New IRS reporting for 2021? 8 8

[Willbert]

17 hours ago, vodou said:

Expect to be audited.

https://www.bloomberg.com/news/articles/2020-11-17/irs-plans-a-50-ramp-up-in-audits-of-small-businesses-next-year

And act proactively, accordingly.

Or not. Scary headline but 50% more of nothing is still nothing. Take S Corps from the article, 50% increase of 0.01% is 0.015% or 15 out of 100000. If you are a Schedule C flier clocking in less than $100K in gross income it's even less. Impossible? No. Improbable? Highly. Fifty new examiners is like saying there are 50 new graded ASM 300s on the census....doesn't move the needle. For the Service, the fear of an audit is it's most powerful weapon in compliance. Audits suck, don't get me wrong. They are a huge expenditure of time & effort and just not worth the anxiety over slicking Uncle Sam out of a few extra dollars. If you keep written records to the best of your ability, I wouldn't lose sleep at night. And if you are the type to run fast and loose, well you probably can sleep soundly too knowing the odds are way in your favor.

Edited March 10, 2021 by Willbert

[William-James88]

On 3/8/2021 at 4:24 PM, THE_BEYONDER said:

The market will most likely implode before then...,

Here's hoping

[the blob]

19 hours ago, apollobuzz said:

Thanks @grebal and @shadroch!  You have both given me something to think about.  I still prefer the trade path to the sell/buy path since fees are generally avoided in the trade transaction.

don't quote me on it, but if you're trading comics like this the chances of the IRS ever getting involved are near zero. we're not talking about Action 1 here. When you sell and actually have money, that's another issue. of course, it is going to be REALLY hard to document your cost basis if you do sell if your collection was put together through hundreds of trades

 

[the blob]

44 minutes ago, Willbert said:

Or not. Scary headline but 50% of nothing is still nothing. Take S Corps from the article, 50% increase of 0.01% is 0.015% or 15 out of 100000. If you are a Schedule C flier clocking in less than $100K in gross income it's even less. Impossible? No. Improbable? Highly. Fifty new examiners is like saying there are 50 new graded ASM 300s on the census....doesn't move the needle. For the Service, the fear of an audit is it's most powerful weapon in compliance. Audits suck, don't get me wrong. They are a huge expenditure of time & effort and just not worth the anxiety over slicking Uncle Sam out of a few extra dollars. If you keep written records to the best of your ability, I wouldn't lose sleep at night. And if you are the type to run fast and loose, well you probably can sleep soundly too knowing the odds are way in your favor.

basically they have been barely doing any audits, so barely + 50% will still not be a lot.

[the blob]

Just now, the blob said:

basically they have been barely doing any audits, so barely + 50% will still not be a lot.

But you'll probably get audited if ebay does a 1099 for $15K for you and your taxes don't reflect it anywhere. That's the problem. So you need Shadroch to do your taxes and figure out how $15K in sales is $200 in profits.

[the blob]

At the end of the day I am going to need to educate myself on this, which, frankly, i was going to have to do anyway because my wife was planning on expanding her consulting business this year and we'd need to figure that out. Previously it was not all that hard to figure out some business deductions that wiped out most of $800 in consulting income. I still have not gotten a good sense of how many sales would qualify something as "regular" enough to be viewed as a business vs. a hobby (where the changes to the rules really skrew folks over) vs. straight up capital gains on collectible sales. are we really supposed to do a capital gains analysis on the sale of a $10 comic?

[shadroch]

2 hours ago, the blob said:

But you'll probably get audited if ebay does a 1099 for $15K for you and your taxes don't reflect it anywhere. That's the problem. So you need Shadroch to do your taxes and figure out how $15K in sales is $200 in profits.

I don't do my own taxes.  While I try and stay on to of changes that affect me, I have had my taxes down by pros for decades, except for a few years when I was voluntarily unemployed. 

I'm going to make a wild assed guess here, but I think most people will ignore the notices Ebay sends out, and the IRS will audit maybe 1% of them.

Back in the 1980s, I was called in by the NY State tax people. I'd failed to file sales tax reports for three straight quarters and I got a bill for several thousand dollars.  A face to face got them to accept $250, including $75 in penalties.

