Venmo, Paypal, etc payments to trigger 1099s in 2022

This comment makes absolutely no sense.

It's not a sales tax we're talking about here. It's income tax. And it's not a new tax that you'd have to pay it. It's just how they are keeping track of income so dodgers are caught more easily.

However, if you are buying alcohol on a secondary market and not paying sales tax...that is definitely against the law and much of your state and local government revenue is depending on such transactions. So they'd be interested.


Remember federal government doesn't mess with sales tax, but the people selling alcohol second hand have to be reporting income overall. And that goes for all second hand markets. I mean, the used clothing market is far larger in most nations that the new cloths market is, but a lot of those sales are never reported. Getting more of that money would help paying for services easier. And again, it's nothing new about the requirements, just how it's being administered. 

So that's why there are limits on the transactions and the revenue of what they are looking for. Selling a bottle of something here and there isn't going to raise eyebrows. If you are reselling a lot of bottles, say a few every month, and not reporting that revenue it might trigger a flag. But that's if you are truly trying to move stuff on the regular and aren't accounting for money coming in and going out. It shouldn't be an issue if you buy a bottle of something, decide it's not for you, and sell the remainder. If the sale price is above the trigger amount, then you should just consider scanning your receipts so you can show covering your expense. 

I'm going to try to find an easy to understand page about this sometime, maybe one already got posted I think.  But yeah that's $1,200 which is double the $600 annual limit, so you'd be expected to report that as income.

But it's more complicated than that.  If you bought the bottles for $50 /ea and sold for $100 /ea you would only have to report $50 of income.

This means a ton of record keeping, I think, of buys and sales, lots of receipts.

That’s a nightmare.

After being a daily reader of this forum for the past 18 months, this is the conversation that finally forced me to become a member. LOL!

In my day job, I am involved in some very specific areas of tax which also takes me to Capitol Hill. While my expertise is not in 1099-Ks, maybe I can help clarify some of the myths and half-truths that I've seen across the internet.

Federal Income Tax – Generally speaking, the Federal government is allowed to tax every dollar of income you make whether it’s your weekly paycheck or the $10 you made from the lemonade stand on your front lawn. The only reason no one pays taxes on the lemonade stand income is that no one bothers to put it on their tax return even though “technically” you should. The reporting change that is occurring for 2022 basically forces you to declare that lemonade income.

The change you’re seeing from Venmo and others is a way to capture this “lemonade money”. In March 2021 the House passed H.R. 1319 (see Sec.9674) which eventually got passed by the Senate and signed by the President. The D’s passed this bill using a process called Budget Reconciliation. The process requires that the legislation be paid for over the next 10 years, hence, the lower limit of $600 is one of the ways they are going to help pay for everything else that was in the bill. Btw, the Budget Reconciliation process is typically used so you can bypass the other party. The D’s used it here. The R’s used it back in 2017 for a different piece of legislation.

So for 2022, all Goods & Services you sell will be reported by the payment providers to the IRS as income. You will now have to offset that income by keeping all your records such as your original receipts so that you can prove to the IRS that you originally paid $2,000 for that compressor which you sold for $1,800…and therefore offsets the $1,800 income on the 1099K. This will certainly be a record keeping nightmare for many common folks.

This Venmo page might help:Venmo 2022 1099K

This article is helpful:

www.investopedia.com/new-tax-ruling-side-income-5215172

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Reverb has an FYI page about these new laws and how they're handling it:

help.reverb.com/hc/en-us/articles/4411577966227

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Here is a snippet from Reverb's URL:

As of January 1, 2022, marketplaces like Reverb are required to report a seller’s sales if they sell $600 or more on the platform in a calendar year. This new reporting requirement means that if you hit the $600 sales threshold, Reverb is required to collect tax identification information and issue you a Form 1099-K.

What happens when you hit the tax reporting threshold

If you hit $600 in sales on Reverb, we’ll reach out to collect your tax identification information. You have the option to add this information to your account here at any point prior to hitting the threshold, but you will be required to provide it once you reach $600 or more in sales. This information will help us issue you a Form 1099-K, help you file your taxes, and ensure your payouts are not impacted.

Once you’ve provided your tax information, no additional action is needed from you until later this year. We’ll reach out with more information and next steps as appropriate.

Reporting your sales doesn’t necessarily mean you’ll pay income tax

Receiving a 1099-K doesn’t necessarily mean you’ll pay income tax on your Reverb sales. For example, say a Reverber bought a guitar for $1,600 in 2019 and sold it for $1,000 in 2022. Reverb would still have to report the $1,000 payment on a 1099-K, but the seller would have no taxable income to report since the resale amount was less than the original purchase price. However, everyone’s situation is different. If you have questions about your taxable income, it’s best to work with a tax professional.

so stuff we bought decades ago we need to have the receipt or pay tax on full amount as income? Jesus… guess accountants are going to be in very short supply real quick. I don’t sell stuff often but I still have the receipts filed away somewhere. Thought I was being dumb saving it all this time but I guess not lol.

So how is this taxing the rich? Almost like it’s a lie.

Time for you guys to sign up for a Coinbase account.

I was just thinking if someone came up with a music gear buying/selling site that had crypto as a payment option they'd get a lot of business this year.  In other news, maybe this new IRS accounting will get rid of these knuckleheads that have marked up used gear beyond new prices during the supply chain issues of the past couple of years.  

I had some cash economy today…..but it’s all $100’s, which you can’t do anything with and banks track when you deposit, so, still not underground. FWIW.