The New 1099-K $600 Rule Explained | Rob.CPA
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- Опубликовано: 29 ноя 2022
- In this video, I will walk through the new changes to the 1099-K form.
Starting January 1, 2022, those companies and people that received payments from payment card processors or had third-party network ( Paypal, Venmo, Zelle) transactions in excess of $600 will receive a 1099-K.
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The 1099-K is an informational tax form that is filed with the IRS, and a copy is given to the person
that received the $600+ of payments.
If you receive form 1099-K, you need to report this income on your tax return. The IRS is expecting to see this on your tax return.
If you/or your business received payments from Venmo, PayPal, Etsy, Airbnb, Uber, Lyft, Amazon, etc., greater than $600, you’ll get a 1099-K.
If you received payments from Zelle, you will not receive a 1099-K, but instead received a 1099-MISC or 1099-NEC if the payments were in excess of $600.
Here is an example of a 1099-K form:
[Form 1099-K (Rev. January 2022) (irs.gov)](www.irs.gov/pub/irs-pdf/f1099...)
Finally, in the video, I mention the importance of NOT combining personal with business bank accounts. The 1099-K is a perfect example of why not. If your customers paid you $10,000 via Venmo to your business bank account and your friend paid you $1,000 via Venmo to your bank account, the 1099-K would show $11,000. Technically, $10,000 is revenue, but the IRS will be looking for the $11,000 to be reported.
Paypal 1099 K
Venmo 1099 K
About my channel:
Rob CPA channel was created with a mission to provide viewers with accurate content so they can be proactive in their tax planning strategies and build financial wealth. The video topics I selected reflect real-world issues that I’ve seen our clients experience relating to their personal tax returns, retirement plans, and accounting.
The channel allows me to share my passion for taxes, personal finance, and accounting. I create content I wish schools and entrepreneurship programs/accelerators would teach their students and companies. I take complex topics and simplify them for the viewers as well as show examples.
I will be covering the following topics:
- Personal & business tax planning tips;
- Personal finance;
- Accounting;
- Investing;
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Terms: 1099 k amazon, 1099-k vs 1099-misc, 1099k, 1099k paypal friends and family, 1099 k form
#1099 #taxes #taxreturns
Let me know below if you have any questions about the 1099-K $600 Rule:
Question: I have a personal, non-business account with PayPal. Through PayPal, I loaned a friend $5000 in 2022. Later in 2022, through PayPal, he paid me back $1000. Am I obligated to report this $1000 as taxable income, even though it is money I loaned out being paid back to me?
@@hemlo7494 Good question - you shouldn't have to pay tax on the $1,000 - since you don't have a business account and if your friend paid you back the $1,000 and they didn't use a business account on PayPal and didn't mark the transaction as goods and services. On a side note, check out my video on the gift tax rules - you can gift people up to $16,000 a year and its not taxable.
I was currently using my cash app to move money around from one bank to another to pay my bills. I was really lazy to go to the bank and just deposit cash over the period of the year we moved over $12,000 and 27 transactions total. I do have proof that I was using the money to pay bills on our statements. Will I get be getting a 1099?
This is an irresponsible overreach of government. They know the mass confusion and hardship this will cause. It shouldn't have happened.
What if I sell my washing machine to my friend for $650. And he says to me can I pay you via PayPal? And I tell him, no please pay me cash. So I don't have to report it as income. Question. Is that legal? And then what if say to him. You can pay me in PayPal and I'll sell it to you for $599. So now PayPal can't send me a 1099? And who is responsible to file the 1099 first? Me or my friend who bought the washing machine? Or PayPal is just waiting to make ANY transaction to anyone for anything that is $600 or more. And then PayPal sends out the 1099? How does PayPal know if it's a transaction for a business or personal?
This is why they want a cashless society, they want to track every penny and track you.
and they can cut you off from funds at will
Yes the word of God says that there will come a cashless society that one can neither buy nor sell and that those that take the mark will be damned!
. . . while they transfer billions through Ukraine and launder it back through FTX & similar to launder our tax $$$$ into campaign funds and their personal off shore accounts.
@@vernpierce8836 You are correct....the creation of a true, slave society.
We are already there. 2% of all money in USA is in physical media.
Looks like the 80 thousand new hires at the IRS will be busy auditing grandma's Etsy side hustle.
Of course. Rich people can afford badazz lawyers to fight the IRS lawsuits. Better to twist the arms of grandma and grandpa and the like to get them to spit out their cash. Like a legalized ATM machine.
The potato owes 500g's in taxes
Of course they are. No thinking person ever thought it was about going after rich people "not paying their fair share".
Correction that's 87,000 gunslinging new IRS agents! Let's Go Brandon 🖕
Nothing like a pissed off auditor with a 9mm and 700k in ammo.
Pertaining to eBay, Reverb, Etsy, etc.: Taxes should ONLY be collected on profits, not gross revenue. The government/IRS knows that 95%+ of casual sellers selling items that they acquired 10,15, 20+ years ago will not have kept receipts to prove original cost. Therefore, they will be wrongfully taking advantage of these people by taxing on gross revenues, not profits. This should be illegal.
Naw, the government wouldn't do anything illegal, now would it?
Good point. How do we handle selling a few things to without profit or receipts?
