US 1099-K Federal Tax Reporting Burdens on Casual Sellers

US 1099-K Federal Tax Reporting Burdens on Casual Sellers

The US 1099-K Federal Tax Reporting Burdens on Casual Sellers is due to come into effect in January 2022. The IRS will require all annual online sales over $600 to be reported using Form 1099-K. This requirement previously only applied to sellers with at least 200 transactions and over $20,000 in sales each year. This change will impact your 2022 sales and your 2023 tax filing; it will not apply to your 2021 sales and 2022 1099-K tax forms.

eBay believes millions of Americans casually selling things online shouldn’t receive unnecessary, invasive, and confusing tax forms for small-time transactions. They are inviting sellers to register their concerns which will be passed to the US Congress.

Here’s how this change will impact your 2022 taxes

Many sales on eBay aren’t taxable, so if your sales are over the $600 threshold it doesn’t necessarily mean you will be taxed on those sales. Only goods that are sold for a profit are considered taxable, so you won’t owe any taxes on something you sell for less than what you paid for it. For example, if you bought a bike for $1,000 a few years ago, and then sold it on eBay today for $700, that $700 you made generally would not be subject to income tax.

But you will now need to report these sales as part of your tax return and eBay will continue to share updates that will help you prepare for these changes.

Here’s what eBay are doing

This change will impact millions of casual and small business sellers on eBay. It has raised concerns in the eBay selling community and eBay are working to bring these concerns to Congress. eBay believe this new legislation will cause confusion, over-reporting of non-taxable income, and privacy concerns for millions of Americans who are just trying to get by. eBay are continuing to highlight the undue impact this increase will have on small sellers on eBay, and are urging an increase to the reporting threshold.

eBay’s concerns include:

  • Overly complicated tax forms for smaller transactions.
  • Targets casual sellers who are not set up to handle this kind of tax reporting.
  • Doesn’t take into account the selling of used goods, which are rarely taxable income as they are sold at a price below the original purchase price.

eBay invite you to join the conversation on eBay Main Street, where you can contact Congress on behalf of our community of sellers, small business owners, and entrepreneurs.

“We will continue to keep you updated as this legislation evolves. Going into 2022, we’ll also share more detailed information that will help you understand what’s changed so you know what to expect in the upcoming tax year. We’ll keep you posted on how we will support you, and what steps you need to take. In the meantime, we want to remind you that this change will impact your 2022 sales and your 2023 tax filing; it will not apply to your 2021 sales and 2022 1099-K tax forms.”
– eBay

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Comments

"He has erected a Multitude of new Offices, and sent hither Swarms of Officers to harass our People, and eat out their Substance."

Mike • 18th December 2021 •

I am a casual part time seller on Ebay, most everything I sell is used, and I will have to stop if I have to report! The limit needs to be higher, especially for people who are just trying to supplement their income! Please raise the limit to a more realistic number, like 7-10 thousand dollars!! Thanks

Karen Linker • 22nd December 2021 •

Another example of Progressive OVERREACH into the freedom of the folks. This is BS - we are not a business, just a retired person trying to make ends meet in this historic recored surge in inflation while living on a fixed income. I never have more many listings and sales around $200 for the year to help pay the bills. Will have to stop selling and buying on eBay if this does not get taken care of. Thanks

Mike • 23rd December 2021 •

This is not helping casual sellers like myself that sells mostly used items. The limit need to be higher. Covid-19 has affected us in so many ways. Raising the limit will be a blessing for casual sellers that don't have jobs and no income. Thank you for your consideration.

Elena P Hutchison • 23rd December 2021 •

I am a casual seller on ebay, supplementing my retirement income. I would appreciate so much if the new selling limit could be raised from $600 to perhaps $5000-$10,000. With the $600 limit including not only the sale price but shipping (which isn't income), it doesn't seem fair to small volume, used-items sellers. Thank you for your consideration.

Victoria W Wall • 27th December 2021 •

Hi- I collected items at yard sales, flea markets, shows etc for 30 years never selling anything along the way. Now I am retired living on a fixed income and am selling some of these items to supplement my income and to start to thin out my collection. I am NOT a business. This new for 2022 rule of one item and $600 in sales is really unfair to those just looking to get some of my money back from items I bought as long as 30 years ago. Of course there are no receipts so, even if I do want to continue to sell on sites like Ebay and get the 1099 there is no way for me to prove what I paid for these items when I have to prove these costs to the IRS. I don't think the old rules of selling up to $20,000 and 200 items constitutes running a business. If this was my only income I would barely be above the poverty line. Some say get a licensed CPA to go over this which is another cost then with taxes on top of that why even bother selling on sites like Ebay. It's simply not fair to those looking to make a few bucks to keep above water. Thank you for reading... Dave Zurick

David Zurick • 27th December 2021 •

Oh. It was fine like it was. Please don't do this to people who have fixed incomes and cannot make it without selling on online sites.

Benite Jeng • 27th December 2021 •

This is absolutely ridiculous! I was laid off and trying to make ends meet by reselling items on eBay. I can't track everything one by one and remember how much I paid for on things that were purchased years ago!

Frank • 28th December 2021 •

I am a casual seller of collectibles I have saved throughout my life. I am retired and on a fixed income and the little amount that I do gain helps supplement that fixed income. The eBay process also gives me something to stay active with since retiring. With this new 1099k legislation I am worried about the impact it will have in my ability to enhance my income even though I am not making too many sales.

