Good news everyone!

Off-topic discussions. Be nice. No politics/religions/insults (as on the rest of the forum).
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kevinkk
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Good news everyone!

Post by kevinkk »

Beginning next year, if you sell a total of 600usd using a third party, like PayPal, Venmo, and any other payment application,
guess what?

You get to support the government! How cool is that! Yep. You'll get to pay taxes on that money, I'm am so stoked. I mean, our tax dollars
go to support such worthy causes, now I won't need to donate to charity, that's a relief.

I don't want to get into a banned topic. Maybe I can get away with saying that certain persons get the government they deserve, and they
drag the rest of us to hell along with them. :twisted:

I hope I can get some defendable turf to sell my livestock out of the trunk of my car...after dark :roll:
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Re: Good news everyone!

Post by Chuck »

Bad news: this begins THIS year, for 2022 taxes.

It also includes Ebay and Etsy.

PP "friends and family" is does not earn a 1099. Zelle does not have to report 1099, for whatever reason.



Who's really going to get nailed are the artisans on Etsy who will get a 1099 for (example) $3000. If they do nothing, they'll owe taxes on that $3000 and will over-pay. Since most of their materials are sourced at yard sales, and/or are cash payments, they cannot prove the deduction of expenses.

I did read from a tax accountant that the 1099 has to be included on the income line in order to realize expenses; the "other" line, which I've forgotten, one cannot claim expenses.
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Re: Good news everyone!

Post by adamcotton »

For those of us who know nothing about US taxes, what is a 1099?

Adam.
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Re: Good news everyone!

Post by Chuck »

1099 is the form name of a US tax form for the self employed and independent sub contractors. It shows how much money they received from one or more jobs. If one does contract work for a big company, then at the end of the year the big company will provide the independent contractor (and our tax agency IRS) with a 1099.

Independent and self-employed (e.g., plumbers) know they'll get 1099s, so they know enough to collect receipts for EVERYTHING to offset their 1099-shown revenue with their costs.

Who's going to get a big surprise, either because they didn't know about this, or didn't know what it means from a comprehensive tax view, are the little "mom and pop" shops, like those that sell on Ebay and Etsy. Typically, these types make at best a few thousand dollars, and don't declare it as income. Most of them are hobbyists, or tiny businesses that sprang from hobbies.

NEXT year they will know what all this means. And what it means now is that if you sell via Ebay or Etsy, or get money via PP, you have to run your little "business" like a real business: get receipts for everything to show costs and offset supposed 1099 revenue, make big buys before the end of the year to offset revenue, expense fuel and hotel and home expenses, etc....TONS of work, and frankly it's not worth it...so a lot of tiny businesses are going to quit.

Here's an example:

I drive across country to collect butterflies in Colorado. I don't know about this 1099 thing. I have extra butterflies, so I set them perfectly (oh so time consuming), put them in Riker mounts, and sell my extra butterflies online and take payment via PP. I make $2500.

Then I file taxes, and don't say anything about that $2500. Meanwhile, IRS gets the 1099 from PP and they say I made $2500, and I have to pay tax on it. If IRS takes a long time to get around to my taxes, they can also hit ME for late fines and penalties. So suddenly that trip to Colorado cost me an additional $1000.

NEXT year when I go to Colorado, I get receipts for gas, food, hotels, etc. I buy three new nets, and get receipts. Pins, Riker mounts etc..all receipts. THEN I now have to act like a business and spend HOURS putting all that into Excel or tax software...sucks. But when I sell those butterflies for $2500 next year, I can show that it cost me $2300 to get them, and I only pay taxes on the true profit, which is $200.

In most cases, people will actually (NEXT year) make out better because if they have to collect receipts and log them, might as well expense everything you can. Like the new Toyota 4Runner, and oh there are bears, the new $2500 .44 Magnum. And since I get better tax credit on business-related meals, I take all my friends out while in Colorado, pay for dinner, and expense all that. Damn. Now my 2023 expenses (noting depreciation) are $7000, and I only made $2500, so darn no extra taxes paid...and I have new nets, new Toyota, and a .44 Magnum.

