1099 tax rules

[BroccoliFarmer]

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.

Unfortunately the rule when you cannot substantiate the basis in your property is that your basis is zero. Meaning you have to pay tax on the full sale price. It’s draconian!!

 

[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

It’s not primary source, but it is written by cpas

Hobby Gross Income and Expenses after the TCJA - Strategic Finance

The Tax Cuts and Jobs Acts of 2017 may have increased the complexity of hobby gross income and expenses reporting.

sfmagazine.com

it says what I said. You can deduct cost of goods sold in the second paragraph. (I called it direct costs but it is the same thing)

 

[BroccoliFarmer]

It will die quickly.

Edit: it will be moderated to death and then it will die. Folks don't know how to keep politics out of it.

Wow. The prognosticator!! It was quite moderated!!! Good call

 

[mdb_talon]

It’s not primary source, but it is written by cpas

Hobby Gross Income and Expenses after the TCJA - Strategic Finance

The Tax Cuts and Jobs Acts of 2017 may have increased the complexity of hobby gross income and expenses reporting.

sfmagazine.com

it says what I said. You can deduct cost of goods sold in the second paragraph. (I called it direct costs but it is the same thing)

Thank you!

 

[Lbrdsoxfan]

Wow. The prognosticator!! It was quite moderated!!! Good call

 

[V A R I A N T]

I look forward to this article. As it turns out, common sense isn’t too common.

 

[Sean Clark]

This is why I only deal in Benjamins. Paper rules.

 

[ChiCity]

This is why I only deal in Benjamins. Paper rules.

 

[nereefpat]

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

I assumed you were a producer of broccoli

 

[BroccoliFarmer]

I assumed you were a producer of broccoli

I changed my handle from Nj_tax_man to broccoli farmer because I was trying to concentrate on euphyllia. Which looks like broccoli.

i am better at taxes than broccoli farmin

 

[Widdlyscudds]

I changed my handle from Nj_tax_man to broccoli farmer because I was trying to concentrate on euphyllia. Which looks like broccoli.

i am better at taxes than broccoli farmin

"broccoli farmin"

 

[spsick]

@BroccoliFarmer can you link the article you reference in the OP?

 

[BroccoliFarmer]

@BroccoliFarmer can you link the article you reference in the OP?

Here is one of them:

IRS warns Americans over $600 threshold to report Venmo, PayPal payments

The IRS is interested in transactions involving part-time work, side gigs, and selling goods, according to the agency.

nypost.com

 

[leighton.bingham]

Here is one of them:

IRS warns Americans over $600 threshold to report Venmo, PayPal payments

The IRS is interested in transactions involving part-time work, side gigs, and selling goods, according to the agency.

nypost.com

As a business owner, I'm never too worried about the IRS. No matter if they add another 100,000 people the population of the US is like 330 million. The computer system checks all tax returns, and people do the audits. Just don't try to claim anything that isn't in the grey area

 

[BroccoliFarmer]

As a business owner, I'm never too worried about the IRS. No matter if they add another 100,000 people the population of the US is like 330 million. The computer system checks all tax returns, and people do the audits. Just don't try to claim anything that isn't in the grey area

The problem at play is that what constitutes the grey area is …well…grey. So the boundaries of what constitutes legitimate expenses and deductions is very much in the eye of the auditor and tax payer which are not always aligned. Tax laws are written vaguely intentionally because the more precise they are, the easier they are to circumvent.

this is also why talking with a tax person can benefit you. Too many people just say ‘here is my paper work, do my taxes’. Planning with a cpa / tax pro can help someone put the facts in alignment to make a stronger case for acceptance of your tax position. A simple example, to be a legitimate business, did you set up a separate business account? Simple stuff like that sets a proper foundation to ungrey the grey.

 

[JAMSOURY]

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?

Awesome, looking forward to the post! It makes me wonder how much they're going to want to take from the 600 in sales. Glad to also know that we can write off shipping and stuff as a hobbyist.

Might be worth considering registering as a business? With all the salt/electric/water that goes into this hobby, might be good to be able to write a good amount of it off.

Thanks for the help!

 

[TankCandy]

Awesome, looking forward to the post! It makes me wonder how much they're going to want to take from the 600 in sales. Glad to also know that we can write off shipping and stuff as a hobbyist.

Might be worth considering registering as a business? With all the salt/electric/water that goes into this hobby, might be good to be able to write a good amount of it off.

Thanks for the help!

I just started an LLC just to play along this new IRS rule. If they want to tax me selling a used fridge then i will write off everything related to this hobby. I have already gotten access to certain sites of because i have an EIN number now. I opened up a separate bank account and CC for all aquarium related purchases. Only cost me $250 in total and i have to file twice a year.

Side note. I bet prices for coral are going to jump next year because of this. Cash is king!

 

[JAMSOURY]

I just started an LLC just to play along this new IRS rule. If they want to tax me selling a used fridge then i will write off everything related to this hobby. I have already gotten access to certain sites of because i have an EIN number now. I opened up a separate bank account and CC for all aquarium related purchases. Only cost me $250 in total and i have to file twice a year.

Side note. I bet prices for coral are going to jump next year because of this. Cash is king!

I agree, I think im going to do the same! Was the process pretty easy/quick? Probably depends on location too, right?

 

[TankCandy]

I agree, I think im going to do the same! Was the process pretty easy/quick? Probably depends on location too, right?

It was super easy. Just print out all documents as you get them and store them nicely. I used northwestregisteredagent and it only took 20 days to get fully registered.

 

[Jeeperz]

It will die quickly.

Edit: it will be moderated to death and then it will die. Folks don't know how to keep politics out of it.

Because it IS 100% political? What party hired 87k it's agents and spent billions doing it?