1099 tax rules

[BroccoliFarmer]

To add to it. At least in my field all kinds of businesses started using cash app Venmo etc.. to take payments as a way to avoid transaction fees and taxes by thinking they could take payments under a personal name instead of their DBA. This has been a long time coming.

Yeah. Too much money going through these systems for the irs not to want their cut.

 

[FIN&BONEZ]

Not politics home boy, once again just common sense. Thinking about buying a hawkfish.

 

[PeterC99]

As we are fast approach the end of the year, it means it's 1099 time. For all hobbyist and vendors who buy and sell corals, be aware that paypal, venmo, and other online payment solutions will be sending out 1099-Ks's if you receive more than $600 in payments. I was reading an article the other day that this is one of the areas the IRS expects that their new 87,000 agents will be focusing on.

Will PayPal report my sales to the IRS?

Learn how PayPal is required to report sales above a threshold and also know the 1099-K requirements.

www.paypal.com

https://help.venmo.com/hc/en-us/articles/4407389460499-2022-Tax-FAQ

How do we signup for your end of year tax letter?

 

[BroccoliFarmer]

I am 45 year tax partner at a major international cpa firm. I do taxes for a living.

 

[B’s Nano Reef]

I am 45 year tax partner at a major international cpa firm. I do taxes for a living.

Can you do my cross-border US/Canada taxes lol

 

[billyocean]

Can you do my cross-border US/Canada taxes lol

If you sell like 4 magazines in Canada that's over $600..

 

[mdb_talon]

This is actually a very easy one for them to chase down. Venmo and similar now have to file these with the government as well as send to users. If your tax does not include the 1099 that venmo registered it is very easily flagged. This is the reason for the rule change it is an easy automated flag there is no tracking down needed At minimum expect a bill for what the IRS calculates as a shortfall(which u can appeal) or at worst an audit.

This is nothing new. It's been around for 3-4 years. I remember when everybody who sold on ebay etc... were having fits about it long before 2020. It's just never really been enforced. I don't think they will waste much time on the lower end of the spectrum. Although I will say as a business owner who does the right thing and pays taxes it's about time there was a crackdown. There are full blown businesses being ran through e commerce who pretend they are weekend warriors cheating us all. I run across it in my own profession. Unlicensed and uninsured businesses everywhere. Those are the ones who this will primarily be targeting.

Nope it is new. Started Jan 1st of 2022. Not that it is a change of what is expected by the taxpayer....but the payment processors being required to file and send the 1099s(which is the only reasonable way for the IRS to crack down on this) is a rule just going in this year.

 

[fish farmer]

I will be writing up a full posting about the tax rammifcaitons of selling corals. I do this every year and provide people some information. Ultimately, what you can write off is dependant upon if this is a hobby or a business. If you are a hobby, you can write off direct expenses (postage, shipping container and how much you paid for the coral). If you are a trade or business (overly simplistically stated as spending more than 750 hours a year on the business), you can write off direct costs as well as indirect (salt, electricity, mortgage, equiptment). Again..i will write up a better article on this later in the year.

I wonder if I will get an article contributor badge?

Can a coral farm be considered a small farm (not hobby) and benefit from deductions for business expenses.

 

[FIN&BONEZ]

I am 45 year tax partner at a major international cpa firm. I do taxes for a living. And yes..was rather rude.

My apologies sir, I'm retired from KPMG at 44 and my wife still playing around with them collecting $250. You wanna talk to us about accounting?

 

[BroccoliFarmer]

Can a coral farm be considered a small farm (not hobby) and benefit from deductions for business expenses.

The answer is yes. If you are considered a ‘trade or business’, you get to write off all direct and indirect costs associated with said business there is a write up about the rules required (I don’t have my computer in front of me so I can’t post a site easily) but the big two rules are that you have to commit substantial time to the effort (750 hours last time I checked) and enter into the business for a profit motivation. There are a few other tests but these are the big two.

