Welp, looks like I'm done selling on Reverb.

[vultures]

We've had years to prepare for this kind of stuff. I keep receipts for everything. In the pro photography realm people won't buy shit from you unless you send a detailed invoice. Which I'm glad for. I sold a medium format camera body for $3300 last year and Ebay issued a 1099 showing a profit of $3300. What they didn't show is that they took $550 in fees and shipping and I only received $2700. I had to dig for that form. I also have the invoice where I bought the body for $2650. I just print all those things out and hand them to my accountant. Cover your ass on gear and your accountant will take care of it.

I'm not selling on Reverb or Ebay anymore, but not because of taxes.. It's the fees I'm more pissed about.

 

[Metlupass2]

This is the reason why I stopped selling on reverb and only take PayPal FF

 

[Soundstorm]

We've had years to prepare for this kind of stuff. I keep receipts for everything. In the pro photography realm people won't buy shit from you unless you send a detailed invoice. Which I'm glad for. I sold a medium format camera body for $3300 last year and Ebay issued a 1099 showing a profit of $3300. What they didn't show is that they took $550 in fees and shipping and I only received $2700. I had to dig for that form. I also have the invoice where I bought the body for $2650. I just print all those things out and hand them to my accountant. Cover your ass on gear and your accountant will take care of it.

I'm not selling on Reverb or Ebay anymore, but not because of taxes.. It's the fees I'm more pissed about.

100%. I keep receipts on everything, organize them into folders, and even make a spreadsheet at the end of the year for my CPA. But many people don’t, and I’d rather just deal with slower forum sales in the future and not have to pay Reverb’s fees in any case.

 

[RedB4Black]

Can you clarify if one must itemize deductions in order to claim losses on sales from a 1099-K? Or can you do this while taking the standard deduction?

You can’t claim losses… Unless you are an actual business. For most of us, it would be considered hobby income…must report/pay tax on gains but can’t deduct losses. A gain on a guitar you sell can’t be offset by a loss on an amp you sell. Each item is considered separately

 

[the4thlast1]

Can you clarify if one must itemize deductions in order to claim losses on sales from a 1099-K? Or can you do this while taking the standard deduction?

No itemized return is needed. You just fill in what you paid for the item and how much you sold it for. The form is part of your regular standard deduction taxes. If you made a profit you pay tax on the profit , that’s it. I don’t think it’s cool the government does this however there is some misunderstanding in this thread about it.

Only time you have to show a receipt is if you are audited. As others have mentioned the chances of that is low. But yes anything is possible.

 

[Matt300ZXT]

This is the reason why I stopped selling on reverb and only take PayPal FF

Same here. It hurts me when I'm trying to sell one of my game consoles or something and tell people I only accept F&F, but that's fine. Actually had one guy message me about buying one and I told him that and he was like well, I only do regular PayPal, as I've had to use the refund option a lot. I don't think he's self aware enough to realize that the reason a lot of people only accept F&F is because of guys like him.

 

[boltzthrower]

Got a 1099-K for a whopping $23k in sales on Reverb.

You’re implying that $23k is a small amount? Seriously? I don’t think we should be taxed for flipping gear for our hobby, but, $23k ain’t chump change for most of us.

 

[napalmdeath]

I had $19k in sales. When I did my taxes, it allowed me to claim the whole lot as a loss, (most were). It was one click, done. If they decide to audit, I have the spreadsheet and always load my cost when I list so it keeps track.

My refund this year was $8. And the 1099K had nothing to do with it. These days, unless you're considered poor, nobody's seeing big refunds. Ever since they did tax cuts a few years back, now you owe more at tax time because you didn't pay enough. Last 3 years I've either owed, or got back squat.

 

[Soundstorm]

You’re implying that $23k is a small amount? Seriously? I don’t think we should be taxed for flipping gear for our hobby, but, $23k ain’t chump change for most of us.

No, I wasn't implying that at all, quite the opposite.

 

[napalmdeath]

I wish the Trump administration would make this go away - This whole 1099K was a Biden brainchild, and the ones "paying their fair share", as he put it, aren't rich people. Think of the grandma selling arts and crafts on Ebay for some extra cash. This whole scheme just fucks the lower and middle class - the very people you don't want to impose these insane undue burdens on. And people selling used goods just to make a little cash? C'mon. It's absolutely ridiculous.

 

[Meeotch]

Thanks for clarifying, I'm expecting to get a 1099-K next year so I played around with TurboTax to investigate. Some basic observations that I hope will be helpful:

If you exceed the sales threshold (which is cumulative from all selling platforms like Reverb, Ebay, Paypal, etc) you'll get form 1099-K which means your sales have been reported to the IRS.

The 1099-K will list your gross sales, but this does not mean you will owe taxes on this amount. It is up to you to determine how much of this gross amount was actual gain. You compare your proceeds (the amount you received for the sale of the item) to the cost basis (the amount you originally paid for the item) to determine a gain vs a loss.

As mentioned, a loss on the sale of an item cannot be deducted from your income unless you are a business, but it will offset all income received from that sale and result in zero gain for that individual sale.

If you profit from the sale of an item (proceeds exceed the cost basis) then you owe taxes on the difference. In other words, you only owe taxes on the amount of money that was profit.

You cannot accumulate losses from the sale of individual items to offset the gains made from the sale of other items. So for example, lets say you sell 6 items in a given year. 5 items resulted in a loss of $100 each, and 1 item resulted in a gain of $500. On paper, you have lost $500 and gained $500, but the IRS assesses each sale individually so the losses simply zero out and you owe taxes on the $500 gain.

TurboTax makes it quite easy to input your sales and calculates everything for you, then spits out the forms you need to submit with your tax return. To me, this all becomes fairly inconsequential, as 95% of my sales I either lose money or break even. So the main penalties that I face are selling fees from Reverb or G&S fees from Paypal, but I just increase my asking price 10%-20% on Reverb and that's still where I make most of my sales. Yes you have to deal with the risk of buyer fraud and returns but luckily those are few and far between.

 

[vultures]

100%. I keep receipts on everything, organize them into folders, and even make a spreadsheet at the end of the year for my CPA. But many people don’t, and I’d rather just deal with slower forum sales in the future and not have to pay Reverb’s fees in any case.

Oh I'm with you, man. I try to keep 80% or more of my deals local. Especially since I get a ton of broken guitars for dirt cheap or free, fix them and sell them.. I'm not paying sales tax on every $300-500 guitar when I can't show a receipt for the "$250 refret" or "$150 rewire" or "$300 headstock repair" that I did.