Hopefully they are not combining the payments and payouts as transactions correct?
Anyone Ever Buy and/or Sell on Tradesy?
- Thread starter iluvmybags
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Hopefully they are not combining the payments and payouts as transactions correct?
Exactly, thank you for taking time and posting quotes.
I'm not sure if Tradesy themselves know tax law well enough, they are young and not super professional team. They can be busted themselves for not reporting sales properly. Or most likely Tradesy doesn't have a clue, their payment processor Stripe reports it to IRS.
You're welcome. It's frustrating to look up the tax laws, post them, find a "translation" that's easier to understand and be told that she'll believe Tradesy over the IRS!!
As for Tradesy being penalized for not doing the right thing, I can say it WILL happen if they're spewing the inaccurate info that was posted above. And they can be assessed double or treble damages.
In fact, as a mod on another selling site, I actually collected double payment because the site was requiring mods to work at least a minumum number of hours per week. Although volunteers, by requiring us to "work" without pay, they were fined by the department of labor for non-payment of wages and we were considered to be independent contractors. Although not a windfall, I was quite satisfied that they got caught and wished I'd been the one who had reported them.
If they're accountants are coding payments and payouts correctly, there shouldn't be a problem. It should work just as on paypal - your payments from buyers are separate from your withdrawals to your bank account.
This is all very informative, thank you. It is amazing how I can learn from you things that my accountant is misinformed on.
I am an extremely small time seller, maybe 10 items per year, mostly bags, but I wonder if all PayPal payments are lumped together towards the 200. I have a consulting business where clients sometimes pay me via PayPal G&S. Of course that is all declared income, and though most clients pay via other methods, it may come close to 200 transactions per year via PayPal. So does that mean any fashion sale I would make via PayPal would be reported if the total would be over 200 from any source?
Since Tradesy uses Stripe, sales on Tradesy wouldn't count towards total PayPal my 200 PayPal transactions, but sales on eBay would? Probably best just to give the sales data to my accountant and he can include it if relevant.
I am an extremely small time seller, maybe 10 items per year, mostly bags, but I wonder if all PayPal payments are lumped together towards the 200. I have a consulting business where clients sometimes pay me via PayPal G&S. Of course that is all declared income, and though most clients pay via other methods, it may come close to 200 transactions per year via PayPal. So does that mean any fashion sale I would make via PayPal would be reported if the total would be over 200 from any source?
Since Tradesy uses Stripe, sales on Tradesy wouldn't count towards total PayPal my 200 PayPal transactions, but sales on eBay would? Probably best just to give the sales data to my accountant and he can include it if relevant.
Just so you know, even if Stripe or Paypal don't report to the IRS because you didn't hit $20,000, you're supposed to report earnings yourself when you do your taxes
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Yes PayPal will combine. You'll get a 1099 from PayPal if you meet the 200 transactions and $20,000 amount listed for payments received no matter who they are from. I found this out when I was an independent contractor
Thanks, this could get confusing! Do you report the profit from selling each item, or do you report the total sale amount + the total cost to acquire the item prior to selling it?
The net is reportable. "Net" is your profit after you subtract your basis plus your costs.
So say you shop at a thrift store and find a bag (they thought was fake) for $5 so that's your basis. If you sell for $1000, you've made $995 profit. You deduct your listing, FVF, paypal, shipping, packing materials, etc and the difference is the profit and that's what's reportable.
Note that if you bought a new bag from a boutique for your own use (~$1000), tired of it and decided to sell the used bag, you can't use $1000 as the basis and take a loss in an attempt to offset the profits. Having used the bag, you need to depreciate the value so the basis (at that point) is probably the same as the market/selling price.
You would want to keep track of receipts for purchases and then how much you sold each purchase for if you think that you will go over the threshold and therefore will get the 1099 because then you would report the income and then you would want to report the losses if applicable (or costs of depreciation and costs of listing, shipping, etc). You really should contact an actual accountant if you think these things apply to you so that they can legally advise you on what to do in your tax situation.
In other news, I noticed today that it now shows me a total of how much I have made over my time in selling on Tradesy when I go to the "your sales" page (lifetime earnings). I wish it would just show year to date. That would be much more helpful!
If you are reporting it on your income tax, you will probably want to file Schedule C Profit or Loss from a Business. Besides the expenses you have that are associated with each individual item you sold, you are allowed to deduct other expenses. You can even deduct for the use of a part of your home if you have a dedicated room for your business.
Yes, we do have an accountant, but he previously told me that I did not have to declare selling income under a certain threshold, which you all clarified for me, so I think it is best to double check these ins and outs with the forum! It also helps to know what to save - most things will be on my credit card invoices, but it is likely wise to save receipts as well.
I am somewhat surprised that you could not claim annual depreciation of your bags (if you really wanted to) since BB points out that you have to use the lower value at the time of sale due to losing value with age, because you can claim depreciation on a vehicle/device/equipment used for your business.
Good point about deducting the expenses for the dedicated part of your home that you use for your business. That does not apply to me personally for selling, since I only do it as a hobby and we already claim the portion of expenses for our home office on our taxes, but that is great info for serious sellers on here to take advantage of!
Whether the depreciation is deductible or not depends on why you bought the item. If you purchased for your own use then decided to sell it, you didn't buy as a business expense. (Just as if you purchase a personal vehicle, use it and resell, you can't deduct the loss of value when it's your personal item.)