The Pentagon lost 2.2 trillion, and these people are worried about a 600-dollar transaction I made with a friend. Give me a break!
Not from a friend. This is about earned income derived from a business. A little research can reveal a lot.
So selling my personal items online so I can afford the car repair is business income? Lol…do a little research before making dumb comments
@@shep68 Way to entirely overlook the meaning of this comment. Congrats.
The Pentagon did not lose 2.2 trillion. It's impossible because the annual defense budget is far less than this amount.
@@rpg752 they couldn’t account for 2.2 Trillion dollars after their recent audit with over 1,600 auditors. This wasn’t for a one year period, this is a running audit.
Yes… I also have a question….why do people vote for politicians that do nothing but grow more government to find new ways to confiscate the fruits of your labor, without providing any value beyond creating bigger bureaucracies for themselves?
You can always go live on an ice floe in the Arctic. Nobody will bother you there. Societies need taxes to function.
@@shep68 or, you can have limited government, and not have an ever expanding need for more, by inventing things for the government to do infinatum. I always love the big government commenters who think Limited government and taxation with representation is an insane concept…
@@shep68 So for you, it's ok for Biden to hire 87,000 armed IRS agents to raise more income for this already wasteful government. How much do you think 87,000 more government workers is going to cost taxpayers? Now add the extra cost my tax preparer is going to charge.
@@harrysurtees8710 The 87,000 new IRS employees (to be hired over a 10 year period) are not going to be armed. Remember, the Republicans severely slashed the IRS budget resulting in over 20,000 employees to be let go, with an additional 50,000 expected to leave and not be replaced over the next few years. As a result, thousands of taxpayers are still waiting for their 2020 and 2021 refunds. Thousands more are still awaiting resolution to tax issues. And if you have ever tried to call the IRS to get a question answered, good luck. Even tax professionals can't get through.
U are a perfect example of a sheeple lol
I've been paying these 1099 taxes from trading stocks and options as side hustle for 20 years. The good news is you don't have to pay Social Security. You do have to pay state and federal. Certain costs can offset profits. Keep records. Next they'll tax the buy get one free coupons at Kroger!
If the 1099-Ks represent self-employment (as defined by the IRS...an activity engaged in for profit and done on a regular and consistent basis), then the self-employment tax (both the employee and employer portions of social security and medicare) would apply.
Not paying SS taxes is not good news if you are depending on drawing SS benefits when you are older. SS benefits are based on what you paid in.
Instead of collecting from the “big” guy they keep screwing the little guy n u don’t have to b a math wizard to see what should b done so here our government “goes again “ To hell with the system !!
If nobody complied with this BS it would go away. STOP PAYING TAXES TO THESE CRIMINALS
Government is out of control
The rule was supposed to go into effect this year. However, in an update announced on Dec. 23, the IRS says that rule will not go into effect for the 2022 tax year.
Thank the Biden administration, and Senate Dems.
Ah ... the targeting of small business resurgence began with Steve Mnuchin.
Taxation goes back to the founding of this country…and every other country. Nice try tho genius.
@@shep68 taxation is theft, taxation would be nice if we actually lived in a Utopia where the government took our money and made our country better with better cities and better schools but we don't live in that world and they just use our money to line thier pockets.
Nice try.
Either tax the income or tax it when it's spent. Not both that would be double dipping and thats theft.
@@shep68
IRS announced in November 2023 that the threshhold for third party reporting on a 1099-K is now $5,000 for the year, delaying the $600 threshhold for yet another year.
Here is the video I posted yesterday: ruclips.net/video/insVoe_aTmM/видео.html
On Friday, 12/23/22, the IRS announced there will be a one-year delay in implementing the new 1099-K $600 threshold. It will now go in effect next year for tax year 2023 that will be filed in 2024.
The rules now in November 2023 is equal old rules.
Great information, thanks.
Glad it was helpful!
1099ks include tips and sales taxes, non revenue items. Very difficult to tie out to the sales register.
Remember when they were just going to go after the rich?
My understanding it's only if you're a commercial entity as marked on the transaction as opposed to a cash transfer between friends, also as marked on the transaction.
Correct
Might put ebay under . Alot people sell stuff . To help themselves for vacation or holiday gifts , and don't really do high dollar . Guess only 599.99 here on out a yr 👀
you have EXCEEDED YOUR "SO" QUOTA FOR THE DAY!!!!!!!!!!!!!!!!!!!!!!!!
As far as Schedule C reporting, the IRS is going to have to come up with modifications on Schedule C to clarify personal payments when business and personal are mixed. The taxpayer should also be prepared to prove the personal payments were, indeed, personal. There are a few ways it can be reported now, but the IRS needs to step up and add actual reporting lines so the personal portion can be subtracted.
Thank you for the video. How and where do you will the explanation be addressed? Where would I put the explanation of income difference? I have transactions from friends sending me money via cash app, how can I explain it to the IRS? Forgive me if I confused you.
On cash apps like Venmo, there is a business account that can be created. If a business account is used to send/receive money, the receiver will probably receive a 1099K. Also, these apps have way to show if the money is for services or goods vs. a reimbursement.
Since this is all new this year, we expect that 1099Ks will be sent to the wrong people or they might be sent to someone that received money and the money was from a friend for no services or goods.
