Casual eBay sellers are up in arms over the new rule for 2022 that requires 1099-K for sellers with $600 or more in sales with no minimum transaction count. It's not a problem for high-volume sellers who already deal with
this, and it also won't affect the low-volume seller who might only sell a few items per year.
But what is the best strategy for the casual mid-range seller who treats
eBay as an online garage sale and sells extra and unneeded items from around the house for more than $600 per year. It's not a business for these kind
of sellers, and they probably sell most things for less than what they originally paid. So in their minds they are making money by selling stuff they no longer need, but in the strict accounting sense, they are really taking a loss.
Let's assume a taxpayer has eBay sales for the year of $1500, but the original purchase price for the items sold is $2500. Assume that like many taxpayers today, the seller takes the standard deduction because they don't really have enough deductions to make itemizing worthwhile. What is their best tax strategy?
1) Just report the $1500 as income and chalk it up to inequities in the tax law.
2) Don't report any of it and assume the IRS won't worry about such a small amount. In the event an audit happens, explain to the auditor that it was
for items that had a cost that exceeded the 1099-K amount.
3) Pretend it's an actual business and fill out a Schedule C reporting
sales and expenses, which in this case would show a net loss.
Is there another strategy I'm missing? Personally, I think for relatively small amounts option 2 might be optimal.
--
Casual eBay sellers are up in arms over the new rule for 2022 that
requires 1099-K for sellers with $600 or more in sales with no minimum transaction count. It's not a problem for high-volume sellers who
already deal with this, and it also won't affect the low-volume seller
who might only sell a few items per year.
But what is the best strategy for the casual mid-range seller who treats
eBay as an online garage sale and sells extra and unneeded items from
around the house for more than $600 per year. It's not a business for
these kind of sellers, and they probably sell most things for less than
what they originally paid. So in their minds they are making money by selling stuff they no longer need, but in the strict accounting sense,
they are really taking a loss.
Let's assume a taxpayer has eBay sales for the year of $1500, but the original purchase price for the items sold is $2500. Assume that like
many taxpayers today, the seller takes the standard deduction because
they don't really have enough deductions to make itemizing worthwhile.
What is their best tax strategy?
1) Just report the $1500 as income and chalk it up to inequities in the
tax law.
2) Don't report any of it and assume the IRS won't worry about such a
small amount. In the event an audit happens, explain to the auditor
that it was for items that had a cost that exceeded the 1099-K amount.
3) Pretend it's an actual business and fill out a Schedule C reporting sales and expenses, which in this case would show a net loss.
Is there another strategy I'm missing? Personally, I think for
relatively small amounts option 2 might be optimal.
On 10/16/2021 7:29 PM, Rick wrote:
Casual eBay sellers are up in arms over the new rule for 2022 that
requires 1099-K for sellers with $600 or more in sales with no minimum transaction count. It's not a problem for high-volume sellers who
already deal with this, and it also won't affect the low-volume seller
who might only sell a few items per year.
But what is the best strategy for the casual mid-range seller who treats eBay as an online garage sale and sells extra and unneeded items from around the house for more than $600 per year. It's not a business for these kind of sellers, and they probably sell most things for less than what they originally paid. So in their minds they are making money by selling stuff they no longer need, but in the strict accounting sense,
they are really taking a loss.
Let's assume a taxpayer has eBay sales for the year of $1500, but the original purchase price for the items sold is $2500. Assume that like
many taxpayers today, the seller takes the standard deduction because
they don't really have enough deductions to make itemizing worthwhile.
What is their best tax strategy?
1) Just report the $1500 as income and chalk it up to inequities in the tax law.
2) Don't report any of it and assume the IRS won't worry about such a small amount. In the event an audit happens, explain to the auditor
that it was for items that had a cost that exceeded the 1099-K amount.
3) Pretend it's an actual business and fill out a Schedule C reporting sales and expenses, which in this case would show a net loss.
Is there another strategy I'm missing? Personally, I think forI have the same question: slightly different context but really the same script. I do some recreational sports betting and poker playing, all
relatively small amounts option 2 might be optimal.
online. I transfer money from these accounts to PayPal. It may be $1000
more or less. That will generate a 1099=K, but I really don't make any
money. So, how to handle this?
Mel
--
On Sunday, October 17, 2021 at 1:36:51 AM UTC-4, MZB wrote:
On 10/16/2021 7:29 PM, Rick wrote:
Casual eBay sellers are up in arms over the new rule for 2022 thatI have the same question: slightly different context but really the same
requires 1099-K for sellers with $600 or more in sales with no minimum
transaction count. It's not a problem for high-volume sellers who
already deal with this, and it also won't affect the low-volume seller
who might only sell a few items per year.
