Tropical Fruit > Tropical Fruit Buy, Sell & Trade
2022 PayPal taxes
FloridaManDan:
--- Quote from: spaugh on November 25, 2022, 01:56:53 AM ---You won't owe anything if all you made was 1000$ or something close to that. You are still supposed to file a return though.
You don't need an LLC to write off expenses either. You can write off any fertilizers or plants etc and do it all as a sole proprieter. Just keep your receipts.
You paypal earnings are personal income from your sole proprietorship and you can deduct all the plants and fertilizers etc you bought.
Welcome to being a grown up, and dealing with the government.
--- End quote ---
Yeah I made my eBay account to offload a bunch of personal crap when i moved early 2022, they were very straight up that the $20k -> $600 taxable income reporting requirement was a hot load from the govt. The website even told me to contact my local politicians and complain, not that it would do anything.
Like spaugh mentioned, keeping track and writing off business expenses is your best bet. Its not considered a hobby if you have a solid paper trail for profits and expenses, although I suppose each state will have its own definition on that, including business license requirements and the like. If you're making some good money Ryan, may want to even consider a separate bank account for business, that could go a long way. Atleast the state of TN doesn't have income tax.
IRS mentioned hobbyist tax deductions might make a reappearance in 2026... ::)
driftwood:
This is mainly for businesses selling goods and not reporting it. Those who have business licenses will be forced to report it. Instead of hiding >20k per cash service
If you are buying and reselling personal items(plants, and dont own a business) you will be fine. If you approach 20,000$ a year in paypal payments they will force you to add an EIN and other business documents. Basically before you could make a chunk on etsy, cashapp, venmo, paypal, and as long as they were under 20,000$ each none would report. But now they are
Its not a tax change; it's a reporting change. If you're self-employed, you should already be paying taxes on your total income, regardless of how you receive your payments for goods and services. The new legislation is not a tax change: It's a tax reporting change so the IRS can keep tabs on transactions made through payment apps that often go unreported.
It is possible some people may receive the form by mistake for processing a large transaction on a service like paypal/venmo. you sold a car for 20k, or a bunch of old furniture)
driftwood:
Like others said, if youre approaching a serious amount per year in supplies/expenses.. it makes sense to form an LLC. An LLC that earned 10,000$ and spent 10,000$ or more pays zero in taxes. A self employed person who makes 10,000$ will pay taxes.
Vegan Potato Man:
$600 is the threshold for 1099 reporting. Anything more than that must be reported to the IRS.
Source: am self employed
Vegan Potato Man:
--- Quote from: Giant Gecko on November 25, 2022, 09:15:15 AM ---https://turbotax.intuit.com/tax-tips/self-employment-taxes/4-tax-tips-for-money-making-hobbies/amp/L89qz1GNj
Hobby expenses can’t be itemized after 2018, only standard deduction that everyone receives. I had last year’s taxes done by H&R Block and my tax preparer said I couldn’t deduct my hobby expenses. I just think it should be more than $600, nobody is making a living off of that. Also most of the items sold by average folks were paid with $ already taxed to begin with.
--- End quote ---
1099 contractors generally work for more than one entity and receive a 1099 form from each. The IRS wants their money lol. The only way to avoid this would be to get paid cash under the table. But like Brad said, they probably won't go after someone if its a small (ish) amount.
A 1099 contractor that works for only one entity is likely a misclassified employee. (outside of the context of this thread and getting 1099s from selling on paypal)
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