1099-Ks can be amended. If you do receive a 1099K that is not correct, you should a note to the app support team for them to file an amended 1099K.
@@rob_cpa thanks 👍🏾
Thank you so much of your very detailed video. Just found it. You’re talking about business. How about we the people don’t have any business just earning a little bit. Is $600 monthly income taxable?
The key phrase there is "earning". If you are earning the money, it is income. If you are earning the money by providing a service or good to someone, it is also self-employment, subject not only to income tax but also to self-employment tax and would have to be reported on a Schedule C.
@@jimtrue1465 Thank you and Merry Christmas to you and family.🎄
What about aps like Ibotta, you purchase something and you get money back, like a coupon will you be taxed on that?
Do I have to tell the IRS I've been paying a guy to do yard work, mowing, trimming and other general clean-up? Or someone to watch the kids if it's over $600 a year?
Since you are not engaged in a trade or business, you do not have to file a 1099-NEC to the people who do your yard work or watch your children.
1099 nec goes on schedule c and is subject to self employment tax. 1099 misc is for rent or other things are not subject to self employment tax.
I sold tix on stub hub and the sent me my money but they never asked for my ssn.
I asked my accountant and he said don't give it to them... if you don't feel safe, they've paid you and your annual income is under the threshold to declare anyway. If they don't have your SSN the IRS will declare it null and void.
My tix were $620.
Very good question - first question relating to SH.
Based on their website, they are trying to collect SSN to issue 1099K. They say they will not pay out the money unless users supply their SSN.
If you received the money, then you probably won't receive a 1099K from them. The purpose of the 1099K is for you to report this income on your tax return and also alert the IRS of the money you received.
Worse case, they could issue you a 1099K, but with no Social Security.
Going forward, SH will be more strict - be on alert.
@@rob_cpa can they do that, issue with out an ssn?
My accountant said as my income level is below declaring generally then I have nothing to worry about.
I doubt they will issue a 1099K to you if you don't have a SSN.
@@rob_cpa Thank you for replying.
I didn't even know about the change in tax law. It would've been less stress to sell them less than $600 but that would've been a huge loss to me.
Couldn't you take a snapshot of the tickets showing their face value or save your original receipt for the tickets? Then your account has the receipts and can prepare the Schedule C to show the tickets costs, subtract the ticket costs from the SH sales amount, revealing the true "profit" you made, which is well below $600? Ask your accountant, but that's my understanding of how it works.
Thanks for the info. I have one thing I’m not clear on.When I received a Venmo payment for $775 for picking up things for a friend he left this as a personal transaction not a business transaction. Will I still receive a 1099 from Venmo.
You shouldn't receive a 1099-K, especially if the friend didn't indicate "services" in the transaction.
We are telling people that if they recevie a 1099-K and shouldn't have, they can let Venmo know to amend it and indicate it was personal. If this happens, you can't file your personal tax return yet.
So we're a small multi-generational family farm and we sell freezer beef as an alternative market for our cattle. All generation own cattle and we try to divide what animals go to the freezer beef market by percent ownership. Payment generally comes to me as a written check or cash and take care of the checks and distribute the funds appropriately. the owners then claim the funds on their individual schedule F's (except for my under 18 kids and I put those funds o my schedule F) We have started taking Venmo and PayPal, but they're individual accounts, and I know in the case of the PayPal account the dollars received will exceed the dollars that member received in actual sales. Do I need to generate a bill showing the dollar amounts over what they earned to off set this income extra income for them from the individual who actually owned and ended up with the funds? - Thanks
This is just a way to get that stimulus money back. It has absolutely nothing to do with lowering inflation. It's just called that so it sounds good.
As the rich and entitled avoid millions the minnions pay for the scraps they get
i thought this rule begins jan 2023. are you saying it started in jan 2022 so everyone has to scramble now to get SSN's from people to report the 1099's for tax year 2022 returns?
Correct, the rule started effective 1/1/22.
Use the following link to a W9 form and send to people you paid over $600.
www.irs.gov/pub/irs-pdf/fw9.pdf
I deposit 700 bucks in to say DraftKings through PayPal, place bets, ultimately loss 100 and place 600 back into PayPal. Now do I have to prove that I lost 100 and wasn’t paid 600?
Ebay adds the cost of shipping to the amount the seller receives, so if I sell a doll for $40 and shipping is $15 (which I must use to ship the doll), ebay says I made $55. This is a misrepresentation of what the seller receives. How will this be addressed during tax season?
If your total sales on EBay exceed $600 for the year, then I believe you will need to include a schedule with your return to breakdown each transaction including how much you paid for the item, your sales price and the expenses associated with the sale to determine if there was a “profit” or loss for each item and then I believe there will be a summary at the bottom of the schedule to show total profit or loss.
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On Insta:-
You are going to need to keep records of transactions and calculate your actual profit/ gain and be prepared to back it up in case of IRS challenge/audit. Basically we are all in business now..
The $15 shipping is an expense you can deduct from the sale. The same with any fees eBay charges for facilitating the sale. On the sale of goods, you always report the NET proceeds, not the gross proceeds.
I do not understand how they can just change the rules in the middle of the year. Changes should take affect for the year following their passage so we know how to manage what little money we make.
