If you sell items on any online marketplace, such as ebay, to be bought, poshmarkeither etsyyou’ll want to pay attention to any new tax thresholds that could affect you.
For many families in the United States, selling secondhand items such as gently used clothing and unwanted antiques has become an important source of income. Stay-at-home parents, for example, have used resale operations to become dual-income households.
Then, there are online stores like eBay. pretty things which have become full-fledged e-commerce retailers in their own right.
Now, the new tax thresholds have many online sellers frustrated.
He US bailout plan of 2021 included a provision requiring sellers to report online marketplace transactions that exceed $600 in total; This is notably lower than the previous threshold of $20,000 and has made things immensely challenging for smaller sellers.
Sellers must complete a 1099-K form for their transactions, and while the IRS says the change affects only tax reporting rules, not general income taxation, it has small sellers upset.
Melissa Williams, a mother from Walla Walla, Washington, has been selling her children’s clothing online for more than a decade to help finance their new wardrobes each season.
“It really helps us financially to be able to sell my kids’ used clothes and then turn around and buy the next size,” Williams said in an interview with The hill.
He went on to tell the outlet that he is actually considering calling off his two Kidiz and Mercari represents the rest of the year as it has already exceeded $600 in sales on both platforms.
Kidizen, eBay, Etsy and Poshmark are among the online marketplaces that have come together to fight the low tax filing threshold.
All these companies have joined the Coalition for Equity 1099-Kwhich also includes big names like Airbnb, OfferUp and PayPal.
The Coalition seeks to return to the previous reporting threshold of $20,000, specifically noting that its goal is to “increase the reporting threshold for sales in online marketplaces.” they should not receive unnecessary, intrusive and confusing tax forms for small-time transactions.”
If you are interested in writing to your congressman regarding a reversal of the tax reporting requirements in the American Bailout Plan, the Coalition has provided a prewritten letter here.
Have you been affected by these new regulations for third-party online sellers?
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