Keith Gradwohl • 29th December 2021 •

vote these democrat thieves out

Warren Blessin • 30th December 2021 •

The government wants the economy to flourish but wants to tax the small sellers for 600.00 or more in sales when it was 20,000.00 or more. What a huge span on the amount we could sell without being taxed. I'm on Disability and pay federal taxes on it because my husband works and we are over the IRS threshold for income. My money from selling pays Dr, bills from my disability, prescriptions and food. I was taxed my whole working life and now have to pay taxes on the resale of my used items. It is not worth my time. I could donate my items but the IRS has taken away the write off on taxes for donating used items as well. The little guy cant win for losing over and over. Thanks in advance for closing a lot of us little people down and taking away more of our money. For what its worth...think about adjusting the amount of sales allowed before taxing it.

Sandra Bitner • 30th December 2021 •

Jittery Joe will force it through. Remember you get what you voted for

Jonty • 30th December 2021 •

I’m retired and an infrequent, occasional seller since 2003. This new reporting threshold will prevent me from selling anything on platforms like eBay. Over my lifetime I’ve collected a variety of autographed memorabilia, numismatics, historical items and have used ebay to thin out my collection. I often sold my used metal detecting equipment when I want to try something else, another detector. I don’t have a cost basis for most of my accumulated collectibles as they were informal acquisitions I have no records. I’m done as a seller. Ebay will be faced with reduced seller fees from people like me who quit. How much money will ebay lose from people like myself?

Sparky • 31st December 2021 •

I agree with David Zurick and I'm in the same position he is. The bastards in this corrupted government of ours are now changing the rules of the game and destroying our long term plans. Our middle class always ends up paying for everything and I'm sick of it. Neither one of the two parties works for average people. They are owned by the wealthy who just use them to reduce their tax burdens and pass them on to the middle class.

Henry Perone • 2nd January 2022 •

It is already bad enough that EBAY takes a percentage on the TOTAL. That includes the retail of the item, shipping and TAXES. Yes TAXES. Remember when we paid a% on the sold item. Now we actually pay part of the shipping and taxes that your customer has paid. Retired from work, now I have to retire from EBAY. Making it too complicated for the elderly that just want to supplement the income

Wayne LaJoie • 3rd January 2022 •

I too agree with the above statements I’m semi retired and I was able to supplement my income selling used items around the house. Is the government that bad off that they have to go after such a small amount of individuals. How about big business paying their fair share. Looks like I’ll be retiring from EBay too

Wwhiteley • 3rd January 2022 •

I'm a causal seller also. Collect things through the years and now with the low dollar it will be impossible to work with. Guess I'll have to go back to flea markets and cash only. I really hate to give up on ebay. Been with them since 1997 just selling garage sale finds. What a bummer.

Jane caron • 4th January 2022 •

Totally ridiculous!!! The $600 threshold is far too low. Especially for those of us who sell existing items that we have acquired over many years and for which we have no sales receipt to prove what we paid for such items. Not to mention, a 1099K will require and force the casual seller to submit at least two additional tax forms to the IRS . . . 1040 Schedule C and 1040 Schedule SE. Schedule C is for Profit or Loss from a Business. Schedule SE is for Self Employment Taxes for Social Security and Medicare @ a rate of 15.3% Furthermore, if you have your taxes done by a professional, add to that the cost of two addition tax forms. Yikes!!!

D. Roskos • 4th January 2022 •

How in the world does the IRS expect sellers to be able to come up with a cost basis here? I sell items both from my collection or from things I have picked up over the years, and I certainly do not have receipts for them! What then? Are they simply going to expect me to pay based on the dollar amount on the 1099-K? Utterly ridiculous! Been selling on eBay for 20 years, but can see that is going to have to stop as a result of this.

Richard Sykes • 5th January 2022 •

Ridiculous. I paid taxes on the money I earned to buy items that were taxed as I bought them. Time for me to downsize and I am not going to be making a profit on these items...but who has receipts from 5 years ago, let alone 40 years ago? I have offered and given many items to my children and friends...so now I should toss the rest in the garbage instead of getting maybe 10 cents for each dollar I spent? Once again the little guy is being forced to take it on the chin. Bah Humbug.

H Nonesuch • 5th January 2022 •

I am a causal seller of collectable items that I have acquired over the last 40 years. I have no way to list what I paid for items. I am selling these items to downsize and for some extra income. The $600 limit is way too low. it should be much higher - at least 10 times higher at $6000 and $ 10,000 would be even better. This is punishing me and all those like me for having a collecting hobby. Now I have to consider becoming a business by forming a LLC or not sell on eBay anymore. This is just a cash grab by a greedy and bankrupt government.

Paul B. • 6th January 2022 •

In reselling new items, there is a paper trail to determine the cost basis. But for old/vintage/inherited/accumulated/hoarded items, there is no paper trail. There will be a lot of numbers pulled out of thin air appearing on Schedule Cs under "cost of goods sold" which will be impossible for the IRS to verify. I can't imagine the IRS auditing people for overvaluing used clothes etc. This will turn out to be a nightmare. If you do have to file, remember you can deduct all costs such as purchase of shipping supplies.

Lamourie • 9th January 2022 •

I guess our country is turning into a communist country this is not right for government to invade on the Americans back accounts,on line sales.I dont get enough money to pay for food and the extra on social security.Maybe if we all apply for welfare,food stamps,that might be a better option for the government to hand out more money.Think about this were in whole now look how much more we will be for causual sellers.Used items are already taxed.This idea will kill ebay,the market place,etsy,etc....Watch how well the country goes under fast!!!!!!

sue • 10th January 2022 •