They didn't change the rules in the middle of the year. This rule was announced at the end of 2021 to take effect for tax year 2022.
They changed the dollar amount from $20,000 to $600 that gets reported on a 1099K. The reason why they reduced the dollar limit is the IRS has found many people receiving money and not reporting it on their tax returns.
I understand it’s for business transactions but I don’t have a business and how can i prove this money was from personal uses?
Exactly what I want to know
It's a trade. You bought the stock/item for $10 and sold it for $20. You earned $10. You pay tax on $10. Or, you bought item for $20 and sold it for $10. You lost $10. All you have to do is prove it with documents. Keep records!!!
I'm retired and don't work. I want to upgrade to a newer metal detector, so I sold an old metal detector for $700 that I paid $800 two years ago. This is a hobby. I did not earn $700.
Sounds like you earned $100 from the trade. You need you purchase receipt to prove cost.
If what you have is hobby income it gets reported on Schedule 1 line 8 of the 1040. Unfortunately, the Tax Cuts and Jobs Act of 2017, supported by Trump and passed without a single Democratic vote, eliminated your ability to deduct hobby expenses from hobby income.
But what you describe is not hobby income. It is the sale of a personal-use item. This is where things are a bit confusing. The IRS regulations are clear: If you sell a personal-use item at a loss, you should not report the sale on your tax return. But now you are getting a 1099, so the IRS will be expecting that amount to be somewhere in your tax return. This is a conflict in the regulations that will need to be addressed.
One way to handle it is to simply follow regulations and not report the sale on the tax return. Then, if you subsequently get a letter from the IRS asking about the $700, simply respond with an explanation that it was the sale of a used personal-use item for less than your cost basis. If the IRS sees that you are clearly not in the business of selling items (it was just one sale), that likely will satisfy the IRS.
@@jimtrue1465 Thank you Jim, I appreicate your helping.
We are a property management company and I have a few questions regarding the 1099-K and 1099-MISC.
For the 1099-K, we have received a gross amount of $26,600. Could you please advise on how to report this amount in the taxes? These payments were received via the portal and disbursed to the landlord.
Cuando reportes los profit or loss de la empresa, debe informarse al IRS
Question? HOW do I get around this? I get paypal for things I sell on ebay but many of them are things I paid say $4000 for a watch and sold it for $1800....years later...do I have to have the ORIGINAL RECEIPT....? what a nightmare.
@@williamlyons3947 no shit...my point is: who the actual fuck has a receipt for a rolex I bought in 2084 and sold last year?
Yep, gotta catch all those billionaire tax cheats who obviously all got rich by not reporting that $600 transaction on their Venmo and PayPal accounts!
Clearly need a political education
Really, if you receive income of $600 (or even $6) via Venmo or PayPal then you should absolutely report it on your tax return. Don't be a tax cheat. But the problem is when people are selling junk from their house (or their relative's house) they are unlikely to have receipts to be able to find their cost basis. So, when I sell my beanie-baby collection on eBay I'm going to receive a 1099-K for the full sale value. I don't have receipts from the 90s to prove I actually lost money on the sale. I can estimate and provide an explanation to the IRS, but they may or may not even accept my explanation.. Either way it's a pain (not to mention stressful for most people) to deal with the IRS over nonsense like this. And it's blatantly obvious that these new rules do not target rich tax cheats.
@@MrZedblade There are other ways to establish a cost basis other than a receipt. The IRS is more interested in what the cost basis was at the time of the sale not what you paid for it 40 years ago. Although they will accept either one. Just by establishing what comparables sell for is just one way.
@@everettcalhoun8197 "Cost basis at the time of the sale" usually IS what you paid for it originally
@@jimtrue1465 So you originally paid $500 then paid $300 to repair the item and sell the item for $1000. You are telling me the cost basis for the item is $500.
Yes I have a question.
I use PayPal to purchase things from time to time. but I do NOT have a side job and have not received payments FROM any the platforms, including Zelle.
Will I receive any 1099 form?
LOL!
no, you will not receive a 1099, if you are buying stuff via PayPal.
What if you receive LESS than $600 and DO NOT receive a form 1099-NEC (from Amazon Vine)? Do you still file the same way? Or can you file it as “Other Income” on your 1040? I’d really like to avoid Schedule C or whatever since it costs a great deal more to file that way using TurboTax.
I received $280 of estimated tax value in product from Amazon Vine and am really confused if or how I report this since no forms will be filed with the IRS.
your suppose to report any source of income anyways. all they did was lower the reporting threshold down to $600.
Yeah, I have no problem reporting it. I’m just not sure if it’s reported as “Other Income” on my 1040 or if I need to report it as if I received a 1099-NEC when I actually did not receive one because I was under the $600. Reporting it as a 1099-NEC will considerably increase my filing fees via TurboTax.
@@DukToonz If the money is a result of services you provided, it will likely be considered self-employment and need to be reported on Schedule C. "Other Income" is generally limited to income for things you didn't need to do any work for.
@@LCJammer Oh, that is all they did. Lol!
Is it not true that PayPal payments that are received as "friends and family" are not subject to the new 1099 K rule, and won't be reported to the IRS?
