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Posted: |
Sep 5, 2018 - 11:08 AM
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By: |
Bob DiMucci
(Member)
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It's about money received, including re-selling privately owned items. If you live in the states mentioned and received over $600 from any sources via a transaction company, you'd be familiar with this unpleasant fact by now.
Apparently, some states are so desperate for tax revenue that they are willing to assume that anyone receiving more than $600 in proceeds from a sale MUST be in the business of selling such goods for a living. So, they make their citizens account for the proceeds, and any associated profit or loss, by requiring the issuance of a 1099. (That would also seem to trigger a similar accounting on your Federal return.) But the fact remains, that after you deduct the cost of your recordings from the proceeds received, as shown on the 1099, you will likely have no profit, and thus no Federally taxable income. The same should be true at the state level. It's a shame that some states are making all their citizens go through the tax accounting rigmarole just to catch those online vendors who don't honestly report their income.
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Posted: |
Sep 5, 2018 - 11:26 AM
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By: |
Last Child
(Member)
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You can bet other states will follow suit if they think they can get more tax money.
The Feds/states distinguish between stores and "yard sale" re-sellers. Alot of ebayers feel they are in the latter category, but from the state's POV, it's pushing the definition if they're having a permanent yardsale. To continue with the "yard" analogy, some ebayers offering new items are like people with a sign in their yard advertising homemade birdhouses for sale. Either way, you don't expect to declare your income from these low-yield sales, so everyone was pissed getting 1099's. Supposedly the IRS still has a $20K threshold and won't be notified, but people are scared that if they don't include the extra income on Fed returns, it will come back to haunt them.
I think you can only deduct expenses (original purchase price, paypal fees, ebay fees, shipping, etc) if you say you're a store. It's a catch-22.
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Nice to see you here, Mr Silvestri
Oh come on - funniest and sharpest post of the day!!! 
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Posted: |
Sep 5, 2018 - 12:07 PM
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By: |
Bob DiMucci
(Member)
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I think you can only deduct expenses (original purchase price, paypal fees, ebay fees, shipping, etc) if you say you're a store. It's a catch-22.
Not true. According to the IRS: "Taxpayers can usually deduct ordinary and necessary hobby expenses within certain limits:
Ordinary expense is common and accepted for the activity." [such as the purchase price of the recording]
Necessary expense is appropriate for the activity." [such as the costs associated with selling the recording]
What you can't deduct as a hobbyist is the actual loss you suffer when you sell your recordings for less than you paid for them. But you must pay taxes on any hobby profits you make. That's the Catch-22. So, if you happen to sell a rare recording for more than you paid for it, better sell some other recordings at a loss that same year, so you don't have to pay taxes on the profitable one. If you wait until the next year to sell your losers, you have to pay tax on the profit in year 1, but can't deduct the loss in year 2.
In this regard, a hobby is just like gambling. You pay taxes on your winnings, but can't deduct your losses, except to the extent that they offset your winnings (i.e., no deduction of a net loss).
The big limitation on deducting hobby costs (or gambling losses) is that you can only deduct them if you itemize your deductions, which is a lot less likely under last year's tax changes. The hobby "income" (actually, the gross proceeds as reported on the 1099) is reported directly on Form 1040 under "Other Income" (Line 21). So, unless you can offset that income through a deduction of your expenses on Schedule A ("Itemized Deductions"), you are going to end up paying taxes on your proceeds.
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Posted: |
Sep 5, 2018 - 2:38 PM
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By: |
andy b
(Member)
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To Nester
No idea if this will help you or not, but when I left the UK the last time & sold up everything, I went to my accountant KPMG & was told my business was taxable, as it was sold as a gong concern, but the personal items were just that, personal & unless it was going to turn into a business & meet VAT thresh holds and require & receive on going income, then it was fine to sell the items & so be it. I admit this was a time ago.
I did a car boot sale to off load a lot of odds & ends there was an HM Inspector who came over & chatted & as we were doing a one off & not an on-going concern, he simply said “good luck for the future” & that was that.
Who is to prove the value of a collection & therefore the profit?
If you want to be safe from it all, keep some very strict records, so how long did you take to list items, how long you spent in the post office, mileage to & from, cost of packing material, how long did you spend answering questions, time spent listing (if it’s on say ebay) the list is endless and has a cost & therefore is deductible from any possible income tax.
One last point, while Ebay is ruled by Pay Pal, something I do not have or deal with, see if you can be paid in other forms, a cheque or even cash or a voucher (Amazon) then who can prove it’s income?
All up to you & what makes you comfortable & sleep at night, but if you have the written record of the income trail, you can not be caught out.
Good luck in your move & whatever happens.
Regards
Andy b
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I'm going to have to sell on my CD & record collection (I own it all digitally, but that's no fun). I was wondering - will I end up paying any tax on it? I've seen some right nightmare stories from personal eBay sellers getting pegged by HMRC for not declaring income, and in the middle of buying a house I could really do with not having them on my back! 
I've had a look through this tax calculator ( 
