Just curious how everyone is planning to handle the new thresholds on 1099K reporting? Being anything but a commercial seller, I now see that the thresholds for 1099K reporting are a simple $600.00.
"The American Rescue Plan Act of 2021 (the Act) significantly modifies the reporting threshold associated with Form 1099-K, Payment Card and Third Party Network Transactions, from $20,000 in aggregate payments and 200 transactions to solely a threshold of $600 in aggregate payments (with no minimum transaction requirement). The new rule is effective beginning with payment transactions settled after December 31, 2021."
Now I understand you can only be taxed on what is determined to be income, but what if you have an aggregate of $600, but not a receipt from 10 years ago? Less concerned with shaving gear, although it would not be hard to have $600 just in shaving transactions alone, but watches and higher priced goods. Given the fact most even more Americans are not itemizing post 2017 (SALT elimination, new standard deduction, etc...), will this potentially increase the number of audits? Say I receive $1000 in PayPal over a year. I then file taxes with the 1099K, and do not claim it as income, as the items sold were at a loss. How does the return prove that? Do I just wait for an audit and break out the supporting data then? If I paid more for the items and sold them at a loss, can I show that loss in the 1040 without itemizing or being a business?
Please don't get political in responses, just trying to understand the implications of this new reporting rule.
"The American Rescue Plan Act of 2021 (the Act) significantly modifies the reporting threshold associated with Form 1099-K, Payment Card and Third Party Network Transactions, from $20,000 in aggregate payments and 200 transactions to solely a threshold of $600 in aggregate payments (with no minimum transaction requirement). The new rule is effective beginning with payment transactions settled after December 31, 2021."
Now I understand you can only be taxed on what is determined to be income, but what if you have an aggregate of $600, but not a receipt from 10 years ago? Less concerned with shaving gear, although it would not be hard to have $600 just in shaving transactions alone, but watches and higher priced goods. Given the fact most even more Americans are not itemizing post 2017 (SALT elimination, new standard deduction, etc...), will this potentially increase the number of audits? Say I receive $1000 in PayPal over a year. I then file taxes with the 1099K, and do not claim it as income, as the items sold were at a loss. How does the return prove that? Do I just wait for an audit and break out the supporting data then? If I paid more for the items and sold them at a loss, can I show that loss in the 1040 without itemizing or being a business?
Please don't get political in responses, just trying to understand the implications of this new reporting rule.
