IRS suspends 3rd Party Payer reporting for 1 year

[Herdfan]

The IRS has suspended 3rd Party Payer Reporting for Tax Year 2022. But it will be in effect for 2023:

IRS announces delay for implementation of $600 reporting threshold for third-party payment platforms’ Forms 1099-K | Internal Revenue Service

IR-2022-226, December 23, 2022 — The Internal Revenue Service today announced a delay in reporting thresholds for third-party settlement organizations set to take effect for the upcoming tax filing season.

www.irs.gov

What this means is if you sell stuff from your attic on ebay and it is in excess of $600 (old threshold was $20,000) in a year, Ebay or Paypal or Venmo, will be sending you a 1099-K for the gross amount. So if you don't keep good records, you could owe tax on the total amount. The reporting for 2022 caught me off-guard, but I will be prepared for 2023.

The law only applies to sales, not for sending friends and family money. I know some people trying to get around paying Paypal fees by saying it is for friends, but I would never do that because you lose the buyer protections.

I created a Google Sheets where I list the date, a description, amount and my basis, or what I paid. If I don't know what I paid, I try to find an MSRP.

 

[Herdfan]

Well it looks like they suspended it again.

According to the IRS they are dropping the $600 threshold and going back to the $20,000 limit.

For 2024 however the limit will be a much more reasonable $5,000.

 

[Chew Toy McCoy]

Interesting. My friend's girlfriend sells a ton of stuff on eBay, and I'm not talking random crap from around the house. She buys large quantities of things like tools, glasses, bike parts, and shoes in bulk at discount and resells them. I never thought about the tax part of the business and not really sure if she even files this stuff. It's a side hustle. She also has a good paying day job.