New tax law for selling

[WyoBowhunter21]

How is everyone managing the new tax law? I am trying to sell my Cimarron and needed to use goods and services. With the new tax code, I would be hit with a 24% income tax on $800. That’s $192. Plus the shipping, and PayPal fees. Just wanted to hear some thoughts and discussion as I am pretty frustrated right now. How does our future of selling gear look?

 

[TheBootBowhunting]

I believe you can only be taxed on the PROFIT you make off the item. If you buy an item for 1000, and sell it for 750, you lost money on it and there would be no tax. If you sold it for 1200, you would be taxed on the 200 profit. Most places I buy things from have online order history, but its probably going to require you keep a folder and either store a copy digitally or physically print a receipt and throw in a folder.

I cant think of any item Ive ever sold on here that I made a profit. Most of the time its a pretty decent loss. Off the top my head 25%ish depending on resale of the brand/item. Im selling a bow sight in the classifieds that I paid well over 400 for the package, and currently listed at 215 - Ill just need to keep the receipt but I will lose about half of what I paid for it at the end of the day so there will be no tax. So it just creates something else you need to keep track of. I am not well versed enough in tax law to know if you are getting a 1099 for sales, if that constitues anything like self employment and you can claim an actual LOSS on taxes.



From a nytimes article:

Casual users of online platforms may receive the forms even if the payments don’t reflect taxable income, said Andrew Lautz, director of federal policy with the conservative National Taxpayers Union, which supports a higher reporting threshold. Used items generally don’t result in taxable income if they are resold for less than what the seller originally paid, he said.

Say you sold a used piano on eBay for $1,000, but you paid $2,500 when you bought it new. “You don’t owe taxes,” Mr. Lautz said.

Under the new rule, however, eBay will send both you and the I.R.S. a Form 1099-K, showing you were paid $1,000. The company knows nothing about your initial purchase; it’s up to you to document the original price to show that no tax is owed.

 

[WyoBowhunter21]

I believe you can only be taxed on the PROFIT you make off the item. If you buy an item for 1000, and sell it for 750, you lost money on it and there would be no tax. If you sold it for 1200, you would be taxed on the 200 profit. Most places I buy things from have online order history, but its probably going to require you keep a folder and either store a copy digitally or physically print a receipt and throw in a folder.

I cant think of any item Ive ever sold on here that I made a profit. Most of the time its a pretty decent loss. Off the top my head 25%ish depending on resale of the brand/item. Im selling a bow sight in the classifieds that I paid well over 400 for the package, and currently listed at 215 - Ill just need to keep the receipt but I will lose about half of what I paid for it at the end of the day so there will be no tax. So it just creates something else you need to keep track of. I am not well versed enough in tax law to know if you are getting a 1099 for sales, if that constitues anything like self employment and you can claim an actual LOSS on taxes.



From a nytimes article:

Casual users of online platforms may receive the forms even if the payments don’t reflect taxable income, said Andrew Lautz, director of federal policy with the conservative National Taxpayers Union, which supports a higher reporting threshold. Used items generally don’t result in taxable income if they are resold for less than what the seller originally paid, he said.

Say you sold a used piano on eBay for $1,000, but you paid $2,500 when you bought it new. “You don’t owe taxes,” Mr. Lautz said.

Under the new rule, however, eBay will send both you and the I.R.S. a Form 1099-K, showing you were paid $1,000. The company knows nothing about your initial purchase; it’s up to you to document the original price to show that no tax is owed.

That is some great information! Thanks. So what do you think you could do if you bought something prior to 2022 and don’t have copies? Just go to the website and say, I have this product, this is what I paid?

 

[Rich M]

They said they weren’t gonna do the form for 2022.

Not sure about 2024.

Maybe you can do the okd fashioned way? Local and for cash?

 

[TheBootBowhunting]

That is some great information! Thanks. So what do you think you could do if you bought something prior to 2022 and don’t have copies? Just go to the website and say, I have this product, this is what I paid?

Search your email inbox for the sales receipt maybe. Maybe the company can send you a receipt for an older transaction if they keep them. Id imagine youd have to, by the law, provide actual proof you bought it as in a receipt. But thats a tax person question. It just creates more things to keep track of, but as long as you keep receipts you should not be paying taxes on being a gear junkie.

