Big tax changes will affect guitar sellers and parts resellers..

englishman

Gretschified
Apr 5, 2014
13,033
Detroit
Basically, using a service such as paypal, anything brought in over $600 IN A YEAR will generate a 1099K.

I'm not condoning the mass avoidance of people paying their fair share of taxes on places like Reverb or eBay but I can foresee everything going underground in a cash-based system. Regardless, your favorite pickup reseller may suddenly disappear from the face of the Earth next year.

https://www.cnbc.com/2021/03/26/its...g-the-irs-about-income-from-online-sales.html
 

Randy99CL

Country Gent
Feb 17, 2020
2,116
Albuquerque
I am considering selling a few guitars and this could be a real PITA.
Edit: like anything dealing with the IRS, this is complicated. There must be some way to deduct the cost of goods sold, just as with any business. We'll have to see how this shakes out.
 
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Jerzey Bob

Synchromatic
Apr 3, 2021
639
North Jersey
Just read something where that number also applies to any bank deposits as well. Haven't verified as to whether it's a spam campaign or fear mongoring. I trust MSM like I trust a Central Park night lurker. Until I see a law has passed, it's all hot air to me.
 

swivel

Country Gent
May 13, 2018
2,214
PNW
Yeah, it's the greedy states driving it.
Realistically, if all us tinkerers kept invoices and payment data, we'd lose a ton every year. If they are going to request we claim, then let's claim it! Probably $5-10K a year for buying music stuff and selling maybe $2k on a good year...

What I'm not getting is: In the past, my accountant says I need to make a little bit on music every 3-4 years to be legit.... otherwise it's a "hobby".
So turn that around... If it's a hobby, then how can they tax that which is on a 1099?
hard to figure.
How many of you MAKE MONEY on selling a guitar you bought? Maybe 10% of the time at best?
 

Sid Nitzerglobin

Country Gent
Jun 8, 2015
3,867
fROMOHIO
Already been reporting my sales for the last 6 years as an LLC. My yearly loss from rent & other operating expenses at the shop were a net gain for me until they went & made the standard deduction so high that now I get the worst of both worlds: no effect from the expenses of running the business that barely has any sales w/ customers that want to be a pain in the ass haggling on stuff that's already priced really well by their own admission &/or complaining about charging sales tax but still have to itemize & pay sales tax.... Yay!:confused:

Sounds whiney I'm sure but I honestly don't care any more ;)

My honest opinion not meaning to offend, but I support (almost) anything that makes it an even deal for those who are actually doing it by the book.
 
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englishman

Gretschified
Apr 5, 2014
13,033
Detroit
Just read something where that number also applies to any bank deposits as well. Haven't verified as to whether it's a spam campaign or fear mongoring. I trust MSM like I trust a Central Park night lurker. Until I see a law has passed, it's all hot air to me.
That is still just a proposal. The thing I posted is law, starting in 2022
 

Henry

I Bleed Orange
Apr 9, 2014
18,709
Petaluma
Yeah, it's the greedy states driving it.
Realistically, if all us tinkerers kept invoices and payment data, we'd lose a ton every year. If they are going to request we claim, then let's claim it! Probably $5-10K a year for buying music stuff and selling maybe $2k on a good year...

What I'm not getting is: In the past, my accountant says I need to make a little bit on music every 3-4 years to be legit.... otherwise it's a "hobby".
So turn that around... If it's a hobby, then how can they tax that which is on a 1099?
hard to figure.
How many of you MAKE MONEY on selling a guitar you bought? Maybe 10% of the time at best?
The rules for income and deductions are not the same.

E.g. if you sell illegal drugs or weapons, you must report that income. That's how they nailed Capone.

But you don't get to deduct the costs and expenses for your criminal enterprise.

Not that what sellers are doing is a criminal enterprise, but to emphasize that income and deductions are not treated the same.

Talk to your accountant to see what expenses may be deducted.
 

Henry

I Bleed Orange
Apr 9, 2014
18,709
Petaluma
Just posting an IRS site not offering legal or tax advice.

https://www.irs.gov/newsroom/tips-for-taxpayers-who-make-money-from-a-hobby

"If a taxpayer receives income for an activity that they don’t carry out to make a profit, the expenses they pay for the activity are miscellaneous itemized deductions and can no longer be deducted. The taxpayer must still report the income they receive on Schedule 1, Form 1040, line 21."
 

Back in Black

Country Gent
Jun 22, 2020
1,397
Ontario Canada
Basically, using a service such as paypal, anything brought in over $600 IN A YEAR will generate a 1099K.

I'm not condoning the mass avoidance of people paying their fair share of taxes on places like Reverb or eBay but I can foresee everything going underground in a cash-based system. Regardless, your favorite pickup reseller may suddenly disappear from the face of the Earth next year.

https://www.cnbc.com/2021/03/26/its...g-the-irs-about-income-from-online-sales.html

EM,

Nothing new for us in Canada,

Purchase price, based primarily on US Dollars, plus 13% Federal/Provincial tax.

For the most part...I can still save money buying on-line State-side, even when shipping/exchange/brokerage/tax is included.

You only have to take a quick trip around the grocery store to realize, guitars are not the only thing costing more, and the pandemic hasn't helped.

And...We're all dreaming in Technicolor, if we think prices are going to go down after the pandemic finally passes.

I have a simple philosophy, avoid impulse buying and shop fair market...shun the rest. Some should have been shunned and vanished a long time ago.

Finally, always ask for a discount, groceries/liquor excluded ...all the retailer can say is no...10%/15% is usually easy to get, and a no charge guitar case, if we're talking guitars...if you ask!

