Follow up to 1099 on Ebay sales?

Geo-TH,In

Well-known Member
I know a man who sells his kids used clothes that are like new and no longer fit on Ebay. Good chance this man is selling the used clothes at a loss, less than he paid for them. I'll bet he has no records of what he paid for the clothes when new.

So if he sells more than $600 worth of clothes in a year, will the man have to pay income taxes on the sales?? Or income taxes on just one sale if it goes over $600?
This could become a nightmare.
 
Fairly sure that you must pay income tax if you made $600 or more for the year. In other words. It does not matter if you only sold one item or a thousand. If you made more than $600 total you will need to report it as income.

[i:6a615569e1]Wonder if Ebay, Amazon and such be required to mail out a form similar to a W2??[/i:6a615569e1] :roll:
 
$600 is the threshold for filing some 1099s. Technically, all income needs to be reported even if less than $600. I am getting a large number of questions about the 1099's being issued by cash apps and others. Not all rules apply to all 1099's and you may be mistaking which one is being sent.
 
Since I had heard of none of this I googled it as a double check on the YTIRS and none of it is law, only proposed, last return dated Jan 3.
 
Dave you were answering as I was typing. As you said nothing has changed as for what is reoortable and taxable, all the proposed law does is allow the government more authority to snoop into non cash transactions.
 
If you sell of personal property for less than its acquisition cost,its cost can be used to offset the sale price but cannot result in a deductible loss. In other words it cannot result in a negative number to offset other income. I'm not going to worry about receipts. I'll include a memo in my records of the fair market value at the time of purchase. Receipts are only needed in case of an audit.
 
Does that mean even tho I have not had to file a tax return if I would sell some of my old 2 Cylinder, green Msagazine Farm Collector, Antique power magazines on either YT or at tractor show I would start to have to now file a tax return? 78 and only SS
 
Just because you receive a 1099 doesn't mean you have to declare that 'income' on your taxes. Obviously, though, you invite an audit if you have significant 1099 income that you don't declare. If eBay says you received 500 bucks, I doubt the IRS will send you a letter if you don't declare it. 50K would be another thing.

I'll probably get a 1099 for the tenant who pays rent via Zelle. But there's no way the IRS can tell it was for rent (which I do declare) versus some other purpose, for example sale of car parts or illegal drugs, which I probably wouldn't declare.

The safest thing to do would be to file a Schedule C or E declaring the income and showing a net loss. It would only take a minute to fill out a Sched C showing, for example, that you sold 500 bucks worth of goods that cost you 600 bucks for a net loss of $100. Note that the IRS looks askance at 'businesses' that lose money year after year, so if you try to use your eBay sales to show huge losses over several returns, you might get a valentine from Uncle Sugar.
 
Mark,
My CPA has to pass a test every 4 years to renew his license.
No way am I going to lose sleep at night thinking about taxes.
I've been friends with my CPA. We met in college.
So for over 50 years he's been doing my taxes.
I bring him a spreadsheet with business records, he knows what to do.
This year he has to figure long term capital gains and short term gains.
January is time for him to send out 1099's.

Sometimes I let professionals do what they do the best. Keep me out of trouble with the IRS.
 
If you get a 1099 from Ebay you need to show it on your tax return - somewhere. In the case of the guy selling clothes he would need to show each 1099 issued on Form 8949. If he has three 1099s from different sources for sales of personal property it would be best to list each 1099 as the proceeds from a sale - so the IRS can find them and check them off their list of reported items connected to your SS number. Then you read the instructions for Box E and F and see which applies. I would not try to show items such as children's cloths as generating a loss - since you have personal use that would have lowered the value. The easy answer is to have your adjusted basis equal the sales price resulting in no gain or loss or a tiny gain or loss.

I was a CPA but have NOT kept my certificate current and have not done taxes for 30+ years except my own. When you get a 1099 it usually best to have that amount appear on a supporting schedule or on the tax return itself - because the government is looking for it - that part hasn't changed in 30 years and if anything has gotten checked more.
 

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