I cant imagine anyone selling gear on here should pay any taxes, its just a form and more things to throw in a folder or keep a digital receipt. Its a headache, but it shouldnt cost anyone on here anymore in taxes.

 

[*zap*]

how long before all digital currency?

 

[sndmn11]

You could also use a different form of payment.

 

[WyoBowhunter21]

I agree with above. Most of us who buy and sell gear shouldn’t be taxed. I would rather sell my stuff on this platform than fbook so that kind of takes out the locals. But I think you all may be right, we will just need to keep track of gear purchases. Ugh. Tax folders are getting pretty thick. Ha

 

[*zap*]

If you buy used ask for a receipt.

 

[WyoBowhunter21]

If you buy used ask for a receipt.

That’s what I was thinking too. Just printing off the messages saying you bought it.

 

[TheBootBowhunting]

Paypal and other payment apps allows you to put a note in the paymet field when you buy the item. Id just add in the note what the payment is for, and thats your receipt.

 

[cornfedkiller]

Are these websites (paypal, venmo, etc) going to be withholding that 24% though? If I sell a bow for $1000, am I going to receive $760, and the IRS gets their $240 until I can prove to them I don't actually owe it?

 

[Mighty Mouse]

Are these websites (paypal, venmo, etc) going to be withholding that 24% though? If I sell a bow for $1000, am I going to receive $760, and the IRS gets their $240 until I can prove to them I don't actually owe it?

No. Any tax due on those sales would be paid when you file your annual income tax return. The payment platforms aren't responsible for collecting the tax, just for reporting the transactions to the IRS.

 

[TheBootBowhunting]

Are these websites (paypal, venmo, etc) going to be withholding that 24% though? If I sell a bow for $1000, am I going to receive $760, and the IRS gets their $240 until I can prove to them I don't actually owe it?

They are just going to send a 1099 and let you sort that out with the IRS. If you buy and sell on here, I just dont think anyone here is turning a profit, and most are taking a 20%+ loss. You just have to print out or store receipts and youll be fine outside of the extra time it takes to do that. The $600 is a reporting threshhold, it doesnt change anything about how paypal or venmo transactions process.

 

[mxgsfmdpx]

None of this is new. Anytime you sell any good or service for a profit you are taxed. You are only taxed on the amount realized from a gain. Do some more research on tax law.

 

[Darryle]

Are y'all not afraid of PayPal locking your accounts for using them to buy and sell firearms?

 

[mmw194287]

Are y'all not afraid of PayPal locking your accounts for using them to buy and sell firearms?

I literally had a guy include the note “for the weatherby rifle” like 2 months ago…


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[cornfedkiller]

No. Any tax due on those sales would be paid when you file your annual income tax return. The payment platforms aren't responsible for collecting the tax, just for reporting the transactions to the IRS.

They are just going to send a 1099 and let you sort that out with the IRS.

Did you guys read the middle paragraph in the OP's attached picture?

 

[TheBootBowhunting]

Did you guys read the middle paragraph in the OP's attached picture?

Thats for paypal accounts that arent verified and you havent provided your ssn or tax id....so paypal is required to hold the 24% when you exceed the threshhold because they dont have a ssn to create a 1099 to send to IRS. Ensures IRS gets paid. Nothing new on this either outside of the thresshold being lowered from 20k to 600. If youre verified with paypal, they arent going to hold the 24% for the "backup withholding".

I think if you live in the US, you have to provide that to set up a paypal account regardless. Otherwise all you can do is buy, you cant sell without providing SSN.

 

[cornfedkiller]

Thats for paypal accounts that arent verified and you havent provided your ssn or tax id....so paypal is required to hold the 24% when you exceed the threshhold because they dont have a ssn to create a 1099 to send to IRS. Ensures IRS gets paid. Nothing new on this either outside of the thresshold being lowered from 20k to 600. If youre verified with paypal, they arent going to hold the 24% for the "backup withholding".

I think if you live in the US, you have to provide that to set up a paypal account regardless. Otherwise all you can do is buy, you cant sell without providing SSN.

Gotcha. Thank you for clarifying that for me!