PayPal shouldn't send you a 1099K if you're using their friends and family and noting the transactions as non business. Since this is new, they may think the payments you made are business related and send you a 1099K. If that's the case, make sure you tell them they need to amend the form and send you a corrected form of $0.
In good hands with the IRS.
Question? So since I am using my venmo for only personal transactions that are all labeled as friends only transaction type I should not be getting a 1099k? It's only if a transaction type gets marked as goods and services or if I have a business account that hits the $600 threshold?
That is correct, from what we've been reading. If you do receive a 1099-K from Venmo, you should contact them and have them issue an amended one for $0 and indicate that the payments were non-business related. We think there is going to be a lot of confusion this year from the payment companies.
@@rob_cpa you've got that right
@@rob_cpa I expect a cluster fuck from Venmo
My husband and I are senior citizens and don't do taxes anymore. If we sell over $600 on Ebay for example, and they send me a 1099k, will I have to do my taxes again, even if the income does not bring us up to the amount that we have to file?
Also does each marketplace report separately? For example if I sell $300. on three different marketplaces (Ebay, Etsy,Poshmark for example) will I receive a 1099k from any of them? Is each a separate entity for giving 1099k?
You will need to report the income on your tax return if Ebay sends you a 1099K
I have a question... I do not have a business, but have been selling off years of accumulated "stuff" on ebay and elsewhere to clean house. I understand about reporting using the 1099-K, but will I have to create a business per IRS rules, or can I just report the income on a line for the 1099K's and be done with that?
No, you don't need to formally structure a business. Sole proprietors can just start doing business, which sounds like you have done this.
If this is not a hobby, you should consider some expenses relating to this business to offset the income.
Do you have the original receipts showing the original cost of all your accumulated "stuff"?? Probably not, and your government and IRS knows this. Nice, huh?
@@rob_cpa How does the Hobby clause work???
what if you want to send family money occasionally will zelle,
do they have to pay tax on that?
Good question. What we've heard so far, Zelle payments would be excluded from the 1099K process. But the IRS could change their mind...especially if people start leaving platforms like Venmo for Zelle.
actually 3 questions---we downsized and sold several pieces of furniture and appliances, in most cases for a small fraction of what they cost new---if we produce the original invoices, had a professional appraisal that showed a higher value than what they sold for--could we claim a loss
second question many people are ordering high demand vehicles then selling them at significant profits as "private" sales--how is the irs capturing that income
finally since the irs has no problem going after grandmas bake sale income, will they every have the courage to make alsharpton pay his tax bill
second question: when these people sell vehicles at a higher price, it depends on how these people are getting paid. If its a cash transaction, I doubt the IRS is capturing it, unless the person selling is reporting it on their personal tax return. This is one of the reasons why the IRS lowered the rule to $600 for 1099-K because people were selling stuff on Ebay for less than $20,000 and not reporting it.
first question - you will want the original invoice, if you can track it down, to support the cost you paid. If the cost is more than what you received, you potentially have a deduction to reduce those proceeds. You'll want to claim this on Schedule C.
Al sharpton files under a 501c3 nonprofit status due to his religious affiliation…bs
Yes I have questions. I have taken a total of 6k this year through venmo. Most of that was from the $400 a month my roommate paid me for rent the rest of it was from random stuff ppl paying me back or splitting the check buying plane tickets for family etc. So how is this going to work? If I get sent a 1099 how do I prove all this? I’m going to get taxed on that $6000?
Good question. If you are using Venmo to pay friends or receive payments from friends , like a reimbursement for lunch, that will not be taxable. This new rule is geared towards business owners, gig workers and those that sell goods and services
@@rob_cpa what I’m saying is how will they be able to prove that? If I get a 1099 how can I show them it’s for everything I mentioned?
If you received money from a friend and they didn't tag it as a service/good, then Venmo would not include in a 1099K. For business Venmo accounts, they are automatically coded as goods and services.
Keep in mind, if you do receive a 1099K from Venmo in January and its incorrect, then can amend it.
Why wouldn't you? That's income. Keep records.
@@weldingsolutionskck2798 LOL... you have a strange idea of what "income" is... So according to you if I pay $1000 for the rent and then someone REIMBURSES me for their half of the rent ($500), then I "earned" $500? You sound smart.
I'm curious to know. I sold over the $600 amount on Ebay, from the amount received from sales Ebay gets their fees.. Will I be able to subtract what I paid in fees and final value fees to Ebay?
You should be able to deduct the Ebay fees - bank/merchant fees. So if you sold something for $1,000 and Ebay's fees were $50, your sales would be $1,000 and a deduction of $50.
What if I have a side hustle cutting grass and accept cashapp on a personal account will I receive a 1099 or does it have to be a business cashapp account?
That's a good question - it will depend on how it was classified from the person that paid you. Similar to Venmo, you don't need a business account, but if someone states "services" that will be included in the 1099K.
If you do get a 1099K for your services, you'll be able to use expenses to off-set that income on your Schedule C on your tax return - remember to do that - assuming they relate to the grass cutting.
We all know it's to get that sweet sweet stimmy back where it belongs😂
Does this apply to an individual that sells hi couch for $650.00 on craigslist or Facebook Marketplace and they pay you through Venmo or PayPal?
Yes.
Cash is king.