But some people, and many artisans will fall into this, won't want to do all that paperwork. So they quit their little hobby business. This reduces the flow of cash, and has an impact on Ebay, Etsy, PP, etc. More than likely, this will have a net loss on taxes to the government...in 2023. I'm willing to bet that the news will report in early 2023 that the government got huge money from 2022 taxes because of this; then you'll never hear about it again, because after that the government will have a net loss against this new scheme.

So that's it in basic form. There are other situations and variables, but I think it's pretty clear.
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Re: Good news everyone!

Post by adamcotton »

Chuck,

Thanks for the explanation. Sounds like a nightmare, and it also sounds like the people who decide about tax are walking a tightrope between how to raise more and at the same time not reduce the amount of taxable business done.

Adam.
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Re: Good news everyone!

Post by kevinkk »

Awesome job Chuck. When I first started my career as a self employed roofer I paid 5k in taxes I wasn't prepared for .Later my super accountant would go through my receipts. Then he would say, maybe if you go home and double check you can find some more deductions
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Re: Good news everyone!

Post by jellybean »

Chuck. Great writeup on the tax nightmare being imposed on hobbyists and small businesses. I already complained about this to my Congressman a few ,months ago. Supposedly someone (one?) in Congress is attempting to get the $600 limit increased to a higher amount. I believe that until this $600 was put into effect, the limit for ebay reporting to the IRS was $20,000, applicable to true businesses.


This is even worse than Chuck described. I have been collecting since the 1960's and started buying in the 1970's. It would be near impossible to determine the cost (offset to determine taxible gain) of insects that I collected or purchased many years ago. Of course I have no record of travel costs such as gas, lodging, airplanes, personal and rental vehicles, collecting equipment, pinning and storage equipment. I do have many purchase records that I kept in case I lost my collection in a fire, but I do not readily recall from whom I purchaed a given specimen to be sold, so it may take hours to days for me to find a receipt, of one exists. My biggest cost has been the purchase costs in 1984 of a VW camper and later a Ford truck with a camper which I have used exclusively for collecting trips and attending insect fairs up to the present. Over 300,000 miles driven. How would this relate to any collected specimens?. Also, once you have determined the cost of a trip, how would this relate to each collected specimen sold?

Yes, this would be tons of work. If you do it and show little profit in your total sales, the IRS may not believe you and you might be subject to an audit. I am surprised companies like ebay and etsy did not fight it.


US members: Stop voting for the same old politicians that only believe in Tax and Spend.


Jelly Bean, not a bot.
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Re: Good news everyone!

Post by wollastoni »

It will be a nightmare indeed for small collectors who sell their extra-catch to finance their collecting trips...

Would be more efficient to tax Elon Musk and Jeff Bezos of 1% of their income... but some politicians stopped that...
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Re: Good news everyone!

Post by Chuck »

wollastoni wrote: Tue Dec 13, 2022 9:59 am It will be a nightmare indeed for small collectors who sell their extra-catch to finance their collecting trips...

Would be more efficient to tax Elon Musk and Jeff Bezos of 1% of their income... but some politicians stopped that...
Musk did. And that's a great example the directly relates to the "run your hobby as a business."

in 2021 Musk donated $5 Billion to charity. All Americans can do that too. Some of that is tax deductible.

And, since Tesla lost $130 Million, and Musk owns most of Tesla, he too lost money. That too contributes to taxes (not) payable.

Many of the same financial (tax) "games" apply to home businesses as well.

Concerned that your part-time butterfly business made too much? Contribute cash to LepSoc or your favorite charity. Contribute specimens to your favorite entomology museum- and deduct part of that from taxes.

If you bought a dozen Ornithoptera (or whatever) in 2022 and the market value suddenly declined, yup you write that off as a loss.

