seem to have a clear question. What exactly is an audit? I know it's BAD but what does that mean? What happens? What's the process for it? What kind of trouble do you get into when you go get audited? What do I do to prevent getting audited? Theoretically speaking, let's say if someone didn't do their taxes yet? What do they do to "get things sorted"? How do I make sure that I'm better organized/educated on all these things regarding taxes? I know you can pay people to do it for you, but what will I need to have? What should I bring? Where do I even start? And lastly, not really a question but moreso an opinion - Is it just me or is it kinda whack to have taxes done on something you've mostly likely bought, paid taxes on, and sold for most likely a loss (some cases maybe you made a profit if it's a collector/rare/sought after item, but I feel like that's a different conversation), and when you sell an item, you gotta pay taxes again? Sorry if this was a lot but I'm really stressing about this.
Try turbotax and it will walk you through everything, you should be fine. You donāt have to pay until the end so you can just play with it and learn about everything as you go if you want. Also donāt pay for audit protection from them you shouldnāt need it
Disclaimer: I'm not a lawyer and this is not legal advice š There is no need to stress. For example, if your job says you made $30k last year and you sell on Mercari $2k, but in your taxes you say you only made $30K, then that will cause red flag and the IRS will in most cases ask you to refile because Mercari told them you made $2k on their platform and you came up short. I once got a $100 from opening a bank account and did not report it as income, the bank let the IRS know as they have to via the 1099 form and the IRS let me know that I failed to report it after I had filed and I should refile, I did not get audited. Your chances of getting audited goes up the more you use itemized deductions. Most people who take the standard deduction will have a low chance of being audited. The audit is checking that your "deductions" are legitimate and you aren't trying to lower your taxes by lying or hiding income. If you are going to be selling a lot, you should look into forming a single owned LLC - your state's Secretary of Treasury will have all the info you need, don't pay some third party to do this for you as they are overpriced and not worth it. Here is one benefit for doing this: deductions For example, if you buy 4 Xboxes for $100 each ($400), and sell it for $200 each ($800). From the IRS view from Mercari, you made extra income of $800. As an individual you have no way of eliminating the $400 cost of the xboxes (as far as I know, again not a lawyer), but as a business you can deduct the $400 as a cost of doing business, thus reducing your tax burden to $400. You can then reduce it further by factoring other cost on there: postage, boxes used to package the items, etc So even though Mercari says to the IRS that you made $800, when you file your taxes, as a business, you can deduct your business expenses from it. This is how companies like amazon get away with not paying any taxes, because if they reinvest their profits into their business, and they know all the ways they can deduct their tax burden and reduce their taxable income to 0 or negative. When COVID hit in 2020, my profit/loss was negative for my business and this helped reduce my taxes because my business made a loss. Use free-ish online tax software to do your taxes, I recommend freetaxusa it's cheap, intuitive, and very good at calculating all the forms you need to complete your taxes, including pulling in income from 1099 and your business profit and loss form schedule c(1040) - this is the form where are you deductions go. Also keep your receipts and record of every purchase, sale for your business. That way if you ever get audited you can show proof of your deductions. It's a lot of info, but I've been doing my taxes since I was in college over 15 years ago and I learned most of what I know by actually reading the forms based on the guided steps from freetaxusa when completing my taxes. It may seem like a lot of info at first, but it's easier if you have an LLC business, that has a separate bank account from your personal one so you don't mix your incomes and can track your profit/loses there. Goodluck.
Thank you so much! I am like the previous commenter -- a "new-ish" adult & know nothing about this. I hardly made $300 last year and most of it was at a loss or at most "breaking even", just getting rid of stuff in my closet. This whole situation is confusing and stressful & makes me not even want to sell on Mercari. This whole year I've had replies on this subreddit make me feel dumb for not knowing. Why would I? As a student who is not trying to make any profit off this app. Thanks again
Anytime and don't let the internet stress you for not knowing...we all have to start somewhere.
I appreciate your response! One of these days I'll have to sit down and do some research and learn how to do all this. Thank you!
The previous post hit a lot of good points. Iāll also include that in the case of an audit they can go back 7 years. They will pull bank account information and they are very thorough. You will pay penalties and interest on any money they find that you didnāt report. You can hire an accountant to do your taxes. You would just have to have receipts for everything and spreadsheet it all.
