ebay tax question...

Discussion in 'Bad Dog Cafe' started by cmm71, Jan 29, 2020.

  1. cmm71

    cmm71 Tele-Meister Silver Supporter

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    Hey all, I don't usually post here, typically I stay out in the gear forums. I have a concern that brings me here.

    I received a 1099K from PayPal yesterday, first time that's happened since I got an account going almost 20 years ago when it was a part of ebay. The amount in box 1a shows an astronomical sum. I thought it was an obvious error. I messaged PayPal and they said that the sum recorded in that box shows my "historical" total. That doesn't make sense to me.

    To put this in context, I'll throw out a hypothetical:

    I don't typically charge tax when I sell a guitar or amp. I'm not a business, just a guy that buys and sells out of GAS. If I buy a Strat for $1,000 from a local store and then sell it 8 months later on ebay for $900 is that considered income. Am I to claim that as income? After 20 years of that kind of buy and sell can I be expected to cough up tax on all those transactions over 20 years?

    Thoughts?

    Thanks
     
  2. suave eddie

    suave eddie Tele-Afflicted

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    How far back does this "historical" total go back? I haven't sold anything on eBay for probably 12 years at least. Should I expect a 1099 from PayPal?
     
  3. knavel

    knavel Tele-Meister

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    1099 is normally related to income.

    Sales of goods in an eBay context are at best capital gains taxed. Paypal following an eBay sale is always sale of goods.

    But in theory one could be paid for services (work) via Paypal.

    A 1099 has the legal effect of throwing the ball into the recipient's court to iron out what is taxed, how it's taxed and how much it's taxed. For the issuer of a 1099 it's just a CYA to say "the funds only passed through me; they were never mine". For example, I used to get paid all the money for gigs. I 1099'd the rest of the band so it didn't look like I made $30K or whatever that year but only 1/4 of that.
     
    Last edited: Jan 29, 2020
  4. jageya

    jageya Tele-Meister

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    i thought paypal just does all the tax stuff on its own for you. I have buyers for my lowly t shirts and they pay tax on my sales automatically-i dont do anything as ebay collects it i guess.
     
  5. cmm71

    cmm71 Tele-Meister Silver Supporter

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    I'm going to be calling paypal to clarify what is meant by "historical". I'll post a follow up when I find out.
     
  6. jageya

    jageya Tele-Meister

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    thanx. I noticed they started charging tax recently on stuff i buy and items i sell to others so i hope they dont expect us to pay enay tax going back 10 years?? that would suck. My sales as i said are small items and i use ebay to get rid of closet clutter but also only use enay sales to fund things i want to buy(not high ticket stuff but workout shirts and sunglasses sometimes)
     
  7. suave eddie

    suave eddie Tele-Afflicted

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    I've never understood how there is no limit as to how many times the same item can be taxed.
     
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  8. jageya

    jageya Tele-Meister

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    Its a ponzi scheme/scam. Its makes me sick how unfair and rediculous it really is.
     
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  9. jageya

    jageya Tele-Meister

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    ok so today i bought a cheap fragrance for 2.99 plus 0.15 cents tax. which i was charged and happens on all my ebay purchases. however i was for some reason refunded the 0.15 tax back to paypal....never happened before with this seller or any(i have bought from this seller's store before(fragrancenet.com on ebay))- I messaged them to see why???? the order was shipped so its wasnt an order cancelation with wrong refund. Maybe something has changed on ebay?
     
  10. Informal

    Informal Tele-Holic

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    I think the Constitution only tackles "Dual Taxation" Nothing about Quad-taxation or higher :lol:
     
  11. Switchy

    Switchy Tele-Holic

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    Sales tax has nothing to do with the 1099. You get the 1099 if your sales go over a certain amount, and considered income by the IRS.
     
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  12. Switchy

    Switchy Tele-Holic

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    1099s only cover 1 fiscal year. It's like a W2 for small business income or taxable side income.
    Perhaps you haven't been paying taxes on what you have been selling for years?
     
  13. electrichead

    electrichead Tele-Meister

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    I sold about 3 grand of stuff on eBay last year..Am i expected to pay tax on the money i made..Yikes


    err asking for a friend..
     
  14. Blue

    Blue Tele-Holic

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    RIDICULOUS.
     
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  15. schmee

    schmee Poster Extraordinaire Silver Supporter

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    Ebay collects sales tax on sales, but they don't give it to you, so you aren't responsible to get it to the state.....so I'm not sure why you got that 1099?
    As potential profit? Geez, that will be a PITA. But realistically... who makes a profit on used musical gear? But are you going to be forced to even show sales and losses now? IF so, I'm done using those services. I no longer use Paypal to sell anyway for other reasons they instituted recently....
     
  16. Greggorios

    Greggorios Friend of Leo's Silver Supporter

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  17. nojazzhere

    nojazzhere Doctor of Teleocity

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    I "believe" the distinction is.....the "item" is not being taxed.....the "exchange" (transaction) of money for goods IS. When I bought a new car, I paid the state sales tax. When I SELL that same car five years later (or whenever) the new buyer then pays the state sales tax again. (same rate, but based on that price paid)
    We can argue and debate the fairness of all of this, but as long as it's the LAW, we should abide by it. ;)
     
  18. RodeoTex

    RodeoTex Poster Extraordinaire

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    As stated previously, sales tax has nothing to do with a 1099.
    I believe the 1099 is triggered at $600 of payout from a business to a client. (Paypal to you).

    I don't know how this should play out but, as also previously stated, Paypal just seems to be in CYA mode.
     
  19. jackinjax

    jackinjax Friend of Leo's

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    Just what we needed; making filling out tax forms even more complicated, time consuming and/or expensive.
     
  20. Texicaster

    Texicaster Tele-Afflicted

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    This doesn't make sense....

    Paypal should send a 1099 once you hit ~$9000 in a year. But we're still supposed to report any income from Paypal sales as income so you can't fall back on "I didn't get a 1099..." I can't believe they are sending historical 1099's though!


    Not being a business doesn't help and actually hurts you as you can't claim inventory or losses per se...

    IF you're a business that $1000 Strat (with a receipt!) is an asset and if sold for $900 you lost $100. With no business/ no receipt I think you just made $900.... If you have hard receipts you should be OK but if you paid $1000 cash for a CL buy and sell for $900 ....again you just made $900! And Paypal simply tells IRS you made $900, it's up to you to keep a record on income/outgo....

    I'd run that past your local tax guy to see exactly what the deal is. Mean while make your CL buyers/sellers sign a receipt!
     
    RodeoTex likes this.
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