Another benefit of a small business is that when you buy inventory and supplies you don't pay sales tax. And, of course they are tax deductible.

There are, of course caveats. With the new (2019?) tax structure, those making less than (some amount) get a standard deduction, and you can't deduct "home business" (or any other) expenses. That's also going to nail a bunch of the Etsy people. You can only show a loss IIRC for four years- you can't just buy, buy, buy and claim a loss forever- so if all you do is collect baubles, you can do it for a short term, but not long.
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Re: Good news everyone!

Post by Chuck »

jellybean wrote: Tue Dec 13, 2022 6:40 am How would this relate to any collected specimens?. Also, once you have determined the cost of a trip, how would this relate to each collected specimen sold?


US members: Stop voting for the same old politicians that only believe in Tax and Spend.


Jelly Bean, not a bot.

The simplest way (say, starting in 2023) is to keep receipts (obviously) and at the end of the year, you just account for income, deducted by costs. Forget even trying to account for 30 YO inventory, just income and costs. As far as as how much of your travel and how much of your vehicle price, etc is deductible, you'd need to talk to a tax accountant. They do this all the time.


On your latter point about voting, people don't typically realize the impact of what they're doing when voting. They ignore, often intentionally, the past, and don't think about the future. When all of a sudden they get a 1099 for $2500, it's like voodoo- it was "the damned IRS" not anything they did.
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Re: Good news everyone!

Post by Jshuey »

adamcotton wrote: Mon Dec 12, 2022 10:40 pm Chuck,

Thanks for the explanation. Sounds like a nightmare, and it also sounds like the people who decide about tax are walking a tightrope between how to raise more and at the same time not reduce the amount of taxable business done.

Adam.

It's actually not that big of a deal, as anyone who has a small business in the US can attest to. It's just a form that someone else provides to you (and the IRS) that identifies income that is eligible to be taxed... . It just that people don't think should have to pay taxes on small transaction (or keep the records required to document that actual profit recorded on such sales). Not that we do ebay sales - but you can even factor in the costs of such record keeping into profit margins as you do your taxes in the States.

Just look at it as the "cost of doing business" and the price some us us pay to live in the USA.

John
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Re: Good news everyone!

Post by kevinkk »

Yes, the government may be what it is, but we have things pretty good here for the most part.
Self-employment tax, profit and loss, itemizing, it may be all on a form, but it was always
less than straight forward. Small transactions add up, and that's what they're going after now,
87k new IRS agents, and they won't be knocking on Amazon's door. I think I sold more than 600 bucks in livestock this last year-
it's something I'm going to pay attention to in the future, I have income parameters that cannot be exceeded.

Anyway, how about my title for the post? A reference to Professor Farnsworth and the under rated animated series Futurama? If you are unfamiliar
with this incredibly funny cartoon, created by the genius who brought us the ultimate slice of Americana, The Simpsons, there is still hope for you,
all you need is your credit card, and order your Dvds from, wait for it- and while you're shopping there, buy an espresso machine:)
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Re: Good news everyone!

Post by Cassidinae »

Last edited by Trehopr1 on Sat Dec 17, 2022 4:25 pm, edited 1 time in total.
Reason: Inappropriate language usage
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Re: Good news everyone!

Post by kevinkk »

Cassidinae wrote: Sat Dec 17, 2022 11:46 am F*u*c*k ebay and start using https://marketplace.insectnet.com/
Language. Little stars don't fly for me there buddy. Besides that, the market place is mostly for the EU, everything is out of the USA,
I look at specimens there, but I'm not getting a permit for anything, ever. Period. It's not worth it to me. I let other people take those
risks and deal with the legal issues.

When you grow up, you'll reconsider burning bridges. eBay has issues, just like every other platform, when you create the perfect platform,
don't keep it a secret. I use eBay for a lot of things, do they charge a lot? I think so, it used to be different, but it's a tool, just like Amazon,
I don't like buying from Amazon as much as I do, but it's a matter of cost, and inventory.
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Re: Good news everyone!