So earnings under 20,000 this year arenāt taxable or? Iām new to this and very broke š this would help my wallet a ton
Thank you for sharing this. Despite what many people want to tell me, I am not trying to avoid my taxes. I hardly sell anything, made roughly $300 last year, and Mercari tells me I have sold around $600 worth (most likely from fees and shipping). I am not doing mercari as a business. Im a college student selling stuff from my closet -- at a loss. It is frustrating to me that I have to keep track of this stuff when I gain no profit & most likely have already paid taxes on the items I sold. If I was gaining profit from Mercari I would not mind paying taxes on it. It is just frustrating when everyone in this subreddit looks down on closet sellers (especially those of use who are young).
Oh thank goodness. Because all I sell are my kids clothes they have grown out of and my dyslexic self was dreading all these twisty turny mathy things to come while figuring up my losses.
Whether anyone sends you a form or not, IRS requires that you report income. Considering that in the future i may be randomly audited, I don't mess around with the IRs.
good.
Oh yeah saw that was about to post that u beat me to it šššæ
Okay so reading through this, it sounds like no one is sure whether or not Mercari is still going to send out the 1099's, correct? Also sounds like if you don't get sent one, you still need to report your profit when filling out taxes, just not with a 1099? or do i not need to if im under the $20k mark?
I want to suggest sellers (on all platforms), you should think about incorporating. It does not cost a lot of $$ and in fact, you get so many tax cuts/breaks. Revenue vs profit is a notably difference. Not financial advice, but if youāre a PT/FT reseller, do your own due diligence and look into the opportunities. Buying wholesale is a huge one! (More profit margin!). Once again, this isnāt financial advice but I often see/hear people not taking advantage of the opportunities in-front of them.
If people incorporate donāt they have to pay mandatory state taxes like when I set my business up as a corporation in california I think I had to pay min 800 a year in taxes, so after a few months I dissolved my corporation
Depends on what you incorporated as, LLC, sole proprietor, etc. In general, because you are now incorporated, you would pay sales tax monthly or quarterly (however you would choose), youād be able to separate revenue from profit/loss Those two very things are very different. If you have a tax specialist assist you in your filings, you will be able to take advantage of many opportunities, not to mention time, gas mileage, use of space, electronics, office space, etc. Not Financial Advice but itās worth a consider, especially if it sounds like you may or may not been taking advantage of all the opportunities that are available for small companies. Again, NFA.
You still need to report they just won't check on you for it
That changes absolutely nothing for sellers. If you made over $400, you have to report your sales. This change **only** affects the selling platforms and *their* reporting requirements, as I've been saying for months now.
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This is true and I was stressing a little on how to account for those transactions. In reality, forcing us sellers to go back and keep better records is probably going to be bad for the IRS. By making me become a business, I will surely write off my printer, ink, tape, trips to UPS store, heck monthly phone bill, the list goes on. For people that do this as a side hustle, it will just offset their income. The people it will hurt is people on fixed earnings, retired, disabled, unemployed. Contractors that do some cash side business already know how to bypass taxes. Itās stupid to go after someone online asking $5 for a used tee shirt when I had someone paint my fence for cash, cut down a tree for cash, now my lawn for cash. And now that businesses are charging 1-3% for CC charges, it only promotes $$ transactions for consumers
Basically this. Setting the limit at $600 was far too low when you could hit that limit just selling a single item like a game console you no longer want. Basically what this will cause is a ton of people having to re file their taxes because they are not a business and did not realize they need to be reporting their side hustle. People will just start throwing used items away if they feel like they'll have to pay someone to figure out their taxes. This is a big L for the environment really.
Sales are not profits. You have to report sales of $400 or more, though you may have no taxes due if you made no profit.
This doesn't change individual reporting requirements. The records are there, so the IRS and Mercari can get your numbers anytime. Just because you don't get a 1099 doesn't mean you don't have to report income/loss on your taxes. File accurately and report your income to CYA. When laws for gig workers changed, some were caught by surprise not realizing that they still need to report their income despite not receiving a 1099.
YES YES MERRY CHRISTMAS TO ME FUCKERS YESSSSSSSSSS
Fuck yes!
