Got the letter from Reverb....
- Thread starter englishman
- Start date
Highroller
Country Gent
Yeah, nobody cares about you selling a few Telecasters over Craigslist. It's all about tracking businesses (or people operating as businesses) over platforms like ebay, etsy, or reverb. And it defines "business" as when the seller is operating with the primary purpose of making a profit. That's to say, not a hobbyist just unloading some old junk.
Getting a 1099 doesn't mean you'll pay more taxes, it just means you'll report more income. There's a million ways to avoid having that lead to paying more taxes. Some people are pretty good at finding them!
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Yes ebay will be in the same pickle. If you sell a guitar for $2100 and have paperwork that you bought it for $1000 and put $200 into it, then you will pay income tax on the $900 profit. So keeping records for an audit is on you.
The old joke about sending your paycheck to the IRS and they will send you what they don't use may yet come true.
About 20 years ago they floated this idea: If your house is paid off, they wanted to tax you on the amount of rent your house could bring according to the IRS chart. Say $1,500 a month. Since you live there rent free, the amount of rent you don't pay would be considered income and subject to income tax. HB4848 I think was the number on the proposed bill.
The old joke about sending your paycheck to the IRS and they will send you what they don't use may yet come true.
About 20 years ago they floated this idea: If your house is paid off, they wanted to tax you on the amount of rent your house could bring according to the IRS chart. Say $1,500 a month. Since you live there rent free, the amount of rent you don't pay would be considered income and subject to income tax. HB4848 I think was the number on the proposed bill.
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juks
Country Gent
Not so. The responsibility is with Reverb. They know how much each of their users sold in a year. If it's more than $600 they must issue 1099 that is sent both to the user and IRS.
IRS can always audit Reverb to see if they are doing this. Then if the user does not include the Reverb 1099 in their tax declaration, IRS already has a copy of it. And if they audit that user's account, they will see that the user did not declare all their income. Busted.
Lol re "used" things not having to be taxed. Real estate companies would love it if they never had to pay taxes on real estate they flipped because the land and improvements are used.
Tax is on income, doesn't matter how the income is generated unless the tax code says it matters.
Tax is on income, doesn't matter how the income is generated unless the tax code says it matters.
Yes . . . But that is why they put the burden on the reverbs of the world. Companies like reverb can police the transactions they host, and the IRS can in turn police large companies like reverb.
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juks
Country Gent
Yep, this is a record keeping nightmare. Not only for guitars but for anything you sell though these platforms.
I have gear that I bought 30, 40 years ago. Do I have the invoice still? Of course not.
Also I'm guessing if you have a luthier fixing your guitar, that's a deductible expense. How about new strings? Is that deductible too? So keep the invoices for all strings you've put on in the lifetime of the guitar before you sell it? Lol.
Part of the problem is the inequitable and regressive system for taxing housing. Homeowners and landlords get tax deductions for mortgage interest and property taxes. Renters get no tax benefits except in certain situations, usually low income. One group gets subsidized housing, another doesn't. Arguably inequitable.
Homeowners tend to be wealthier than renters. So not only inequitable, but regressively so.
And when there are deductions for renters, the value is usually less as they pay rates at a lower marginal rate.
As much as I love and benefit heavily from my SALT deductions in Taxifornia, they aren't good policy imo.
Back in Black
Country Gent
EM,
The best thing you/anyone can do with Reverb is to avoid them completely!
First and foremost, they are not a dealer/retailer, they're a broker. Thereby, you the ''seller''...become the ''retailer''.
This topic was covered recently.
Do your own brokering. We pay enough for what we buy as it is, why start paying a brokerage fee.
In all my years, especially now with social media, and with the help of friends, like those on this forum, I have yet to look for anything, that with a little perseverance, couldn't be found.
Case in point, I wanted a second Rickenbacker 325 C58, started a search, found a beauty in Legnano Italy.
The pick-guard was cracked, otherwise the little Ric was in ''as new'' condition. I replaced the pick-guard, which was another interesting search, and found ''RickySounds'' in Nottingham England, a Rickenbacker Specialty shop...great folks, all the Ric specialty toys. Robbie fabbed me two replacement pick-guards, and two name-plates. Very quick turn-around, had the parts in a week, and the guitar made the long trip from Italy in under 10 days.
Forget the brokers...let your fingers do the walking, and save your hard earned $$$$!!!
Best,
BIB.
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Highroller
Country Gent
This is true - keeping records will become very important. But it also helps to look at the big picture. For those people/businesses that record a large number of transactions, there's always going to be transactions you can claim you lost money on. The $1500 digital workstation that's only worth $500 now. You'll report those too, and that'll offset the profitable stuff, bringing down your overall taxable income.
People that play the stock market have been doing that for years. You always dump your losers at the end of the year to offset the winners.
It's all a game, twisted as it is, but a game nonetheless!
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Fat Bastid
Gretschie
Oh Dear....
Nah you gotta depreciate the strings over their useful lifetime.
Thomastik Infields may sound great, but are a terrible tax choice due to their longer useful life.I am of course kidding..
LA Miles
Country Gent
Oh boy, I’m so tempted to let fly and get this shutdown
In before that!Oh boy, I’m so tempted to let fly and get this shutdown
juks
Country Gent
I've worked from home twice in my career. The first time I did it around 2010 I could deduct the % my work space occupied of the total home of rent, utilities etc.
So for 2020 I had prepared all the same when I met my tax advisor, happily expecting the same deductions. He said, can not do. That possibility was removed in the 2016 tax code changes. Thanks a bunch...
.Even worse, they also reduced the dependant deduction from making a real difference to pitifully small.
Yeah, i sold a ABR-1 bridge on there for twice that this year, one used old part.
Groutsch
Synchromatic
Someone needs to set up a new Reverb.com in Panama or the Caymans.
Highroller
Country Gent
Ha! Well, let's not forget ... as a percentage of the entire world's internet marketplace, musical instruments are probably not much more than a blip on the screen. Maybe $600 makes a little more sense if you're looking at socks and underwear.
Jelly Roll Horton
Country Gent
"Render therefore to Caesar the things that are Caesar’s." It was ever thus. I don’t make enough money to not pay taxes.
Neither can keep up it. Enforcement is on the IRS, tabulation is on Reverb(s) of the world. It's absurd to put the threshold so low.