In the mid-1990s, I was invited to a meeting with an IRS agent concerning some irregularities. When I showed up, the meeting was canceled as I did not have my SS card with me.  The agent gave me a number to call to reschedule but I gave up after a few busy signals. About six months later I got a letter saying the investigation was complete, I owed nothing and if I was unhappy to call the same number I'd gotten months before. 

 

 

 

 

[jcjames]

3 hours ago, the blob said:

But you'll probably get audited if ebay does a 1099 for $15K for you and your taxes don't reflect it anywhere. That's the problem. So you need Shadroch to do your taxes and figure out how $15K in sales is $200 in profits.

So does feebay send 1099s to all sellers, or only to those who are above that $20K (now $600) threshold? I don't think I've ever gotten a 1099 is it via email or snail mail??

 

[manetteska]

19 minutes ago, shadroch said:

I don't do my own taxes.  While I try and stay on to of changes that affect me, I have had my taxes down by pros for decades, except for a few years when I was voluntarily unemployed. 

I'm going to make a wild assed guess here, but I think most people will ignore the notices Ebay sends out, and the IRS will audit maybe 1% of them.

Back in the 1980s, I was called in by the NY State tax people. I'd failed to file sales tax reports for three straight quarters and I got a bill for several thousand dollars.  A face to face got them to accept $250, including $75 in penalties.

In the mid-1990s, I was invited to a meeting with an IRS agent concerning some irregularities. When I showed up, the meeting was canceled as I did not have my SS card with me.  The agent gave me a number to call to reschedule but I gave up after a few busy signals. About six months later I got a letter saying the investigation was complete, I owed nothing and if I was unhappy to call the same number I'd gotten months before. 

 

 

 

 

Were you not being patriotic for those three quarters?

[jcjames]

25 minutes ago, shadroch said:

I don't do my own taxes.  While I try and stay on to of changes that affect me, I have had my taxes down by pros for decades, except for a few years when I was voluntarily unemployed. 

I'm going to make a wild assed guess here, but I think most people will ignore the notices Ebay sends out, and the IRS will audit maybe 1% of them.

Back in the 1980s, I was called in by the NY State tax people. I'd failed to file sales tax reports for three straight quarters and I got a bill for several thousand dollars.  A face to face got them to accept $250, including $75 in penalties.

In the mid-1990s, I was invited to a meeting with an IRS agent concerning some irregularities. When I showed up, the meeting was canceled as I did not have my SS card with me.  The agent gave me a number to call to reschedule but I gave up after a few busy signals. About six months later I got a letter saying the investigation was complete, I owed nothing and if I was unhappy to call the same number I'd gotten months before. 

 

 

 

 

In the past I wondered if starting an actual small business or LLC would be beneficial, but really, with MAYBE $2-3000 in annual feebay sales and MAYBE a bit more than half that in actual profit (which goes right back into the hobby) I never really saw the advantage of all the hassle, forms, filings, etc. Is it really worth it for very small sellers?

Edited March 10, 2021 by jcjames

[the blob]

18 minutes ago, jcjames said:

So does feebay send 1099s to all sellers, or only to those who are above that $20K (now $600) threshold? I don't think I've ever gotten a 1099 is it via email or snail mail??

 

no, it was only required for $20K+ before, but the new proposal lowers the limit. it is a pain because i suspect it will also include all your shipping charges.

[ADAMANTIUM]

9 minutes ago, the blob said:

29 minutes ago, jcjames said:

So does feebay send 1099s to all sellers, or only to those who are above that $20K (now $600) threshold? I don't think I've ever gotten a 1099 is it via email or snail mail??

 

no, it was only required for $20K+ before, but the new proposal lowers the limit. it is a pain because i suspect it will also include all your shipping charges.

If it passes, @jcjames it would start at end 2021 and be sent out 2023 for the year 2022

Edited March 10, 2021 by ADAMANTIUM

[the blob]

52 minutes ago, shadroch said:

I don't do my own taxes.  While I try and stay on to of changes that affect me, I have had my taxes down by pros for decades, except for a few years when I was voluntarily unemployed. 

I'm going to make a wild assed guess here, but I think most people will ignore the notices Ebay sends out, and the IRS will audit maybe 1% of them.

Back in the 1980s, I was called in by the NY State tax people. I'd failed to file sales tax reports for three straight quarters and I got a bill for several thousand dollars.  A face to face got them to accept $250, including $75 in penalties.

