IRS delays new $600 Form 1099-K reporting threshold

Oh good! Man, I'd have been more aggressive in my selling if I knew this at the beginning of the year. Happy to see it raise to $5k though.

Thanks for posting this. I've been waiting to sell a bunch of stuff.

🤣🤣🤣

Yep it’s always been on you to prove you didn’t profit, now the government is making the platforms provide a paper trail, so keep those receipts so you can prove you didn’t profit.

I’m. Not exactly sure but, I’m not an accountant, but I recommend finding one.
Remember a 1099 shows income not profit. What you really have to ask yourself is X dollars worth paying a accountant and documenting everything.  The good news is in the digital age dealers can generate a copy of the receipt for everything.

C Senor.
501 C.

Herein lays the problem and why people are upset. Every day people with just a day job and a W2 and file the most simple and straightforward 1040 every year need an accountant when they’re NOT running a business at all?

The above does not apply to me and it’s still very upsetting.

This is going to be a gross oversimplification, but...

You are required to pay taxes on any income you have for the year. (Note that financial gifts are not "income," and do not count as such.)

If people are paying you to record them, compose for them, write for them, or consult for them, then in the eyes of the IRS, you have a business. If you write and/or record your own music with any reasonable plan to make money from such activity either now or in the future, in the eyes of the IRS, you have a business.

You must report your yearly financial activity in your tax return. Income or loss can most simply be reported via Schedule C on personal income taxes (unless you have incorporated your business).

To fill out a Schedule C, you do not have to write down every set of guitar strings or plugin you purchased as a line item. You should have your own records of that in some way, but in this day and age that's pretty simple--there's always an email receipt somewhere. You can group all kinds of expenses together and add them up, such as "Software for music production = $834," or "Music supplies = $2065," (where "music supplies" might be everything from guitar strings to cabling to hard drives).

If, as part of your financial activity in pursuing income from music, you sell a piece of equipment, then any money you got from that sale goes in your "income" column. But likewise, if you use that money to buy another piece of gear, then that outflow of money goes in your "expenses" column. (Things can get more complicated here, like if you chose to expense an item out over several tax years but then sold the item before you fully wrote it off, or if you bought some Neve 10xxs 25 yrs ago and sold them this year for a lot more than you paid for them obviously.)

I know this often sounds like a harsh reality of the tax code, but there really are benefits to the way this is all done. If your financial activity qualifies you as a "business," then that means you can also take a business loss some years and pay nothing. If you did a significant amount of physical work in your studio this year (building a new studio, hiring an acoustician to help redo the room over your garage, etc.), you will almost certainly have a business LOSS. And if your spouse has a job where taxes were withheld from their paycheck, you might get a very nice chunk of change back from the IRS in a loss year for your business.

All that said, I am not defending the current US Tax code. Just explaining a tiny bit of how it affects us, as written. Personally, I think the complexity of the US Tax code is f'n insane. I am astonished every year at how many provisions there are in the US Tax code for individuals who own fishing boats. It is bonkers, and the code does not reflect the reality that most Americans live, financially speaking.

Don't shoot the messenger.

EDIT: Just to add this - the smartest and easiest organizing tool you can do for yourself is opening a separate bank account for all music-related activity. Don't ever pay for anything else out of that account except for music-related expenses (and there are a ton of those). And when you make a gear sale or a client pays you for the mixes you delivered, ALWAYS deposit that money in the music bank account. It makes tracking everything sooooooo much easier.

EDIT 2: Oh, and "music-related activity" in the paragraph above can be interpreted quite widely. You took a trip to Nashville this year to tour some studios and try out a bunch of mics at Vintage King? Well guess what, that was a business trip. Your mileage (or airfare), your hotel, etc. - those are all business expenses.

EDIT 3: Seriously, please don't shoot the messenger.

excellent news!

Personally, I would go further than that, Eric. If you receive a 1099 from someone, that’s almost proof positive that you ARE a business. Because that means someone hired you in a professional manner.

EDIT: and obviously that’s what the real debate here is about, right? Reverb and eBay being required to file a 1099-K for anyone with sales above a certain threshold.

Sounds like we should start a "RGO gift exchange" section in the classifieds 

Absolutely not anymore. That’s what’s crazy.