Edit: here are the factors to determine if you can be a trade or business

Here’s what taxpayers need to know about paying taxes on their hobby activities | Internal Revenue Service

Tax Tip 2021-94, June 30, 2021

www.irs.gov

 

[killer2001]

Looks like I'm going to request people send me cash in the mail.

 

[ilikefish69]

I’m looking into purchasing a home and made my email address [email protected] so the tax man can try all he wants but I’m always 69 steps ahead of him

 

[BroccoliFarmer]

My apologies sir, I'm retired from KPMG at 44 and my wife still playing around with them collecting $250. You wanna talk to us about accounting?

If you worked for a big 4 accounting firm (as have i), then why are you attacking me? These are the rules that I was giving people a heads up about. As a former Kpmg employee, I would have expected a bit more appreciation about what the rules are and not be so fanatical about this. Luckily for me, I have the ignore button. Good luck in life.

 

[mdb_talon]

The answer is yes. If you are considered a ‘trade or business’, you get to write off all direct and indirect costs associated with said business there is a write up about the rules required (I don’t have my computer in front of me so I can’t post a site easily) but the big two rules are that you have to commit substantial time to the effort (750 hours last time I checked) and enter into the business for a profit motivation. There are a few other favors but these are the big two.

Ya I would add that if you go too many years without a profit they will reclassify you as a hobby(and in some cases reclass prior years as well). It's subjective and not just "x number of years" but you can't just indefinitely run the "business" at a loss or around break even without them catching on.

 

[BroccoliFarmer]

Ya I would add that if you go too many years without a profit they will reclassify you as a hobby(and in some cases reclass prior years as well). It's subjective and not just "x number of years" but you can't just indefinitely run the "business" at a loss or around break even without them catching on.

And the flip side, if you run a hobby too many years at a profit, they can classify you as a trade or business. If people were not so creative it would be easy to have black and white rules but everytime there appears to be someone taking advantage of the situation, a new rule pops up causing people to get more creative. Continually cat and mouse. Exhausting as a tax guy.

 

[mdb_talon]

As we are fast approach the end of the year, it means it's 1099 time. For all hobbyist and vendors who buy and sell corals, be aware that paypal, venmo, and other online payment solutions will be sending out 1099-Ks's if you receive more than $600 in payments. I was reading an article the other day that this is one of the areas the IRS expects that their new 87,000 agents will be focusing on.

Will PayPal report my sales to the IRS?

Learn how PayPal is required to report sales above a threshold and also know the 1099-K requirements.

www.paypal.com

https://help.venmo.com/hc/en-us/articles/4407389460499-2022-Tax-FAQ

I would definitely appreciate such a guide. I am fairly well versed in it but some of what u mention is a bit different than guidance I was given in regards to hobby expenses. I was informed that after 2018 no hobby expense at all could be claimed regardless of revenue. It was the driver for me turning my hobby into a legit business

 

[BroccoliFarmer]

I would definitely appreciate such a guide. I am fairly well versed in it but some of what u mention is a bit different than guidance I was given in regards to hobby expenses. I was informed that after 2018 no hobby expense at all could be claimed regardless of revenue. It was the driver for me turning my hobby into a legit business

Yes. There was the law change in 2018 that prevent hobby expenses from being deducted because it was abused. But it doesn’t mean you have to pay on gross revenue. I will try to pull some source material tomorrow and post it.

 

[workhz]

What is annoying about this is when you sell something you’ve had for a 1-2 decades and you have no idea what your cost basis is. When it’s clearly not a business, you now have to keep track of everything you sell. I preferred the old ‘rules’ on eBay when it was 200 items AND $20k. I’m guessing the IRS won’t really care too much if the $ we’re talking about is minuscule compared to AGI but if it’s a significant portion of your income then they’ll care.

 

[HomebroodExotics]

I plan on being President one day so I don't pay taxes.

 

[flashsmith]

Or just keep forming new LLC's when you've exhausted all your tax breaks. That's how rich folks avoid paying taxes. Keep it moving as they say..