Got the letter from Reverb....

Discussion in 'Fred's Barcalounge' started by englishman, Dec 2, 2021.

  1. juks

    juks Country Gent

    Nov 26, 2020
    Fremont, California
    Like I said above, I did some gig work for Amazon in 2019 and 2020. In 2019 well above $600 so they issued 1099. In 2020 only $150 as I stopped doing that. And Amazon did not issue a 1099.

    I did report the $150 as income, as it was salary. Not worth taking a risk of not reporting peanuts. If it's income, you are supposed to report it. You just won't have a 1099 for below $600. I don't see how you could deduct the $600 if you have 1099 for more than that.

    However, had I sold a guitar, I would not have declared it. But you didn't need to in 2020, or 2021 for that matter.
     
  2. englishman

    englishman Gretschified

    Age:
    64
    Apr 5, 2014
    Detroit
    This is true BUT only if that's the only thing you sell in a year.
    " sellers who sell $600 or more on the platform in a calendar year."

    You can't sell a bunch of things for $500 and stay under the radar, once you hit that big 600 target, then ANYTHING else you sell for the rest of the year will be added to your 1099 score.
     
  3. Johnny Alien

    Johnny Alien Gretschie

    117
    Apr 29, 2014
    Harrisburg, PA
    Technically if its honestly additional income then we should have always been reporting it and paying taxes BUT the end goal for them is to find people that are making income through alternate sources and make them pay their fair share. I understand and appreciate that they want to find people like that but $600 is way too low of a threshold. $600 does not seem high enough to identify someone that is using sales as an alternate source of income.
     
  4. Frank_NH

    Frank_NH Synchromatic

    847
    Mar 25, 2013
    Lebanon, NH
    That's why the old threshold of $20,000 was appropriate. It helped to delineate businesses with large total sales from casual sellers. And remember - while we're talking about just selling music gear online, this kind of tax reporting will affect ALL online sales transactions. So you must keep receipts for everything you own going forward.

    By the way, since capital gains on items owned less than a year are taxed at a higher rate than items owned longer, you will have to keep accurate date records and note them when you fill out your taxes to account for all of that income you're earning from online sales.

    I'm curious - for those who received the letter from Reverb.com, was that the first you heard about this tax change from them? The law has been on the books for some time and I know eBay has been warning its users and is in fact is lobbying Congress to change/modify this 1099K reporting rule.
     
  5. englishman

    englishman Gretschified

    Age:
    64
    Apr 5, 2014
    Detroit
    Well yeah, the letter addressed the changes begining at the end of this month.
     
  6. AZBrahma

    AZBrahma Gretschie

    425
    Dec 18, 2020
    Arizona
    If I wonder if, or how, this affects selling things to a local brick and mortar like....you guessed it, Guitar Center. Is the onus going to be on them to make sure a 1099 is generated? If so, between that and online sales, if this is the case I see the quality of life pertaining to hobbyist sales and exchanges slip, slip, slipping away...
     
    Groutsch likes this.
  7. juks

    juks Country Gent

    Nov 26, 2020
    Fremont, California
    I'm wondering about GC too. If they too have to issue 1099, my exchange strategy will have an issue, though I have the invoices from all the gear I bought from them so I'll be just showing losses then.

    But then they have to strat issuing paperwork for the price they pay for the used gear. They don't do it currently.
     
  8. Gretschtim1

    Gretschtim1 Country Gent

    Dec 4, 2012
    Dundalk, Md
    Well the term fair share is totally distorted. Fair share would be a flat tax.
    Say for instance 10%
    If you make a dollar you pay 10 cents.
    If you make $1,000 you pay $100 and so on.
    Charging someone a higher tax rate just because they make more money is not fair and it never was.
    All that does is destroy the incentive to work harder.
    The other thing that bothers me is that they are double taxing us.
    We pay tax on the item when we buy it. What's fair about them charging another tax when we sell the same item?
    Like I said there's no such thing as "fair share" when it comes to taxes.
    If you add up all the money that we pay out on all the different taxes there are we are already paying out over 50% of what we earn - I think that is way past a fair share.
     
    Last edited: Dec 8, 2021
    panhead6zero and G5422T like this.
  9. gretscher09

    gretscher09 Electromatic

    73
    Apr 18, 2009
    USA
    The link below is Reverb's explanation of the 1099K rule. It is a little misleading in that they give an example where someone sells a guitar for less than they paid for it so they have "no taxable income to report". While technically true, they do have to report the 1099K on their tax return and the entire amount will be considered taxable income. The problem is how do you tell the IRS it is not taxable income when you file your tax return? The only forms available to show what you paid for the guitar, and that the 1099K amount is not taxable, are Schedule C Business or Schedule D Capital Gains. Reverb doesn't mention what forms to use or how you are supposed to show the IRS your 1099K is not taxable income. They punt and say consult a tax professional.

    It is also important to know that the amount on your 1099K will be the gross sales amount including: Sale price, Shipping, Sales tax, Selling fees, Bump fees, Credit card fees, etc. So the amount on your 1099K will be much higher than the actual net amount Reverb deposited to your bank account. So you have to keep track of all that and, as of right now, fill out a Schedule C or D to explain why the 1099K is not taxable income. A useless nightmare! Good luck.

    https://help.reverb.com/hc/en-us/articles/4411577966227
     
    Last edited: Dec 10, 2021
    Groutsch likes this.
  10. juks

    juks Country Gent

    Nov 26, 2020
    Fremont, California
    I already saw one seller on Reverb announcing that they will stop selling there after Dec 31st.

    130 reviews so fairly active but I think it's not a shop, more of a private gig.
     
  11. Groutsch

    Groutsch Synchromatic

    534
    Jun 9, 2018
    Maryland, US
    Ask your tax guy, but I think that you can't deduct the value of your time unless you pay yourself for your time; and if you pay yourself for your time, you need to pay income tax AND self-employment tax, which comprises both the employer and employee portions of payroll taxes.

    Since our tax code (unfairly) favors capital over labor, it's better to keep track of your cost basis and treat any profit as a capital gain. You will thereby avoid payroll taxes and possibly pay a lower tax rate.
     
  12. hcsterg

    hcsterg Friend of Fred

    Feb 13, 2012
    France
    I have a Reverb account, but never used it... o_O

    A+!
     
    thunder58 likes this.
  13. Johnny Alien

    Johnny Alien Gretschie

    117
    Apr 29, 2014
    Harrisburg, PA
    If Reverb wanted to keep sellers and attract new ones they should work on a new system in which you can sell items you bought. So I could go into my purchases and list a guitar that I bought through their website. Since they know the price I paid they could deduct that from my selling price. Each account would then have a running yearly total. So if I bought a new guitar and sold it for $300 less then the purchase price but also sold something I never bought there for $800 it would give me a yearly total of $500. It would encourage retailers to sell through them and because it would be way less work for casual buyers and sellers it would encourage them to use Reverb vs ebay and private forum sales.
     
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