In the mid-1990s, I was invited to a meeting with an IRS agent concerning some irregularities. When I showed up, the meeting was canceled as I did not have my SS card with me.  The agent gave me a number to call to reschedule but I gave up after a few busy signals. About six months later I got a letter saying the investigation was complete, I owed nothing and if I was unhappy to call the same number I'd gotten months before. 

 

 

 

 

you still need to collect the pertinent information for your accountant

[shadroch]

24 minutes ago, manetteska said:

Were you not being patriotic for those three quarters?

It was 1984 and the only thing I should have been collecting tax on was the packs of cards that I sold.  I had no idea I was responsible for filing and once I knew the requirements I followed the rules.  I changed book-keepers after that, and my new guy filed the forms, as most of them did in those days.  Now , a program does all that.

[Tnexus]

My father is accountant for 45 years. Regarding auditing, he told me unless the IRS thinks it can recoup at least $1,000 a day from you in an audit, it's almost always not worth it for them to do it. So I think most small sellers will be fine as long as they make educated estimates on their taxes.

Edited March 10, 2021 by Tnexus

[the blob]

20 minutes ago, shadroch said:

It was 1984 and the only thing I should have been collecting tax on was the packs of cards that I sold.  I had no idea I was responsible for filing and once I knew the requirements I followed the rules.  I changed book-keepers after that, and my new guy filed the forms, as most of them did in those days.  Now , a program does all that.

technically, in NY, if you sell back issues for under cover price you're not supposed to collect sales tax. I found this in a tax bulletin. i tried to explain this to a shop charging sales tax on their dollar box moderns, but they would have none of it. and, of course, ebay charges sales tax on those books too.

 

[shadroch]

50 minutes ago, the blob said:

technically, in NY, if you sell back issues for under cover price you're not supposed to collect sales tax. I found this in a tax bulletin. i tried to explain this to a shop charging sales tax on their dollar box moderns, but they would have none of it. and, of course, ebay charges sales tax on those books too.

 

 The big debate at the time was are graphic novels/trade paperbacks comics or books?  As comic stores multiplied, the sales tax people paid more attention to it.  Of course, as selling lines expanded, more and more stuff became taxable.

Bags, boxes, pins, calenders, D&D stuff, toys, ect, ect, but when I first opened all I sold was comics. New and old.

By the way-no one charges sales tax. They collect it.  

It's a new world out there and governments are going to  be trying to recoup the money the pandemic has cost society. 

Adapt or die.

Edited March 11, 2021 by shadroch

[apollobuzz]

5 hours ago, the blob said:

don't quote me on it, but if you're trading comics like this the chances of the IRS ever getting involved are near zero. we're not talking about Action 1 here. When you sell and actually have money, that's another issue. of course, it is going to be REALLY hard to document your cost basis if you do sell if your collection was put together through hundreds of trades

 

Yeah, I am not too worried about it as I typically trade only a handful of comics a year.  And when I sell (also only a handful a year and usually adding up to less than $1000 in sales, not profit), I usually sell at break-even or about a 5-10% profit at most (often much lower than FMV as some recent sales on these boards in the WTB forum can likely attest).  I do need to better figure out what and how to track my cost basis though.  I think I do have all of the details on FMV for my trades as well as my actual purchase prices and such.  I have learned a lot by reading this thread!  

[comixry]

On 3/8/2021 at 4:43 PM, Beige said:

Capital gains tax.

On houses - you own it a year, and live in it for a year - no CGT payable.

 

What about comics?

 

Just because i had the foresight to buy say a Tec #66 10 yrs ago - when I sell it, should I have to pay tax on the gains?

 

After 10 years?

And of course, 10 yrs ago - no receipts, and any electronic records are long gone.

 

I have quite a few $5000+ books I bought quite some time ago - surely, I don't pay tax on some early ASM I held onto since I was  a kid?

 

Any info on capital gains tax would be appreciated.

So, I guess some collector who bought that West Coast Avengers 45 off the rack when he was 10 years old for cover price back in 1989 is gonna have to find that 7-11 store receipt if he sells it this year and has to file taxes on it.

[comixry]

On 3/8/2021 at 7:28 PM, D84 said:

Another thread of people whining about no longer being able to hide income from the IRS.🤦‍♂️

I wonder if sellers on eBay's international branches can chime into this convo. I'd like to hear if they've been already paying their country's taxes or are in the process of going the same route or altogether exempt.