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Explain this $600 tax thing to me like I am 12 please...
Posted on 4/2/23 at 9:05 pm
Posted on 4/2/23 at 9:05 pm
I bought a watch several years ago with income that I was taxed on. Then I paid sales tax at the time of the purchase.
Fast forward to now, I sell the watch online. I get paid through PayPal.
I just received notice that the money I am getting through PayPal is being reported as "income" because it exceeds $600.
I sold something that I was taxed on at time of purchase and now I am being taxed again when I sell it? How is that right?
I guess this is why they want to get rid of cash as well. I heard about the $600 thing but assumed it was for people running businesses online. Not for a simple buy / sell one time transaction.
Fast forward to now, I sell the watch online. I get paid through PayPal.
I just received notice that the money I am getting through PayPal is being reported as "income" because it exceeds $600.
I sold something that I was taxed on at time of purchase and now I am being taxed again when I sell it? How is that right?
I guess this is why they want to get rid of cash as well. I heard about the $600 thing but assumed it was for people running businesses online. Not for a simple buy / sell one time transaction.
This post was edited on 4/2/23 at 9:09 pm
51
Posted on 4/2/23 at 9:07 pm to jbgleason
You have to prove it wasn't income... don't you love the IRS!
Posted on 4/2/23 at 9:07 pm to jbgleason
Shut up bigot and pay your fair share.
Posted on 4/2/23 at 9:08 pm to jbgleason
Welcome to the Libertarian Party. Wait until you hear what happens when you die!
Posted on 4/2/23 at 9:09 pm to TheSadvocate
quote:
Joe Biden... clear enough?
Posted on 4/2/23 at 9:12 pm to jbgleason
You basically have to show what you originally paid and what you sold it for. If you made a profit, you owe the tax on that. At least that’s my understanding.
Posted on 4/2/23 at 9:15 pm to jbgleason
quote:
“Will I have to pay taxes when sending and receiving money on PayPal - what exactly is changing? “
“Beginning January 1, 2023, the Internal Revenue Service (IRS) implemented new reporting requirements for payments received for goods and services, which will lower the reporting threshold to $600 USD for the 2023 tax season, from 2022’s threshold of $20,000 USD and 200 transactions.”
Posted on 4/2/23 at 9:16 pm to jbgleason
You can thank Biden for that.
Posted on 4/2/23 at 9:18 pm to jbgleason
quote:
I get paid through PayPal.
Posted on 4/2/23 at 9:22 pm to jbgleason
Ukraine needs another $100BB. Obviously you must want Russia to win.
Posted on 4/2/23 at 9:26 pm to jbgleason
Always do friends and family.
Posted on 4/2/23 at 9:31 pm to jbgleason
If you paid $600 you have $600 basis in the watch. If you sold for $600, you have a gain of zero. Nothing with the taxation changed, just the reporting threshold.
Posted on 4/2/23 at 9:35 pm to LSUSUPERSTAR
quote:
Always do friends and family.
I don’t think this is an option using ebay
Posted on 4/2/23 at 9:37 pm to jbgleason
Should have dismantled and sold each part for $599
Posted on 4/2/23 at 9:46 pm to jbgleason
It has to do with income tax, not retail sales tax
Paypal, Venmo, and similar services now report to the IRS when you receive payments of $600+ and send you a 1099.
When you file your taxes, you deduct the original cost basis of the item you sold. So in the end, if you sold the watch for equal or less than you originally paid for it, then it has no bearing on your taxes. But if you made a profit on the watch, the profit is now taxable income.
Paypal, Venmo, and similar services now report to the IRS when you receive payments of $600+ and send you a 1099.
When you file your taxes, you deduct the original cost basis of the item you sold. So in the end, if you sold the watch for equal or less than you originally paid for it, then it has no bearing on your taxes. But if you made a profit on the watch, the profit is now taxable income.
Posted on 4/2/23 at 9:46 pm to jbgleason
Posted on 4/2/23 at 9:50 pm to LSUSUPERSTAR
quote:Still going to get the 1099 for taxes if its over $600
Always do friends and family.
Only difference with “friends and family” is that Paypal doesn’t charge a fee to the recipient. And there’s no Paypal protection for the sender if you get scammed or there’s a problem and the seller refuses to make it right.
Posted on 4/2/23 at 9:58 pm to jbgleason
quote:
I heard about the $600 thing but assumed it was for people running businesses online
People like you always assume the law is about someone else. You're the problem. It's always about anyone that has money and that means you, every moonlighting maid or baby sitter, they want your money, and more of it.
Posted on 4/2/23 at 10:00 pm to Tiger Prawn
quote:
the profit is now taxable income.
A hypothetical gain was always income subject to tax. In the past, PayPal wasn’t reporting your proceeds to the IRS, so obviously most people wouldn’t report that gain.
With audit risk effectively at zero, unless you have a ton of these reportable transactions, if you want to evade tax like everyone has in the past, you can still easily do it.
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