But what is the best strategy for the casual mid-range seller who
treats
eBay as an online garage sale and sells extra and unneeded items from
around the house for more than $600 per year. It's not a business for
these kind of sellers, and they probably sell most things for less than
what they originally paid. So in their minds they are making money by
selling stuff they no longer need, but in the strict accounting sense,
they are really taking a loss.
Let's assume a taxpayer has eBay sales for the year of $1500, but the
original purchase price for the items sold is $2500. Assume that like
many taxpayers today, the seller takes the standard deduction because
they don't really have enough deductions to make itemizing worthwhile.
What is their best tax strategy?
1) Just report the $1500 as income and chalk it up to inequities in
the
tax law.
2) Don't report any of it and assume the IRS won't worry about such a
small amount. In the event an audit happens, explain to the auditor
that it was for items that had a cost that exceeded the 1099-K amount.
3) Pretend it's an actual business and fill out a Schedule C reporting
sales and expenses, which in this case would show a net loss.
Is there another strategy I'm missing? Personally, I think for
relatively small amounts option 2 might be optimal.
script. I do some recreational sports betting and poker playing, all
online. I transfer money from these accounts to PayPal. It may be $1000
more or less. That will generate a 1099=K, but I really don't make any
money. So, how to handle this?
Mel
--
Gambling winnings are reportable income. Gambling losses are deductible as >other itemized deductions, but only if you itemize deductions and only up
to the amount of your winnings. You can't net your winnings and losses, but >must report winning and losses separately. This has been true whether or
not you receive a W-2G or 1099-K or any other tax reporting document. You
can find more information in IRS Pub. 529, Miscellaneous Deductions, >www.irs.gov/pub/irs-pdf/p529.pdf. Although not mentioned in the IRS Pub,
you may be able to reduce your reportable earnings by using the "session >method" of tracking your gambling activiity. This is clearly allowed for
slot machine play (IRS Notice 2015-21), but less clear for other forms of >gambling.
Ira Smilovitz, EA
Leonia, NJ
contributions dropped quite a bit with the new rule because people
stopped itemizing and could no longer deduct much for charity.
"ira smilovitz" wrote in message news:9b66dc5c-aacf-4367...@googlegroups.com...
On Sunday, October 17, 2021 at 1:36:51 AM UTC-4, MZB wrote:
On 10/16/2021 7:29 PM, Rick wrote:
Casual eBay sellers are up in arms over the new rule for 2022 thatI have the same question: slightly different context but really the same >> script. I do some recreational sports betting and poker playing, all
requires 1099-K for sellers with $600 or more in sales with no minimum >> > transaction count. It's not a problem for high-volume sellers who
already deal with this, and it also won't affect the low-volume seller >> > who might only sell a few items per year.
But what is the best strategy for the casual mid-range seller who
treats
eBay as an online garage sale and sells extra and unneeded items from
around the house for more than $600 per year. It's not a business for
these kind of sellers, and they probably sell most things for less than >> > what they originally paid. So in their minds they are making money by
selling stuff they no longer need, but in the strict accounting sense, >> > they are really taking a loss.
Let's assume a taxpayer has eBay sales for the year of $1500, but the
original purchase price for the items sold is $2500. Assume that like
many taxpayers today, the seller takes the standard deduction because
they don't really have enough deductions to make itemizing worthwhile. >> > What is their best tax strategy?
1) Just report the $1500 as income and chalk it up to inequities in
the
tax law.
2) Don't report any of it and assume the IRS won't worry about such a
small amount. In the event an audit happens, explain to the auditor
that it was for items that had a cost that exceeded the 1099-K amount. >> >
3) Pretend it's an actual business and fill out a Schedule C reporting >> > sales and expenses, which in this case would show a net loss.
Is there another strategy I'm missing? Personally, I think for
relatively small amounts option 2 might be optimal.
online. I transfer money from these accounts to PayPal. It may be $1000
more or less. That will generate a 1099=K, but I really don't make any
money. So, how to handle this?
Mel
--
Gambling winnings are reportable income. Gambling losses are deductible as >other itemized deductions, but only if you itemize deductions and only up >to the amount of your winnings. You can't net your winnings and losses, but >must report winning and losses separately. This has been true whether or >not you receive a W-2G or 1099-K or any other tax reporting document. You >can find more information in IRS Pub. 529, Miscellaneous Deductions, >www.irs.gov/pub/irs-pdf/p529.pdf. Although not mentioned in the IRS Pub, >you may be able to reduce your reportable earnings by using the "session >method" of tracking your gambling activiity. This is clearly allowed for >slot machine play (IRS Notice 2015-21), but less clear for other forms of >gambling.
