**You Made $700 From an Online Side Hustle. Now the IRS Will Know.** **A new tax law means online platforms will have to file a 1099-K for people earning more than $600**
**By Laura Saunders, The Wall Street Journal, April 15, 2022**
**Now that your 2021 taxes are done — or at least under way — it’s time to focus on a key tax change for 2022 affecting millions of Americans making money through platforms like eBay, Etsy, Airbnb, Venmo and Uber.**
**This change, which is beginning to ripple through e-commerce, tightens the tax reporting on income earned by people selling goods and services through online platforms. Starting this year, the platforms must send a Form 1099-K to the Internal Revenue Service reporting an individual’s total revenue if platform earnings top $600. ... Under prior law, platforms only had to send 1099-K forms if a vendor earned more than $20,000 and had over 200 transactions. ...**
**Casual sellers on e-bay may not owe tax at all if they’re selling items for less than they paid — or, when it comes to items inherited from Grandma, less than the item’s value on the date of death. They also won’t have to submit a form to the IRS detailing the purchase and selling prices of items, at least for now. ....** [end quote]
This new law will affect many gig workers and small vendors. Some may drop out altogether if they can’t do business untaxed under the table. Others may force the platform to raise their pay to cover the increased taxes.
$600 isn’t very much. When my mom died, I booked about $1500 selling her stuff that was small enough to ship.
if they’re selling items for less than they paid — or, when it comes to items inherited from Grandma, less than the item’s value on the date of death.
Prove the price paid. How many people hang on to decades old receipts? Is the purchase price adjusted for inflation? I sold an 80s vintage portable radio a few weeks ago. I think I gave $15 for it new (I’m shocked SHOCKED that I couldn’t find the receipt in my file). Adjusted for inflation, that $15 is about $40 now. Sold it, net of eBay fees, for about $34. Did I make a profit on it? Gave $63 for a VCR/DVD player 9 years ago. Adjusting for inflation, that is $78.66 now. Netted $72 on eBay. Did I make a profit?
Only thing I’m sure I made a profit on is the computer found in the neighbor’s trash last summer. Repair amounted to plugging one of the memory sticks completely into the socket. Sold for a net of $24.
That computer brings up another question. What is the tax on value added by the seller? I changed that computer from one that would beep a few times, then shut off, to a fully functioning machine. Can I deduct my knowledge of knowing where to thump it from the selling price, or, are my knowledge and effort inputs deemed worthless?