Post by Trehopr1 »

Indeed, let's watch the inappropriate language Cassidinae.
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Re: Good news everyone!

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kevinkk wrote: Sat Dec 17, 2022 4:03 pm
Language. Little stars don't fly for me there buddy. Besides that, the market place is mostly for the EU, everything is out of the USA,
I look at specimens there, but I'm not getting a permit for anything, ever. Period. It's not worth it to me. I let other people take those
risks and deal with the legal issues.
I think this is the classic "American" point of view. We don't care about what's outside the US. But ebay is international! It makes no difference on which international platform one buys goods. The law must be dealt with individually and always (or not dealt with). On ebay, buyers have to solve exactly the same problems (unless an American buys only within the USA)! In international trade, no one deals with legal customs in the buyer's country (at most international, such as CITES). That's the buyer's problem and he needs to know what he's doing!
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Re: Good news everyone!

Post by kevinkk »

I am an American, and buy mostly from the USA, I deal with realistic sellers from overseas, I could really care less about the permit system.
I accept risk when I choose to and that's worked for nearly the last 10 years. I don't buy deadstock anyway, I have 1 case of Ornithoptera,
are there specimens I'd like to own? Of course. one has to make measured choices about space as well as cost and risk.
At the risk of getting into an argument with someone using an internet platform, I find the term "classic American point of view" offensive.
You don't know a thing about America and are making suppositions without any experience.
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Re: Good news everyone!

Post by Chuck »

Cassidinae wrote: Mon Dec 19, 2022 3:39 am
kevinkk wrote: Sat Dec 17, 2022 4:03 pm
the market place is mostly for the EU, everything is out of the USA,

I think this is the classic "American" point of view. We don't care about what's outside the US. But ebay is international!

It's unclear how one could make the jump from what Kevin said to the broad statement made about Americans.

Kevin said that the Insectnet marketplace [sellers] are primarily in the EU, where it's easier to sell to the EU.

As far as "classic" views, I could cite the same for just about every country/ region. And I think that's OK- globalism sadly chews away at the unique characteristics of cultures. But rather than denigrate other countries and cultures, I prefer to enjoy and explore them.

Saying American's don't care about what's outside has some truth to it; we can travel 4500km from sea to sea and still speak the same language, not pay VAT, not be hassled by customs, and not worry about crossing into a warzone. And we DO care what's outside- virtually every market sells Pils Urquell, and almost everyone I know has a CZ75.

BTW, ebay.com is NOT international, in itself. Serious collectors know to that the best stuff shows up on the country-specific ebay sites that doesn't show up on ebay.com. If this is news to you, check out ebay UK and ebay germany, for example.
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Re: Good news everyone!

Post by kevinkk »

Thank you for expressing the issue a bit better than I did Chuck, truth be told, I would make a wild guess and say that many American collectors
who don't travel have got to have some envy concerning entomology in the EU, we have nothing like the insect shows I see advertised , and
our authority figures are more concerned with less scientific matters and close much to us.
In any event, I'm done with this new aspect of what was a thread with some levity about our greedy government.
Other cultures are interesting, I loved Italy, and was disappointed so many people spoke English-
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Re: Good news everyone!

Post by Cassidinae »

To kevinkk - you wrote: "Besides that, the market place is mostly for the EU, everything is out of the USA" (to explain my reaction).

To all - I'm not attacking anyone. I wouldn't want to get into politics here. I have no illusions about any nation (humanity as a whole is still very primitive). But the fact is that big nations are more problematic in the sense that they have more influence on world events (regardless of whether it's good or bad) :)

The thread is about "taxes". The democratic world is in serious trouble today. It is dealing with financial totalitarianism (i.e. a different one than we see, for example, in North Korea, China, or Russia). The rich get richer and the poor get poorer (scissors open). And ebay as a "multinational corporation" just adapts to it (ebay will not threaten it).
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