Ira Smilovitz, EA
Leonia, NJ
The big problem with reporting gambling losses up the amount of winnings is that so many people are now taking the standard deduction rather than itemizing. Typical scenario is a person gets lucky and wins $1000 on a scratch-off but spent $5000 during the year on losing tickets. They
receive a W2-G so they have to report the $1000 but have no way of reporting the $5000 in losses. It's one of the unintended consequences of the high standard deductible. Another is that charitable contributions dropped quite
a bit with the new rule because people stopped itemizing and could no longer deduct much for charity. They've since allowed for up to $300 per person in charity deductions over and beyond the standard deduction, but I don't think they've made similar exceptions for other deductions.
--
On Sunday, October 17, 2021 at 1:37:40 PM UTC-4, Rick wrote:
"ira smilovitz" wrote in message
news:9b66dc5c-aacf-4367...@googlegroups.com...
The big problem with reporting gambling losses up the amount of winnings is >> that so many people are now taking the standard deduction rather than
On Sunday, October 17, 2021 at 1:36:51 AM UTC-4, MZB wrote:
On 10/16/2021 7:29 PM, Rick wrote:
Casual eBay sellers are up in arms over the new rule for 2022 thatI have the same question: slightly different context but really the same >>>> script. I do some recreational sports betting and poker playing, all
requires 1099-K for sellers with $600 or more in sales with no minimum >>>>> transaction count. It's not a problem for high-volume sellers who
already deal with this, and it also won't affect the low-volume seller >>>>> who might only sell a few items per year.
But what is the best strategy for the casual mid-range seller who
treats
eBay as an online garage sale and sells extra and unneeded items from >>>>> around the house for more than $600 per year. It's not a business for >>>>> these kind of sellers, and they probably sell most things for less than >>>>> what they originally paid. So in their minds they are making money by >>>>> selling stuff they no longer need, but in the strict accounting sense, >>>>> they are really taking a loss.
Let's assume a taxpayer has eBay sales for the year of $1500, but the >>>>> original purchase price for the items sold is $2500. Assume that like >>>>> many taxpayers today, the seller takes the standard deduction because >>>>> they don't really have enough deductions to make itemizing worthwhile. >>>>> What is their best tax strategy?
1) Just report the $1500 as income and chalk it up to inequities in
the
tax law.
2) Don't report any of it and assume the IRS won't worry about such a >>>>> small amount. In the event an audit happens, explain to the auditor
that it was for items that had a cost that exceeded the 1099-K amount. >>>>>
3) Pretend it's an actual business and fill out a Schedule C reporting >>>>> sales and expenses, which in this case would show a net loss.
Is there another strategy I'm missing? Personally, I think for
relatively small amounts option 2 might be optimal.
online. I transfer money from these accounts to PayPal. It may be $1000 >>>> more or less. That will generate a 1099=K, but I really don't make any >>>> money. So, how to handle this?
Mel
--
Gambling winnings are reportable income. Gambling losses are deductible as >>> other itemized deductions, but only if you itemize deductions and only up >>> to the amount of your winnings. You can't net your winnings and losses, but >>> must report winning and losses separately. This has been true whether or >>> not you receive a W-2G or 1099-K or any other tax reporting document. You >>> can find more information in IRS Pub. 529, Miscellaneous Deductions,
www.irs.gov/pub/irs-pdf/p529.pdf. Although not mentioned in the IRS Pub, >>> you may be able to reduce your reportable earnings by using the "session >>> method" of tracking your gambling activiity. This is clearly allowed for >>> slot machine play (IRS Notice 2015-21), but less clear for other forms of >>> gambling.
Ira Smilovitz, EA
Leonia, NJ
itemizing. Typical scenario is a person gets lucky and wins $1000 on a
scratch-off but spent $5000 during the year on losing tickets. They
receive a W2-G so they have to report the $1000 but have no way of reporting >> the $5000 in losses. It's one of the unintended consequences of the high
standard deductible. Another is that charitable contributions dropped quite >> a bit with the new rule because people stopped itemizing and could no longer >> deduct much for charity. They've since allowed for up to $300 per person in >> charity deductions over and beyond the standard deduction, but I don't think >> they've made similar exceptions for other deductions.
