Taxes on BST sales

I believe the $600 IRS rule is for businesses not personal. Also it doesn't cover FF transactions.

Which I'll repeat since you brought it up is against there terms and not allowed here so a mute point.

And maybe even a moot one 

Speech to text gets me every time, good catch

I believe the $600 IRS rule is for businesses not personal. Also it doesn't cover FF transactions.

FF are definitely excluded but I’m not sure of the distinction between business vs personal

Which I'll repeat since you brought it up is against there terms and not allowed here so a mute point.

What are you talking about?

I'm sure it was not your intention to encourage this. But people are talking about how to limit their exposure to the tax. Friends and family transactions are not allowed on the Forum and so I was just restating the rules so that we don't feel that that is an option although it would be great. I understand that you were probably referring to off forum sales and using friends and family.

Looks like the answer just keep receipts on purchases. That way the proceeds can be offset resulting in no tax liability. A bit of a paperwork pain but not a big deal. Learn something new every day!

What are you talking about?

I'm sure it was not your intention to encourage this. But people are talking about how to limit their exposure to the tax. Friends and family transactions are not allowed on the Forum and so I was just restating the rules so that we don't feel that that is an option although it would be great. I understand that you were probably referring to off forum sales and using friends and family.

Looks like the answer just keep receipts on purchases. That way the proceeds can be offset resulting in no tax liability. A bit of a paperwork pain but not a big deal. Learn something new every day!

Yes I agree going forward, but what about purchases from years ago that you now sell. I guess it's a shell game too cover it. I'll leave it to those that prepare my taxes.

I believe the $600 IRS rule is for businesses not personal. Also it doesn't cover FF transactions.

FF are definitely excluded but I’m not sure of the distinction between business vs personal

Some PayPal accounts are business accounts, so you don’t even have the option to send money as F&F. For example I’ve bought things from a couple of wetshaving artisans as personal sales (like them selling their stuff), and when you go to send money it doesn’t even give the choice to send as F&F because the account is recognized as a business/merchant account. 

At least that’s my understanding & experience…

I believe the $600 IRS rule is for businesses not personal. Also it doesn't cover FF transactions.

FF are definitely excluded but I’m not sure of the distinction between business vs personal

There isn't. Anything over $600.00 needs to be reported, business or personal. If you are using a business PP account then you'll end up reporting this with your business tax return and if not you'll be reporting this with your personal. It's mostly targeting the personal because anyone running a business is already declaring all sales/income so it's not a big issue.

Can you break up a transaction into multiple sub $600 ones and not pay this ridiculous tax?

Of course you can if the buyer agrees to it.

So maybe I'm missing something? I thought the $600 threshold was for the total you receive over the year. Is it actually just individual transactions that total $600 or more? If that were the case I wouldn't think it would hit many of us. If it's for the total for the year, it would not matter if you broke up a sale into smaller amounts.

Can you break up a transaction into multiple sub $600 ones and not pay this ridiculous tax?

Of course you can if the buyer agrees to it.

So maybe I'm missing something? I thought the $600 threshold was for the total you receive over the year. Is it actually just individual transactions that total $600 or more? If that were the case I wouldn't think it would hit many of us.

According to the email in the picture you understood correctly, PayPal will start reporting when you reach 600 in one year of G&S payments.  I'm not sure if that is the law or if it's an over cautious reaction.

CNN

The new ”$600 rule”
Under the new rules set forth by the IRS, if you got paid more than $600 for the transaction of goods and services through third-party payment platforms, you will receive a 1099-K for reporting the income. With this new, lower threshold for triggering the tax form, more individuals with side hustles, small businesses and gigs may be reporting the income they earn.

The expected uptick in reporting volume was partly responsible for the decision to postpone the new ”$600 rule.” There were concerns that many taxpayers would unexpectedly receive 1099-K forms and would need additional time to familiarize themselves with the rules. Plus, taxpayers needed more time to separate personal versus business payments to prevent misidentified payments from being reported on the form.

What does this mean for you and your money?
For the 2022 tax year, taxpayers will follow guidelines set forth by the old IRS rule — you should receive a 1099-K form if you earned at least $20,000 or received at least 200 transactions. You won’t receive tax forms triggered by the ”$600 rule” until next year.

Again, this rule is aimed at individuals who run a side hustle, small business or do part-time work and receive payments through a business account on third-party payment platforms. So if you don’t have a business account and you’re just sending money to friends for a restaurant bill or a vacation, this won’t apply to you and your transactions won’t trigger a 1099-K form.

Again, keep in mind that even if you’ve been receiving transactions as a business but didn’t earn enough to trigger the 1099-K form, you must still be prepared to report your taxable income.

It’s generally recommended that business owners — and others who earn income that doesn’t get taxed upfront — put away around 20% of their earnings for tax purposes. This is to ensure that you haven’t used up all of your income before tax time and won’t feel like you need to scrape some cash together to pay your bill.

Of course, filintg taxes can be intimidating but it’s always better to avoid waiting until the last minute to start gathering documents and filling out forms. TurboTax offers step-by-step guidance, live support and a final review from a CPA. Otherwise, you can always have a tax expert prepare and sign everything for you.

Can you break up a transaction into multiple sub $600 ones and not pay this ridiculous tax?

Of course you can if the buyer agrees to it.

So maybe I'm missing something? I thought the $600 threshold was for the total you receive over the year. Is it actually just individual transactions that total $600 or more? If that were the case I wouldn't think it would hit many of us. If it's for the total for the year, it would not matter if you broke up a sale into smaller amounts.

No, it is the sum total of g and s proceeds in one tax year, regardless of number of transactions.