heads up, 1099-K hassle for doing $600+ on paypal/venmo

morecoffee · Since 24 Aug 2011 26 Posts

New law comes into effect for 2023, goods or services transactions on paypal, venmo, or other 3rd party payment processing networks will result in a 1099-K being sent you and the IRS if you do more than $600 of such transactions in one year. The $ amount on the 1099-K is reported as income, there is no provision for declaring the cost basis of the goods at the time the transaction takes place. Previously, you had to do $20k a year or 200+ transactions a year to get a 1099-K.

If there is a "mistake", you are supposed to contact the issuer of the 1099-K to correct things, never mind the structural mistake where the law assumes every item's cost basis is zero. There is no explanation for how paypal/venmo is supposed to know which transactions are services or for-profit goods, so I assume that when you use friends&family its considered non-profit, everything else is hassle time.

Pretty hard to turn over your quiver without running afoul of this.

https://www.cnn.com/2022/11/23/success/tax-reporting-irs-venmo-paypal-airbnb-etsy/index.html

shred_da_gorge · Thu Nov 24, 22 9:13 pm

Something I've always thought was pretty shitty is when states charge taxes on eBay transactions automatically, or even for the sales of a used car. It's effectively double taxation! If the state gets 10% on something you bought for $100, used a while, then sell for $70, they are collecting $18 instead of $10. Nice racket...