--
I never said the tax code was fair. It is what Congress intended it to be.
Ira Smilovitz, EA
Leonia, NJ
On 10/17/2021 7:14 PM, ira smilovitz wrote:
On Sunday, October 17, 2021 at 1:37:40 PM UTC-4, Rick wrote:
"ira smilovitz" wrote in message
news:9b66dc5c-aacf-4367...@googlegroups.com...
The big problem with reporting gambling losses up the amount of winnings is
On Sunday, October 17, 2021 at 1:36:51 AM UTC-4, MZB wrote:
On 10/16/2021 7:29 PM, Rick wrote:
Casual eBay sellers are up in arms over the new rule for 2022 that >>>>> requires 1099-K for sellers with $600 or more in sales with no minimum >>>>> transaction count. It's not a problem for high-volume sellers whoI have the same question: slightly different context but really the same >>>> script. I do some recreational sports betting and poker playing, all >>>> online. I transfer money from these accounts to PayPal. It may be $1000 >>>> more or less. That will generate a 1099=K, but I really don't make any >>>> money. So, how to handle this?
already deal with this, and it also won't affect the low-volume seller >>>>> who might only sell a few items per year.
But what is the best strategy for the casual mid-range seller who
treats
eBay as an online garage sale and sells extra and unneeded items from >>>>> around the house for more than $600 per year. It's not a business for >>>>> these kind of sellers, and they probably sell most things for less than >>>>> what they originally paid. So in their minds they are making money by >>>>> selling stuff they no longer need, but in the strict accounting sense, >>>>> they are really taking a loss.
Let's assume a taxpayer has eBay sales for the year of $1500, but the >>>>> original purchase price for the items sold is $2500. Assume that like >>>>> many taxpayers today, the seller takes the standard deduction because >>>>> they don't really have enough deductions to make itemizing worthwhile. >>>>> What is their best tax strategy?
1) Just report the $1500 as income and chalk it up to inequities in >>>>> the
tax law.
2) Don't report any of it and assume the IRS won't worry about such a >>>>> small amount. In the event an audit happens, explain to the auditor >>>>> that it was for items that had a cost that exceeded the 1099-K amount. >>>>>
3) Pretend it's an actual business and fill out a Schedule C reporting >>>>> sales and expenses, which in this case would show a net loss.
Is there another strategy I'm missing? Personally, I think for
relatively small amounts option 2 might be optimal.
Mel
--
Gambling winnings are reportable income. Gambling losses are deductible as
other itemized deductions, but only if you itemize deductions and only up >>> to the amount of your winnings. You can't net your winnings and losses, but
must report winning and losses separately. This has been true whether or >>> not you receive a W-2G or 1099-K or any other tax reporting document. You >>> can find more information in IRS Pub. 529, Miscellaneous Deductions,
www.irs.gov/pub/irs-pdf/p529.pdf. Although not mentioned in the IRS Pub, >>> you may be able to reduce your reportable earnings by using the "session >>> method" of tracking your gambling activiity. This is clearly allowed for >>> slot machine play (IRS Notice 2015-21), but less clear for other forms of >>> gambling.
Ira Smilovitz, EA
Leonia, NJ
that so many people are now taking the standard deduction rather than
itemizing. Typical scenario is a person gets lucky and wins $1000 on a
scratch-off but spent $5000 during the year on losing tickets. They
receive a W2-G so they have to report the $1000 but have no way of reporting
the $5000 in losses. It's one of the unintended consequences of the high >> standard deductible. Another is that charitable contributions dropped quite
a bit with the new rule because people stopped itemizing and could no longer
deduct much for charity. They've since allowed for up to $300 per person in
charity deductions over and beyond the standard deduction, but I don't think
they've made similar exceptions for other deductions.
--
I never said the tax code was fair. It is what Congress intended it to be.
Ira Smilovitz, EA
Leonia, NJ
This is weird. I am in the category of taking the standard deduction.
Now suppose I play poker and bet sports online, say 1-2 times a week.
Suppose I win $1000 and lose $500.No W-2g forms involved, Just bits and pieces. Are you saying technically I would have to report $1000 as
income? Wow. That's crazy. But I guess it's true.
Mel
--
This is weird. I am in the category of taking the standard
deduction. Now suppose I play poker and bet sports online, say
1-2 times a week. Suppose I win $1000 and lose $500.No W-2g forms
involved, Just bits and pieces. Are you saying technically I
would have to report $1000 as income? Wow. That's crazy. But I
guess it's true.
That's exactly true. You would report $1000 of income with no
deductions.
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