Apologies if this topic has already been discussed. Please do your own research before filing taxes. I'm neither giving any advice nor claiming to know anything about finance and taxes but would like encourage affected parties to hunt for those receipts.
Third-party income reporting thresholds for 2022 have changed to $600 total per calendar year as part of American Rescue Plan Act of 2021. eBay, Paypal, Venmo and Facebook Marketplace will report transactions over $600 total per calendar year to IRS via form 1099-K. If a transaction is marked as a “Friends and Family” money transfer, it is not considered income and the transaction will not be included in a 1099-K form.
If you still have the original receipt from an item that you are selling used for less than you bought it for you should be golden. Burden of proof is on the taxpayer. If you’re selling an item for more than you bought it for, the distinction between a hobby and a business may be critical. For example, if you bought a bonzer for $750, rode it for a year and sold it for $700 and have your original receipt you should be good. If you bought that bonzer for $750 and sold it for $800 and you are a business, you’ll pay tax on $50. Same scenario but you’re a hobbyist and you may have to pay tax on all or part of $800. A cursory google search reveals quite a bit of contradictory information.
https://turbotax.intuit.com/tax-tips/self-employment-taxes/4-tax-tips-for-money-making-hobbies/L89qz1GNj
“Beginning in 2018, the IRS doesn't allow you to deduct hobby expenses from hobby income. You must claim all hobby income and are not permitted to reduce that income by any expenses.”
Third-party income reporting thresholds for 2022 have changed to $600 total per calendar year as part of American Rescue Plan Act of 2021. eBay, Paypal, Venmo and Facebook Marketplace will report transactions over $600 total per calendar year to IRS via form 1099-K. If a transaction is marked as a “Friends and Family” money transfer, it is not considered income and the transaction will not be included in a 1099-K form.
If you still have the original receipt from an item that you are selling used for less than you bought it for you should be golden. Burden of proof is on the taxpayer. If you’re selling an item for more than you bought it for, the distinction between a hobby and a business may be critical. For example, if you bought a bonzer for $750, rode it for a year and sold it for $700 and have your original receipt you should be good. If you bought that bonzer for $750 and sold it for $800 and you are a business, you’ll pay tax on $50. Same scenario but you’re a hobbyist and you may have to pay tax on all or part of $800. A cursory google search reveals quite a bit of contradictory information.
https://turbotax.intuit.com/tax-tips/self-employment-taxes/4-tax-tips-for-money-making-hobbies/L89qz1GNj
“Beginning in 2018, the IRS doesn't allow you to deduct hobby expenses from hobby income. You must claim all hobby income and are not permitted to reduce that income by any expenses.”