So when my parents send me money through the year to give to my children for birthdays, holidays etc. will not be tracked and I will have to pay taxes on that like its a business transaction?
If the transaction is marked as a "friends and family" transaction, there should be no 1099-K issued.
I have a guy that mows grass at 25 a week , he does a lot of peoples lawn in my town . He also gets government assistance and SS DISABILITY. He should be reporting all this to the IRS CORRECT ??
Yes. The mowing of grass is considered self-employment, and the IRS says anyone with self-employment income of $400 or more must file a tax return.
Doordash is included in this, correct? Because I made like $350 to supplement slow months of employment through it. Is that why I never got a W-2 or information to file income tax for it? Because it's less than $600? I don't have enough information to calculate my own taxes for it. I only had the total income that I calculated myself going through past bank statements. It took a long time to compile, too.
Good question. You probably don’t receive a 1099 because you earned less than $600.
Has been delayed. News said 2024, but guessing they mean keep track in 2023 for filing in 2024.
Correct...2023 will be when the clock starts - so tax year 2023.
What about the $80 billion that the U.S. sent to Ukraine? Do the American people get a tax credit for that?
No..... But I bet Bunter Fiden w/big-Guy are! .
Are refunds for services or products that are made through Paypal included?
If you sell something and Paypal or whatever is used is that somehow considered income now?
Yes
Thanks for the info
Always has been. The only difference now is that you won't be able to hide it from the IRS.
Quick question. If I made less than $600/less than 200 transactions on a place like Amazon seller, and I did not qualify for a 1099-K. Would any small amount of money I made, have to be filed under schedule C, I assume?
That's where you can record it, assuming you have some expenses to offset it.
What about IRAs and annuities that are not taxable income and do not have to be reported, some are but our inheritance isn't, our financial advisor said these were set up by my wife's parents so that the payments we get from these does not have to be reported as income. Does this change now?
This change does not affect IRAs and annuities.
So far anyway!!
If a person is 70 years old and on social security. Do they have to report anything over $600 or are you still allowed to make money you don't have to report ?
Normally, a single filer with income less than $12,950 (in 2022), or less than $14,700 for people 65 and older, does not have to file a tax return. However, anyone who has self-employment income of $400 or more has to file a tax return even if total income is less than the standard deduction.
SO, if I sell a computer on EBay for $1,500.00, and my buyer wants to pay by PayPal, I will have to pay taxes on the $1,500. I will ask the buyer to send me 3 payments by PayPal of 495 for a total of $1,485 giving him a $15 break for the trouble. The IRS can take a short coffee break but they have to pay for it.
My apologies if this was covered but I missed it.... I'm not a business, I file as an individual, I sell my drum kit because I no longer play... If I use PayPal as the third party to sell my kit, will they 1099-K me?
They might if the sale was for $600 or more. Depends on whether the buyer listed the transaction as a "goods or services" or a "friend or family". Since the drum is a personal-use item, then IRS regulations say if you sold it for less than what you paid for it, don't report the sale on the 1040. If you sold it for more than what you paid for it, then report the sale on Schedule D where you can deduct your original cost and pay tax only on the profit. I wouldn't worry if you don't have your original receipt. If the IRS should question the sale, a simple explanation would generally suffice. The problem would be if you engage in so many sales of items that it might be considered you are conducting a business.
My question is how do I show the cost basis for items I’ve sold on EBay and Reverb? I’ve sold beautiful used guitars that I paid more than I sold them for. Golf clubs too. Thanks
If you are in the business of selling things on eBay, you report the sales on Schedule C, where you can deduct expenses, including "Cost of goods sold". If this isn't a business, you would report each sale on Form 8949 and Schedule D, where you can deduct your cost basis from the proceeds. However, if these are personal-use items, do not report any sale that resulted in a loss.
@@jimtrue1465 thanks Jim! Mine are all personal items. I don’t have a business on eBay and I sold everything for less than I paid for the items ( I have the Ebay and Reverb purchase and sale records) except a few sports cards
@@mvman4122 Just a caveat...the IRS rules are clear that you do not report the sale of personal-use items that are sold at a loss (because such losses are not deductible). The IRS is not clear at all what you should do if you receive a 1099-K for the sales. If you don't report it, it is possible you might receive a letter from the IRS asking why you didn't report the 1099-K on your return. If that happens, I suspect a simple note of explanation would suffice.
@@mvman4122 Just read an update from the IRS. If you receive a 1099-K for personal-use items you sold at a loss, list the items on form 8949 and enter an "L" in column (f) and the amount of the loss in column (g), and a zero in column (h). If you don't receive a 1099-K, you don't need to report the sale.
@@jimtrue1465 thanks Jim! My recently retired tax accountant told me the same. He suggested lumping my 7-10 personal items sold at loss all on one 8949
BREAKING NEWS: The lowered $600 threshold now delayed until 2024. Imagine how many $$$$ websites like eBay, Reverb, Etsy, lost in 2022 because millions of sellers stopped selling under the $600 threshold this year. WOW.
Hello sir, if I made the payments to contractors through credit card, should I need to issue them 1099 or credit card processor will be issued them 1099?
If you dont you might get fined $50k or 2-3 years prison sentence...But the summer of Love 2020 not a single one of the protestors spent a night in jail or paid $1 in fines while burning businesses down.