As far as purchasing cars, buy base models, as options have little to no residual value at trade in time. I average 12 years on a new vehicle. All the money you save by staying away from the expensive, mostly useless options, will help keep your vehicle serviced/maintained for a long time.

BIB.
 

GlenP

Country Gent
Jul 23, 2019
2,364
WA
Not sure that I want to be required to provide my SSN to eBay, etc, to satisfy the new reporting requirements. If they are going to report proceeds to the IRS, won't they need an SSN?
 

Henry

I Bleed Orange
Apr 9, 2014
18,709
Petaluma
Not sure that I want to be required to provide my SSN to eBay, etc, to satisfy the new reporting requirements. If they are going to report proceeds to the IRS, won't they need an SSN?
Good question. I am not certain but those that won't provide an SSN/EIN/TIN may be subject to backup withholding.
 

wabash slim

I Bleed Orange
Feb 10, 2010
17,613
lafayette in
Cash transactions in person only.
Hard to talk about taxes without involving government.
Thankfully, we don't have VAT here in the US----yet.
 

knavel

Country Gent
Dec 26, 2009
1,101
London, England
Show me a source that isn't MSM.
There are many many sources other than mainstream media that confirm the nature of this provision of the law. I'll give you a link below from a large DC law firm, but the article originally posted gets the basics right.

Bills these days written by the lobbying firms, Congress probably hasn't generated a bill itself since the 1990s. Multiple interests are catered to in these bills so very often things like this 1099 threshold are buried. You will see in the law firm's post that the section number in the law about this change is 9674. That means there are 9673 sections that precede it and who knows how many after it. So the law is hundreds if not thousands of pages.

The other thing one will always observe is that laws are given names that come from PR departments. In this case the 1099 provision is part of the "American Rescue Plan Act". My favourite of these this year is the "For The People Act". The reality always seems to be the opposite to the title and you ebay and reverb sellers won't be rescuing anyone or anything.

New 1099: At the end of the day it will largely be more paperwork and a set up to fail if someone gets it wrong and is audited. If questioned you will have to be able to prove that e.g, the Stratocaster you sold for $1000 was sold at a loss since you paid $1200 for it. Elections have consequences, and in the words of Mencken, "Democracy is the theory that the common people know what they want, and deserve to get it good and hard." So glad I got out of America 20 years ago when I saw the writing on the wall. Only wish I had such vision when it comes to picking stocks.

https://www.lexology.com/library/detail.aspx?g=1299ed16-4881-4e56-8845-bacd97572158
 

Jerzey Bob

Synchromatic
Apr 3, 2021
639
North Jersey
There are many many sources other than mainstream media that confirm the nature of this provision of the law. I'll give you a link below from a large DC law firm, but the article originally posted gets the basics right.

Bills these days written by the lobbying firms, Congress probably hasn't generated a bill itself since the 1990s. Multiple interests are catered to in these bills so very often things like this 1099 threshold are buried. You will see in the law firm's post that the section number in the law about this change is 9674. That means there are 9673 sections that precede it and who knows how many after it. So the law is hundreds if not thousands of pages.

The other thing one will always observe is that laws are given names that come from PR departments. In this case the 1099 provision is part of the "American Rescue Plan Act". My favourite of these this year is the "For The People Act". The reality always seems to be the opposite to the title and you ebay and reverb sellers won't be rescuing anyone or anything.

New 1099: At the end of the day it will largely be more paperwork and a set up to fail if someone gets it wrong and is audited. If questioned you will have to be able to prove that e.g, the Stratocaster you sold for $1000 was sold at a loss since you paid $1200 for it. Elections have consequences, and in the words of Mencken, "Democracy is the theory that the common people know what they want, and deserve to get it good and hard." So glad I got out of America 20 years ago when I saw the writing on the wall. Only wish I had such vision when it comes to picking stocks.

https://www.lexology.com/library/detail.aspx?g=1299ed16-4881-4e56-8845-bacd97572158






Thanks for the link. Yeah, I'm familiar w/ how that stuff's written, & how they present it.
 
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englishman

Gretschified
Apr 5, 2014
13,033
Detroit
EM,

Nothing new for us in Canada,

Purchase price, based primarily on US Dollars, plus 13% Federal/Provincial tax.

For the most part...I can still save money buying on-line State-side, even when shipping/exchange/brokerage/tax is included.

You only have to take a quick trip around the grocery store to realize, guitars are not the only thing costing more, and the pandemic hasn't helped.

And...We're all dreaming in Technicolor, if we think prices are going to go down after the pandemic finally passes.

I have a simple philosophy, avoid impulse buying and shop fair market...shun the rest. Some should have been shunned and vanished a long time ago.

Finally, always ask for a discount, groceries/liquor excluded ...all the retailer can say is no...10%/15% is usually easy to get, and a no charge guitar case, if we're talking guitars...if you ask!

As far as purchasing cars, buy base models, as options have little to no residual value at trade in time. I average 12 years on a new vehicle. All the money you save by staying away from the expensive, mostly useless options, will help keep your vehicle serviced/maintained for a long time.

BIB.

Are you referring to VAT here? The difference here is that when you sell anything through paypal of something similar, it reports you to the IRS and that becomes part of your taxable income. Reverb and other places already deduct the sales tax before they pay out.

I'm looking at the chilling effect it will have on small time guitar builders such as myself. I really can't afford an accountant to go through everything and sift out the actual labour cost so I can add that to how much I owe.

Aslo, many high volume resellers on eBay (and similar) will disappear overnight, prices will go up.
 


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