A couple things come to mind. Insurance for one. With F&F you have no insurance from PP is this correct?? This law will encompass all outlets that you sell at such as FB, Etsy, Ebay, Craft shows, and anywhere you take PayPal?? I see Venmo is included. Are there other third party money transaction possibilities that can be used instead of these?? Or are they all effected. The IRS has been downsized to an extent with less workers ,how are they going to police this or is this going to become Paypal's responsibility to report only. ??
In the long run though anyone having a fairly lucrative business that uses PP should really have no problem with this because they have to report income anyway. It will be the people selling a few blanks or items that are basically not a business. I believe they are trying to close that loophole.
I watched the video linked here and believe some misinformation is in there. Unless I am reading things wrong and this does need to be discussed. The guy mentions things like garage sales and things. I think this will become a total mess come tax time especially if you do your own tax returns. If you do garage sales things I believe from reading the law that was again provided here they would exclude that kind of sales. Now this may require more paper work on your behalf
Form 1099-K is an IRS informational tax form that is used to report goods and services payments received by a business or individual in the calendar year. While banks and payment service providers, like PayPal and Venmo are required by the IRS to send customers a Form-1099K if they meet the $600 threshold amount, there are certain amounts that may be included on the form that are generally excluded from gross income and therefore are not subject to income tax. This includes:
- Amounts from selling personal items at a loss
- Amounts sent as reimbursement
- Amounts sent as a gift
So, for example, if you purchased a couch for $1200 and sold it for $800, this amount would not be subject to income tax.
We encourage customers to speak with a tax professional when reviewing their 1099-Ks to determine whether specific amounts are classified as taxable income.