The Credit card processor should issue them the 1099-K.
@@jimtrue1465 How long Will it take to get this form in the mail? Still haven't received one and ive made over 20K in credit card payments from my business
@@hopeforthefuturesg Companies have to mail them by Jan. 31. So I would say give them a few more days to receive it. If you don't receive it, contact the company that processes your payments.
If I sell consigned goods on my eBay for other parties, then pay the owner of the goods via check through my bank account. How would I properly deduct the consignment expense on my tax form, since my 1099k is going to show the sale of these goods in my net income for ebay at year end? Thanks
so your 1099K will show sales of say $50,000 - that's revenue on Schedule C.
Then the amount you spent on expenses will show on Schedule C as well - probably Cost of Goods Sold.
If you send the owners of the goods money via checks, you should be issuing them a 1099-MISC if the amount you send during the year is over $600.
Does this pertain to just businesses or for individuals? What if a person is just receiving money from a friend, through cash app and it totals over $600/year.?
Gifts are not taxable, nor is a payment from a friend who is just repaying you for something. The new rule specifies that the 1099-K should only reflect payments for goods and services.
If you receive money through the Cash app from a friend, just make sure they don't mark it as services. Since this dollar limit of $600 is new this year for 1099-K forms, we wouldn't be surprised if Cash app and others send out incorrect 1099K forms. If you are using the app for personal purposes and not a business, make sure your social security number is not on the app.
Thanks Brandon
What happens if you don’t fill out your 1099-K for like a app to sell stuff on?
The apps like Venmo (if for business purposes) will be sending out the 1099-Ks. Similar with Etsy and Ebay - they are keeping track on what you are selling and if you sell more than $600, they will be sending you and the IRS a copy of the 1099-K.
schedule C or D ? how do you report paypal transfer from my aunt to my paypal account, and then i withdraw money and give it to my son's birthday party ?
Those payments should not get reported on the 1099-K. Hopefully your aunt checked the payments were to a friend or family, and not for goods and services.
So if I clear out my garage and sell my old stuff on eBay and the total amount of my sales comes to over $600, I now have to pay income tax on it?
You will probably receive a 1099K that shows the amount you receive from eBay (utilizing PayPal). Assuming you have expenses and there were costs associated with those items you sold, you could offset that income.
@@rob_cpa Thanks for the information. After eBay fees and PayPal fees I would still have an income from the sales so looks like the government is once again going after more of the little fish. No wonder eBay lobbied against this rule change.
Does this apply to MLP's?
If I make less than $600 and these companies don't send me a 1099, even though I'm supposed to still report it, will the government be told that I made less than $600?
The IRS will not know if you didn't receive a 1099. The 1099 alerts the IRS. Depending on how much you made and if you ever get audited by the IRS, they'll find out by looking at bank statements.
My daughter receives her child support via a Facebook pay. Will she get a 1099K from Facebook and how does she show that as child support and not income?
This is a good question. I haven't seen the options in Meta's payment platform when sending or receiving money. if the payments are noted as Child Support in the memo section, then she shouldn't, but I wouldn't be surprised if she does receive one.
My suggestion - I would have her reach out to Meta this week and let them know that she is receiving child support payments which are not taxable and that she should not receive a 1099K. So they have notice before year-end.
If she does receive one from Meta, have her contact Meta and have them amend to $0. She can't file her personal tax return until they amend.
Does it come filled by Paypal? If so, what should I do with it? I'm a brazilian who works using Paypal.
If you earned more than $20,000 on PayPal, they will send you a 1099-K form.
i have question do Canadian seller will be subject to get a 1099-k form from IRS or just US sellers?
Are you a US citizen that files US tax returns? There are certain rules in US on whether you need file a US tax return and report that income.
@@rob_cpa no i live in Canada and i am Canadian resident am i safe?
If I sell something on Ebay for 600 but it originally cost me 2000 don;t I have a 1400 loss?
Potentially, you will have a loss. The key to find that invoice to support the cost you paid for it, in case you get audited by the IRS.
Correct. You need a receipt. In the stock/options world, we can deduct up to $3,000 against our income per year, plus losses might carry over indefinitely. 1099s have their rules. Learn them. Keep records.
If a person uses Zelle just for non business transactions, then nothing is reported ?
Correct.
Here is some additional wording from Zelle.
If does seem odd that Zelle would be excluded, but there is some talks of including them in the mix for the 1099-K. It's a wait a see at this point.
www.zellepay.com/faq/does-zelle-report-how-much-money-i-receive-irs
@@rob_cpa It doesn't look like a wait and see, it looks like, "No, Zelle does not issue a 1099k". That has been consistent from what I've seen.
You get paid Direct from a customer not from a company that pre set prices and gets paid first / and that company keep giving u work for more then 90 days your are now an employee under 1099k Laws
how about apply pay with friends. 600 goes fast with splitting meals, gas, stuff like that.
Personal transactions don't get reported.
Hi, my son is on my car insurance policy with me to save money. We normally renew our car insurance policy every 6months my insurance company just did a automatic withdraw from my bank account in the amount of $1570. My son paid me back his portion of the insurance he gave me $785 for his half using Zelle. Do I need to fill out a 1099-K? Thank you.
