Tax Guys ---- 1099K rules

[ncin29]

What's the deal with Ebay and PayPal sending out 1099K's this tax season and in previous years they didn't send anything?

Example.......In 2019 I sold 10k in Legos, no 1099k. In 2020 I sold 15k in Legos and both PayPal and Ebay sent a 1099k. Also they sent one to a friend that sold 1.2k in random items on Ebay.

Do I really have to claim it or is there some magic limit? Also, I'm not an LLC...

 

[WestcampTX]

Wait, are you saying you’re a Lego hookup?

 

[ncin29]

Wait, are you saying you’re a Lego hookup?

LOL, something like that. I started collecting them around 2007. Like a fool I built some of them but most I kept new in the box. Probably 4 years ago I started selling them online for profit. Two years ago someone did an article on the return on Legos (better than Gold at times). Last year I sold 72 sets. Year before that I sold 47 sets. But this 1099k rule or change or whatever it is has me holding sets again.

I mainly have Star Wars, Technic, and Batman sets. I do have all of the LOTR sets built.

 

[WestcampTX]

Ah I gotcha. I love building legos, Star Wars and Technic mostly, but I’ll do any of em. I’m looking for sets to build not so much collect, but if you have any that aren’t just insanely priced I might be interested. If anything I could save you the EBay crazy fees.

 

[thenick_ttu]

the IRS will receive a copy of those 1099Ks and will look to verify that those gross receipts have been reported on your tax return but here’s the catch, anyone can sell anything on eBay. It doesn’t have to be business income/revenue. It can be completely personal in nature, which is not taxable. I don’t know how the IRS will determine the difference or if they’ll even try. They may use a certain dollar limit for the non-reporters that they look into but I have no idea what that limit would be.

If you’re not going to report the income, then I would have a good story ready to go about why that wasn’t taxable business income, in case the IRS sends you a letter inquiring.

In my professional opinion, it sounds to me like you do indeed have a home business so make sure you have a very good story to explain why this isn’t a business.

 

[ncin29]

Ah I gotcha. I love building legos, Star Wars and Technic mostly, but I’ll do any of em. I’m looking for sets to build not so much collect, but if you have any that aren’t just insanely priced I might be interested. If anything I could save you the EBay crazy fees.

List some sets you are looking for and I'll see if I have them. I'm good with making deals on them and not charging you insane prices. Example would I sold a the Death Star last Nov for $799 because you couldn't get it online (stayed out of stock) and it cost me $399 after using some points. I also sold a $139 Star Wars set for $79 because a little kid wanted it for Xmas and his parents couldn't afford much.

I have at least 75 used sets that I've been working on getting ready to list. They are all Star Wars for this batch. New sets I still have around 150 that I'm not listing until later.......75054, 75003, 75022, 75002, 75024, 75004, 75001, 75039, 75051, 75058, 75025, 75018, 75059, 76023, 21102, 75053, 10225, 10227, 75048, 8097.......just some of them, LOL.

EBay fees have slowly increased, I hate them now....

 

[ncin29]

the IRS will receive a copy of those 1099Ks and will look to verify that those gross receipts have been reported on your tax return but here’s the catch, anyone can sell anything on eBay. It doesn’t have to be business income/revenue. It can be completely personal in nature, which is not taxable. I don’t know how the IRS will determine the difference or if they’ll even try. They may use a certain dollar limit for the non-reporters that they look into but I have no idea what that limit would be.

If you’re not going to report the income, then I would have a good story ready to go about why that wasn’t taxable business income, in case the IRS sends you a letter inquiring.

In my professional opinion, it sounds to me like you do indeed have a home business so make sure you have a very good story to explain why this isn’t a business.

Very good info!!! I did pull my AMEX transactions for the last 3 years and filtered it by lego store, just so I can claim if needed. I feel like I'm ok but I just didn't understand why last year I didn't get one and this year I did and my friend got one for 1.2k (waste of time and money). I'd rather not include it but you are right about having a good story.

 

[Mordain]

Glad you asked the question. Same shit with my wife, she always buys fancy clothes for our kids (and other things) and then sells them on Ebay. She never received the 1099K and this year got one for $42,000 (that got my attention-guess she killed it this year). Re: having a good story, the last thing I want in my life is a weaponized IRS asking me questions or flagging us in any way.

 

[ncin29]

Glad you asked the question. Same shit with my wife, she always buys fancy clothes for our kids (and other things) and then sells them on Ebay. She never received the 1099K and this year got one for $42,000 (that got my attention-guess she killed it this year). Re: having a good story, the last thing I want in my life is a weaponized IRS asking me questions or flagging us in any way.

42k!!!!!! Wow!

 

[Gators300]

It may depend on the state you are in as to why you're getting a 1099 now. Not sure. But I can sure as hell guarantee you that the IRS will inquire about that reported $15k from PayPal/eBay. Except, it will be in 2024 and you'll be on the hook for the taxes you owe plus 3 years of interest. Speaking from experience, BTW.

Poster above nailed it that there's basically nothing you'll be able to say to convince them $15k isn't a business. Best thing to do is pull those AMEX receipts you mentioned, deduct that value plus shipping, space in your house, internet, cell phone, mileage, etc. Maybe then you won't get fucked. Good luck. Getting that 1099 notice sucks.

 

[ncin29]

Glad you asked the question. Same shit with my wife, she always buys fancy clothes for our kids (and other things) and then sells them on Ebay. She never received the 1099K and this year got one for $42,000 (that got my attention-guess she killed it this year). Re: having a good story, the last thing I want in my life is a weaponized IRS asking me questions or flagging us in any way.

Based off the replies in this thread we are both screwed without proof of purchase. I'll spend a few days printing these bad boys out.

 

[Simmer007]

What's the deal with Ebay and PayPal sending out 1099K's this tax season and in previous years they didn't send anything?

Example.......In 2019 I sold 10k in Legos, no 1099k. In 2020 I sold 15k in Legos and both PayPal and Ebay sent a 1099k. Also they sent one to a friend that sold 1.2k in random items on Ebay.

Do I really have to claim it or is there some magic limit? Also, I'm not an LLC...

I look my kid to lego land in Dallas, you owe me $26

 

[Gators300]

Based off the replies in this thread we are both screwed without proof of purchase. I'll spend a few days printing these bad boys out.

The PayPal one is ridiculous. I'm assuming you're not on managed payments on ebay. PayPal counts shipping costs you receive from buyers as income, so you'll want to pull those reports and deduct all of that. On $15k and with heavy ass items like Legos I am sure you're shipping costs are a big chunk.