Paypal Changes for 2022

Meanwhile back at the ranch, if you make a profit when you sell something, you will owe income tax. In the event you don’t make a profit when you sell something, you won’t. Hardly the downfall of western civilization.

By the way, that was the case last year…and the year before….and so on. In the event someone is ticked off that their hobby was actually a side hustle…then they havent been paying their fair share.

Its not hard to keep records. Its not hard to figure out if you made a profit. If you make a profit, you owe income tax. What is it about this concept that is so earth shattering? Is it that some believe they should be exempt from certain income taxes? Are you angry that taxes may be owed or that it has become more difficult to hide profits?

Relax, you will simply certify that you paid $5,000, that you didnt save the receipt and that you didnt know years ago that you would need it. This isn’t the Spanish Inquisition. Much ado about nothing…unless someone has been running a side business without paying income taxes. Nothing will collapse, the earth will still spin and the sun will rise. I don’t have a great deal of heartburn about a system attempting to encourage compliance. Im a “everyone should follow the rules and if they dont they should pay the consequences” kind of person.

Press button on fire extinguisher, point at hair on fire, continue doing so until no more fire, keep fire extinguisher conveniently located as hair tends to spontaneously combust from time to time.

How can paypal violate your 1st and 2nd ammendment rights? Only the government can be considered when evaluating whether your rights have been infinged.

This is a nothingburger. How many people routinely make money on their audio sales?

@dadork 

If you choose to have a kid, great! I don't want to pay for that choice.

I agree with you. That’s why new laws like those in Texas are head scratchers.

Alot of people gripe about their high taxes, alot of other people chuckle at what those others think are high taxes.

So, if you buy a piece of gear for $1,000 and sell it for $1,500 you have a $500 profit. Depending on your tax bracket you would owe between zero and $185 (37%) in income tax. You might owe some state income tax as well depending on where you live. Would anyone here find this offensive? Paying around $200 in income tax because a statistical outlier of a piece of gear appreciated?

This is a nothing cheeseburger...its not a big deal to pay income tax as a hobbyist if you get lucky and something appreciates. If its a big deal, start a business, pay the fees necessary and set up shop. It looks easy and is hard as heck to make money in the audio business.

OR

You can pay a few dollars in income tax on the absolutely rare occurrence that a couple of items here or there MIGHT have appreciated enough to generate a profit. Senseless handwringing.

@grannyring I see your position. Many may not be aware but you often do favors for fellow hobbyists and mod their gear...best I can tell you barely cover your costs for doing so.

@snapsc 

So, in that rare case like selling an oppo 205 we can say “buyer to pay shipping, PayPal fees and estimated income tax due”. 

OR

You could ask for interesting trades of "X, Y or Z" or you could ask for your basis and ask that the buyer donate $X to a charity (of your choice) and include the charity receipt with their payment prior to shipping. OTHERWISE, someone would be trying to EVADE income taxes rather than to AVOID or DEFER income tax. Quite a different matter.

@grannyring I also recognize that I am an outlier. I probably bought and sold a combined six figures worth of gear during 2021 BUT, I keep meticulous records out of habit. In the past, if something was less than a few thousand dollars, I haven't kept up with it. Going forward, I will. Paypal is still pretty darn convenient but I see your point.

This wont be much different than what we now do when we donate goods to a certified charity. You can guesstimate with some backup, receipts are best but guesstimates with backup work and passed the smell test with a recent audit. It also depends a great deal on materiality of the aggregate tax return...$50,000 on a paypal 1099 on a return showing $1million of AGI isn’t a thing. $50,000 on a $50,000 AGI is a side business unless its a one off year.

By the way, everyone is aware that this isn't a new thing, its just that some of the vendors like Paypal must report the transactions. Technically, you must be able to determine basis for every transaction to determine if there was income or not.

@rodman99999 just pay your taxes. Its a privilege to live in this country and Im certain ther are plenty of people who pay alot more than both of is who never gripe. Thankfully.

@lula 

You do not get to offset losses against gains. Thats the current tax law.

@lula 

In your example, lets say you sell two couches. You paid $1,200 for each. You sell couch one for $1,500 and six months later sell couch two for $800. You owe tax on the $300 gain. You get no benefit or offset on the $400 loss from couch two. In order for you to offset those, it must be a business.