re: Can somebody explain what is a 1099 tax form?

Correct, I too do not have an LLC and keep receipts of expenses and write everything off at tax time.

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but i'm under the impression that what i've been doing is considered a "hobby". therefore, i can't write off the material it takes me to make the items i sale. or the shipping materials.

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Here’s how to tell the difference between a hobby and a business for tax purposes

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These factors are whether:
The taxpayer carries out activity in a businesslike manner and maintains complete and accurate books and records.
The taxpayer puts time and effort into the activity to show they intend to make it profitable.
The taxpayer depends on income from the activity for their livelihood.
The taxpayer has personal motives for carrying out the activity such as general enjoyment or relaxation.
The taxpayer has enough income from other sources to fund the activity
Losses are due to circumstances beyond the taxpayer's control or are normal for the startup phase of their type of business.
There is a change to methods of operation to improve profitability.
Taxpayer and their advisor have the knowledge needed to carry out the activity as a successful business.
The taxpayer was successful in making a profit in similar activities in the past.
Activity makes a profit in some years and how much profit it makes.
The taxpayer can expect to make a future profit from the appreciation of the assets used in the activity.

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*ETA: a lot of this is just a complicated way to eliminate people from taking deductions on personal expenses by creating non-profitable "businesses". Like, I can say I'm starting a "media content company" and try to deduct all the costs of everything in my life by making a Youtube video about it ("Oh, this channel reviews movies, kitchen equipment, tools, streaming services, online media subscriptions, TVs, AND computer parts!")

If you keep legit records and make a profit, you almost certainly should qualify as a business.

Now, where you have some issues is in potential IP violations, but that's not a tax issue.

Thanks for breaking that down!

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Byrdybyrd05

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If you are just selling old crap and not making a profit, as in buying it at a garage sale and flipping it, then come tax time if you get a 1099 just file expenses as the same amount. I'm not a CPA, but you don't need to stress about $2,000 of ebay crap.

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how are you doing that then? do you have a business license?

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I use TurboTax and if you choose to offset 1099 income you have to pay for the “self employed” version or whatever. It’s $150 or so extra. No LLC or business license, tax ID required.

ETA it will even tell you how much in expenses you need before the $150 pays for itself.

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I use TurboTax and if you choose to offset 1099 income you have to pay for the “self employed” version

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can you pair this with the normal version as well?

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tax ID required.

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doesn't an employer give you this? or is it your SSN?

I've gotten a 1099 from ebay for 5+ years.

This year you will get a 1099 for once you surpass $600 in sales.

That number is your total gross revenue.

Be sure to keep a spreadsheet tracking your shipping costs, ebay costs, promo costs, packaging supplies, miles to post office, store, etc.

The 1099 in and of itself is not the problem. Tracking everything else is.

Just reading this...

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It’s psa sport cards I bought on eBay and just reselling them for the same price to hopefully pay off two credit cards. I just remember seeing that eBay will send 1099 form if you go over $600 for tax time. All this is new to me and just confusing. I just wanted to know what I was looking at when I go over the $600 amount.

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That's your COGS. Save your receipts from those purchases and then do everything I mentioned above as well.

You wanna hear something Interesting? The iRS doesn’t want to deal with this crap either. That’s why they keep finding ways to delay the $600 threshold.

But Congress needed to “count” that income to make it look like it could pay for other spending.

Internal Revenue Code Section 61. All receipts of money (income) is taxable unless excluded.

If you sell $1k of sports cards, deduct all your costs of purchase and sales. If you bought them to keep them for value, it’s a capital gain or loss and your cost plus expenses is your basis.

And as others have said this was always the case, it’s only the reporting that has changed. Reporting improves compliance. How much employee income would you report if there were no W-2s?

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Shouldn't it be illegal for the government to tax something you already paid taxes on when you bought it?

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Two different governments. Sales tax are state and local. Income tax, for this purpose are typically federal (states have not been as aggressive). You are really going to be bitter when you buy and then sell your first home after paying property taxes for years. Governments taxes lots of things more than once. Property tax, sales tax and income tax are all considered different taxes and not considered double taxation.

For EBay, you pay tax on the gains. Very few items actually gain value that are sold on EBay. If it’s occasional sales it may qualify for the yard sale exception to taxes. If it is considered a business, you can use your losses from sales to deduct from other business income, so this is not so terrible for many. Store the items in a certain part of your home and use a business inventory storage write off. Unless you are selling a lot of stuff at a profit, it is hard to imagine an accountant cannot figure out ways to avoid this being a tax hit.

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it asks you if you want to enter any expenses related to your 1099

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do you just upload PDFs of the sales receipts and punch in the prices of everything?


i went ahead and downloaded all of my amazon purchases/receipts from this year related to my Etsy store.