New tax on sales using 3rd party payment apps

[apenland01]

I was not aware of this new tax until a buddy mentioned it today.  Since I occasionally sell stuff online and use PayPal, I'm going to get a 1099 this year from a Carbon 9 I sold earlier this year.  It wouldn't have prevented me from selling it, but I would have asked more for it to cover the tax I'll have to pay.

Maybe this was a hot topic earlier, but I'm just hearing of it.

I just listed an item on Ebay, which I haven't done in a long time, and as of February, they no longer use or accept PayPal for transactions.  I didn't understand why until now.

Fair warning to those that sell stuff online, if you use a 3rd party payment app and your total transactions in 2022 are over $600, you'll get a 1099 and owe taxes on that value.  For PayPal, it doesn't count Friends and Family, but nobody buying and selling is going to use that.  Article link below, but there quite a few when I searched....


https://www.inc.com/carrie-mckeegan/how-new-tax-rules-for-venmo-paypal-zelle-will-impact-business-owners.html

[bigjim5589]

I use Ebay some and still use Paypal. Ebay now uses their own processing for payments, but Paypal can still be used to pay for purchases.  So, now if I sell something, and the buyer uses Paypal or any other payment type that is allowed, I have to wait for Ebay to release the proceeds to my Paypal account. When I pay for purchases, I still use Paypal, as that still keeps my bank/credit card information from being seen my the seller. Ebay doesn't prevent it's use, they just now do not use it as part of their system like they did in the past.

As far as the tax issue, it's my understanding that income taxes are only to be paid, on profit from the sale, just as it would be on any profit. Unfortunately that means you have to keep records, so if you sold something that you had bought for personal use 10 years ago, you may no longer even have a receipt, so then there's a conflict as far as what is actually profit or income. Sales taxes of course are a different issue and these third party apps are collecting them anyway. There have been laws on the books that folks should have been claiming a lot of what has been sold on places such as Ebay, as income, but no way to account for it all. That's what this is intended to do.

It's going to be a total mess, as the IRS is way behind now, and the increased volume that this will cause will certainly create huge delays in how they handle tax filings. This will also likely cause issues at the state levels with income taxes for those states that have an income tax.