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1099-K REALLY?????

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buffalorider
Contributor
Posted on

So, I started selling on eBay as a hobby to fund some off road racing I do and was convinced I "needed" an eBay store. That resulted in me selling more items and thus accepting more payments through PayPal. This was still considered a hobby of mine even though I had a "store" online so that I could list more items. I buy old junk off-road motorcycles (instead of people taking them to the salvage yard) and I sell some of the good used parts. This "activity" has now resulted in a damn 1099-K for the IRS. Why in God's name they have any right to money from the hard work I have put in to my hobby is beyond me. So....main question is what are some of you doing to curb getting this "new" 1099-K form sent to you. Should I limit the number of transactions? SHould I watch the total sales coming in and try to stay under the 20K amount? Would you close your eBay store and only sell the minimum number of items? Or would you go full out and start an actual on line business thus keeping tract of all your expenses, putting vehicles into service, writing off part of your property you use for the businss, etc etc on and on??? This was a hobby and I would like to keep it that way. Because I was not prepared for this new 1099, I did not keep tract of expenses during 2017. I guess I can try to figure out some of them but this whole this is a huge pain in my **bleep**.

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1099-K REALLY?????

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DPCreations
Frequent Advisor

There is no such thing as a hobby when you are making a profit.  IRS requires you to report ALL income, regardless of a 1099-k or not.  You are selling for a profit so that makes it a business and of direct interest for the IRS.

Check with a tax accountant on how to file your IRS schedule C business form.

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1099-K REALLY?????

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DPCreations
Frequent Advisor

There is no such thing as a hobby when you are making a profit.  IRS requires you to report ALL income, regardless of a 1099-k or not.  You are selling for a profit so that makes it a business and of direct interest for the IRS.

Check with a tax accountant on how to file your IRS schedule C business form.

1099-K REALLY?????

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racefan9160
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when was your 1099 issued to you?

 

And the previous guy is correct you have to claim it, the IRS doesnt care

1099-K REALLY?????

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Whac-A-Mole
Frequent Advisor

Your Ebay seller account has the fees you paid Ebay in 2017,and sales tax you collected for your state.

Paypal account has the fees you paid Paypal PLUS More,go to reports/2017 summary and you will see a summary.

Paypal also has shipping fee you paid if yu use PAYPAL to print shipping label

rest is just how much you think the parts are worth,you get mileage for taking them t o the post office,it is 53.5 cents permile standard deduction.

any parts or material you used to repair /replace would add to cost of goods sold,it is up to you if you want to take a homeoffice deduction,any pc,ISP fee,phone if you have more than one,manuals,etc etc can all be deductible.

you wont show much of a profit after all those expenses

1099-K REALLY?????

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buffalorider
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Thanks! I did talk to my CPA and now I am trying to go through as much of my receipts as possible for expenses. Had I KNOWN the IRS was going to 1099 me, I would have kept ALL my records. I have no clue how many times I went into town to drop off items at Fed Ex, etc but I do know where I went to buy these parts bikes, tools and other supplies purchased. I should be good to go with a loss or maybe owe just a little bit. 

1099-K REALLY?????

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Whac-A-Mole
Frequent Advisor

If you dont want to get 1099k,THERE is a way ,Paypal sent one if you meet the 20k,200 transactions threshold,if you split your business between AMZN and Ebay,AMZN has its own Paypal called AMZN one click,and like Paypal,it will send you 1099k if you meet the same threshold.

so if you are sneaky,and keep both under 200 and 20K,then you dont get 1099k from either one.

unfortunately I dont think AMZN is one place where people come to buy parts,may be they do,check it out.

say you collect 19k and 150 transaction via Paypal and 18k and 122 transactions via AMZN one click,neither will send you a 1099k.

But if you are ever audited for other reasons and the IRS auditor start digging and see all these payments coming into your bank account from Paypal and AMZN,it wil want to know more.

any incoming $$ into your bank account which is not your SS,pension,paycheck,inehritance ,insurance claims,MUST BE INCOME and Uncle wants  a piece.

1099-K REALLY?????

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buffalorider
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Thanks brother. I thought there had to be a way, but since I am putting a vehicle into "service" due to the 1099-K coming my way for last year, I think I will need to just keep good records for 2018. I should have been on top of it prior to this year. 

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kiro1234
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Income is income and I unfortunately learned it the hard way as well... However I completely agree with the reply to this comment about once you start drilling into it there's so much that can be written off and deducted to the point where although you're gross income number at first looks very shocking... Because of the fact that it is a hobby.. And if you're like me and you just barely made it over that $20,000 mark, then it really is a shock at first but considering how much people like us who use eBay as a hobby use OurTime our money how are utilities are vehicles are shipping expenses or supplies if you really want to look at it that way in the end there shouldn't be much taxes paid besides Social Security, if you are close to that $20,000 threshold over it but under 25000 in my experience. You do have to go to an accountant but the IRS is very used to this scenario it's nothing new to them. But I would also like to ask your question as to whether or not it is worth just watching my eBay sales and once I hit close to 20,000 should I just stop? Should I stop selling on eBay all together? What have other people done?

1099-K REALLY?????

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madkat
Member

I thought the same, but after completing the Schedule C now for last 3 years its resulted in a net loss because of the fees and costs of selling.  Keep in mind if you are reselling your own items the value vs selling price cant be less than zero (look up "tag sale" rules for valuing your own items for resale)   The net loss for me resulted in larger refund overall.

1099-K REALLY?????

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kiro1234
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Wow this is very intriguing, How do you know what the value of that though? or does it go back to that whole idea that the IRS is very used to this type of thing and they're not going to go around poking around too much and questioning too much? As long as you're reasonable? It's not it's a prop

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