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Never seen that before but this is what I found.

The 1099-K is an income reporting form used by the IRS. Payment processing services, such as PayPal, are required to issue a 1099-K form to the IRS for reporting the sales of their customers (businesses) who receive more than $20,000 in a single year AND who conduct more than 200 transactions. So if your business gets income from several different sources – like PayPal, checks, and cash – you might not need to report a 1099-K form unless you earn more than $20,000 via PayPal or another merchant transaction processing service.
 
LightningG said:
Anyone receive a 1099-K from using PayPal? First time I ever got one and can’t find info that is helpful. Any input or advise would be appreciated.
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Where are you located? Most states go by the federal threshold of $20k gross income and 200 transactions. Above that you would get a 1099K.

I'm in MA, and back in 2017 they (and VT) decided to set their own limit to $600 and one transaction, so I got blindsided.
 
jlauffer said:
Where are you located? Most states go by the federal threshold of $20k gross income and 200 transactions. Above that you would get a 1099K.

I'm in MA, and back in 2017 they (and VT) decided to set their own limit to $600 and one transaction, so I got blindsided.
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Same here, in VA.
 
LightningG said:
I was in AZ. I moved to IL in December. I had nowhere near $20k worth of stuff sold. In IL, I guess it’s 3 transactions for $1k. Crap part is, I lived in AZ until mid-December and they are counting the whole year as IL.
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I'd definitely talk to a tax attorney/CPA.
 
It's acting like we made the knives and were selling them as a business, can it be offset by finding the original receipt for them?

I'm also in IL so the threshold is $1000.
 
I've noticed more people requesting money orders or equivalent because they don't want to get taxed for selling. You are taxed on your income you used to pay for the knife, and the sales tax at time of purchase, and taxed again for selling it o_O :poop:
 
Ohh yea. I just got mine from PayPal.
Shouldn't be as bad as my 2019 one.
That trip to HR Block was brutal.

Not sure why MA decided to set the limit at 600. Pretty lame if you ask me. Hopefully I don't owe too much this year.
 
OilMan said:
It's acting like we made the knives and were selling them as a business, can it be offset by finding the original receipt for them?

I'm also in IL so the threshold is $1000.
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Yes, you fill out a Schedule C and can fill in your expenses such as the original cost of the items, shipping, packaging materials, and any fees involved such as PP and ebay. Back in 2017 my 1099-K was for around $3000, and I was able to cobble together proof of about $2400 in expenses, so I only paid tax on about $600.

Now I keep records on all the knives I buy and sell so I can be as accurate as possible and be able to back it up if they come after me.

Was able to avoid the whole thing for 2018 and 2019, but will have to do it again for 2020, and probably 2021.
 
Seems like this is a common theme across knife boards right now. Never been happier to have an unconfirmed, anonymous paypal account. Sure I'm very limited in what I can do. I have to transfer funds directly to my bank with a fee (rather then leaving them in there to use on another transaction) and I don't really have any recourse if anything goes sideways, but I'll take that stuff on given the alternative.

I wonder how big a hole all these states are going to be in next year? Have to imagine sales tax for 2020 was at an all time low for most places. Wonder if that's the catalyst for all these forms being sent out this year.
 
jlauffer said:
Yes, you fill out a Schedule C and can fill in your expenses such as the original cost of the items, shipping, packaging materials, and any fees involved such as PP and ebay. Back in 2017 my 1099-K was for around $3000, and I was able to cobble together proof of about $2400 in expenses, so I only paid tax on about $600.

Now I keep records on all the knives I buy and sell so I can be as accurate as possible and be able to back it up if they come after me.

Was able to avoid the whole thing for 2018 and 2019, but will have to do it again for 2020, and probably 2021.
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John, thanks for this. I got slammed with a 1099 too and was wondering why I’d pay tax on something I already paid tax on:confused: I’ll have to sit down and look back at my sales...
 
For future reference, just keep close track of all your knife-related expenses, and it may well end up being a cost saver because you can itemize the losses you took on knives!
 
kylemiller said:
Seems like this is a common theme across knife boards right now. Never been happier to have an unconfirmed, anonymous paypal account. Sure I'm very limited in what I can do. I have to transfer funds directly to my bank with a fee (rather then leaving them in there to use on another transaction) and I don't really have any recourse if anything goes sideways, but I'll take that stuff on given the alternative.

I wonder how big a hole all these states are going to be in next year? Have to imagine sales tax for 2020 was at an all time low for most places. Wonder if that's the catalyst for all these forms being sent out this year.
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Think the main catalyst is the rise of people finding ways to make money via things like ebay, Uber, etc, which weren't being taxed (unless the federal limits were exceeded). MA and VT started this back in 2017, and doesn't surprise me that other states have followed. IIRC, MA estimated that they were losing out on $20 million a year by not taxing that income. But in my case it just made me stop selling stuff for 2 years. But had to sell some stuff last year. I can somewhat understand wanting to go lower than $20k, but something like $5k would have been much more reasonable IMO.
 
The Aflac Duck said:
John, thanks for this. I got slammed with a 1099 too and was wondering why I’d pay tax on something I already paid tax on:confused: I’ll have to sit down and look back at my sales...
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Technically you'll only have to pay tax if you made profit, but the real problem is for people who didn't know this would be reported cash flow and have little or no documentation of their expenses or losses.
 
madcap_magician said:
Technically you'll only have to pay tax if you made profit, but the real problem is for people who didn't know this would be reported cash flow and have little or no documentation of their expenses or losses.
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Also doesn't help find those transactions, if you do a lot, since no one put's knife or knife names in the Notes area to try to fly under the radar..
 
madcap_magician said:
Technically you'll only have to pay tax if you made profit, but the real problem is for people who didn't know this would be reported cash flow and have little or no documentation of their expenses or losses.
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I’ll be going back through my sales threads, I didn’t sell a whole ton but enough where I could be taxed around $1,200 I estimate. Should be easy enough (I hope).
 
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