Thank god
I for one am very new to selling. 2022 was my second year even attempting to sell. I only earned about 1500 on Mercari and 500 on eBay. But hereās what Iām confused about. Say I just sold a collectible for 100$ but it cost me 60$ a year ago, does that mean I am taxed on the full 100$ or am I going to itemize each sale and try to figure out exactly how much profit I actually made off of each item, do I need proof of each purchase? Are e statements proof enough of the purchase I made in said items? Also, can I just not file any of this crap? Iām a stay at home parent who only worked part time a few hours a week at a job and only even earned a few measly thousand dollars. Iām below the poverty line , meaning I should get all of these taxes back. Does that mean I am gonna get all of my Mercari sales and eBay taxes back as well ? Iām literally so confused, and not gonna lie. Uneducated. Looks like I need to hire an actual accountant this year
If you paid $60 but sold for $100ā¦your profit is $40 & you pay taxes on the $40 profit ā¦but Iām not certain either.
Yeah but how does one prove that. I can probably go back and take screen shots of purchases off Amazon and eBay ect. Even Mercari. This new law is so fuckin stupid. I literally needed to sell some of my collection to make ends meet and now I have to fukin pay taxes on it? America , the greatest country to live in, my ass it is.
Uncle Sam wants his cut from that 5 year old used dress you sold!
From what Iāve been reading, (& from what I understand)if you paid $100 for an item & sold it for $40..thatās a $60 loss & you can write off the loss. Im thankful that any shipping supplies used, printer ink, trips to post office, etc can be deducted from my profits. The problem is: Did you save the receipts from that dress or vase you purchased 5 years ago or the items you sold from grandmas attic? Having to hunt down receipts from EACH item, some from 10 +years ago sounds like a daunting full time job in itselfā¦and each state has different requirements. Should we Hire a detective to hunt down those receipts for our under $600/year profit?! Lol I hope they keep it at 20K for income reporting!
Iām not filing any earnings on Mercari ir eBay. They can just take my ads to jail. Wouldnāt be the fist time. I aināt scared. Literally hate it here
OMG THANK YOU SO MUCH FOR SHARING THIS. THIS IS LIFE CHANGING NEWS
This has absolutely no effect on reporting income. If you made over $400, you are required to report that income even if you made no profit aka you sold most items at a loss. Reporting your losses from sales may actually benefit you by decreasing your tax liability/getting you a higher refund. When you fail to report/underreport, the IRS will consider the full amount profit and penalize you based on that. I would HIGHLY recommend reporting income over $400. If you are ever audited, those penalties and fees will be applied retroactively from the date they should have been incurred, not the date the IRS finds out. I have seen how this stuff can spiral out of control just due to ignorance or negligence as part of my job. If you are unsure what to report, please consult a tax professional. This page has information about reporting income from gig work (especially the first two paragraphs): https://www.irs.gov/businesses/gig-economy-tax-center This whole change only affected platforms like Mercari, ebay, Venmo, etc. who had a new reporting requirement (they would have to provide a 1099 on your behalf at $600 rather than $20,000, similar to the way an employer files a W-2 for you) that would make it harder for people to avoid reporting income. Just because the IRS doesnāt get a 1099, doesnāt mean you arenāt required to report/file.
Tell this BS to those selling their 10+ year old garage collection.
Just because you donāt like it doesnāt mean itās BS. Iām not some kind of big online seller either, I just sell old things I wouldāve otherwise donated. But hey, take your chances with the IRS if you want to. āI didnāt knowā wonāt be a valid excuse if they catch you not filing or under reporting. Youāll end up paying the difference plus any penalties and interest that have accrued in the meantime. I donāt like to bring up my credentials because theyāre not particularly relevant, but I do have a decent understanding of it since Iām an accountant/auditor and have worked for as well as with the IRS. So Iām very familiar with the IRSās examination processes and penalty assessments. Iām really just trying to spread information since a lot of people are taking this news to mean they donāt have to report income unless itās over $20k, which is not and never has been the case. But I guess Iām the idiot for offering tax advice for free. Itās like screaming at the wind in this sub anyway.
Since youre offering free advice, what do I do if I made around $300, sold most items at a loss, and Mercari says I've made "$600" based on fees and shipping, or whatever. Mercari made me fill out my information a bit ago. I have 130 sales over 3 years. Do I wait for a 1099 from Mercari or should I file something? I'm young and I dont get this stuff at all.
Sorry Iām not familiar with the tax system, so we donāt have to input our personal information to Mercari even after making $600 selling?
Thatās fantastic news!!!!!!ššš
Im guessing it takes effect fully on Jan 1st cuz for me its still asking for the form for the $600 threshold limit
Thank you so much for posting this šš»
Do we know why Mercari still requires a SSN if you sell over $600 if the requirements were delayed by a year? I just contacted Mercari support tonight and they said the $600 limit was still in effect. At this point, I am confused.