You do not fill out a 1099-K. A 1099-K might be sent to you by the Third Party Processing company. But my understanding is that Zelle will not be sending out 1099-K.
@@jimtrue1465 Thank you very much for your help. Have a great day!
Please see my video on Zelle payments to learn more. As of now, Zelle is not part of this new 1099-K process and you/Zelle will not need to issue a 1099-K.
What about banks? Let's say you cash in some coins you've been saving, and deposit over 600. Do the banks send you a 1099 for deposits of 600?
No, you will not receive a 1099K from the bank. If you deposit cash that earns interest, they will send you a FORM 1099-INT - interest income. They typically will send it if you earned over $10 of interest income.
How does this work if you have an interest free checking account with under 10 thousand in it and ypu try pulled 2 grand out of it
So you have a personal bank account, earning 0% interest where you put in money, post tax and want to take out money of your bank account - nothing gets reported to the IRS.
Let me know if I misunderstood your question.
I received multiple $50 Zelle transfers from friends personal accounts totaling more then $600 will the IRS know since it’s not a business account?
The IRS should not know, since these payments were through Zelle. Zelle is not part of the new 1099-K rules.
Thanks Rob
Is this just for third party transactions? If I pay a lawn mowing company (or other) over $600 over the year, do I need to send 1099K?
You should be sending them a 1099-NEC.
Good question. The 1099-K rule applies to credit card companies, Venmo, PayPayl, Square, etc. If you are paying contractors from your business - whether you pay them, check, cash, or Zelle, you will want to issue them a 1099-NEC. We suggest you use Track1099.com - its simple and cheap.
@@rob_cpa So now, we are going to end up semi-accountants. What about all the donations to all of those people who ask for donations over the year? I always use the short form, will I have to do something else for 2022?
I am not to smart, getting older and my mind gets a little fuzzy if I try to tackle too much. I think I'll just let my tax lady deal with it. I'm sure she'll be charging more.
@@harrysurtees8710 There hasn't been a short form for a few years now. Charitable donations are itemized deductions that you can deduct on Schedule A (assuming it is a charitable organization recognized as such by the IRS).
So If you sell some items on ebay for say $2000.00 but took a loss on all them you now have to prove that you took a loss or pay an income tax on you ebay sales?
Yes, that is correct. I would look for the cost value that you bought the item for. Assuming this was the only sale, Ebay will most likely send you a 1099-K for $2,000.
I'm lost what if you only made $200 on Uber. Also what does it mean if you don't receive a 1099k
If you only made $200 on Uber during a 12-month calendar year, they probably will not send you a 1099-K or 1099 since its under $600.
You won't receive a 1099-K if you earn less than $600.
You won't receive a 1099, but the $200 is still taxable and should be reported on your tax return.
What happens when you sell your stuff: jewelry, household goods, guns old cars and boats.
If you are selling your stuff on Ebay, for example and using PayPal to collect money, if what you sold was over $600, you'll receive a 1099-K.
If you sell your stuff and the person sends you money via Zelle, you won't receive a 1099-K, if the amount is over $600. This may change if they change the rules around Zelle transactions.
If you sell on Craigslist, for example and someone gives you cash, you will not receive a 1099-K.
I have a question, so i collect celebrity autographs, my collection is constantly changing, so ive sold some on ebay and mercari to get new ones but ive easily taken a loss or broke even on most transactions so how do i prove the hobby aspect of this and not the business part
Just report the income on Schedule 1 Line 8 as "hobby income".
@@jimtrue1465 thanks for your response, now ive never recieved a 1099 so will i be reporting that on the 1099 or on my actual anual earnings?
@@shadowknight4738 Unfortunately, the Tax Cuts and Jobs Act of 2017 eliminated the ability to deduct hobby expenses from hobby income.
@@jimtrue1465 but hobby income itself cannot be further taxed due to me already paying taxes during the purchase of these items correct?
@@jimtrue1465 im not opperating a business nor am i reselling for intended profit, so i shouldnt have to pay any taxes on that income right?
So a bedridden friend of mine Zelles me money once a week to shop for them will this be reported at all to the IRS. Its not my money it's money for their stuff?
If its Zelle, then you shouldn't receive a 1099K. As of now, Zelle is not part of this new 1099-K change. The money exchange between you and your friend is not a business deal.
@@rob_cpa so i won't get the other 1099s either since it's not business related correct?
You know where your dinner is hanging.
Also doesn’t apply to CHASE & your guilty and you must prove your innocence -
good going bidden make sure the billionaires and the millionaires don't pay taxes.
Freaking bureacratic nightmare coming. No more casual ebay selling for me i guess dont need the hassle.
How is this constitutional?
16th Amendment.
If you sell your car that YOU own title and all, do you have to do a 1099?
No...you are selling your car..it would be up to the buyer to send you a 1099...but in most cases, this is a personal transaction.
For those who wonder why the threshold for issuing a 1099-K was lowered, all you need to do is read many of the comments here. This is not a new tax. The 1099-K does not make what was once non-taxable taxable. All the lower threshold does is make it more difficult for people to avoid declaring taxable income No wonder some people are upset.
I wish them good luck with this...The IRS doesn't answer phones...doesn't send letters.....