This just in…the raising of the threshold was not in the spending bill just sent to Biden, but the IRS I think finally realized what they would be inundated with if it took effect. Some folks wondered if this would apply to wine sales, and the ensuing burden of proof to show what was paid for each sold bottle to determine capital gains. Hopefully Congress can raise the threshold again in the next year…permanently.
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This whole thing is just f***ing crazy. How much do the feds think they are going to get out of people selling stuff out of their garage on e-bay anyway? The IRS barely has the time to go through mountains of back tax returns on paper. Now the IRA is proposing not enforcing the change for a year??? The geniuses who thought this up, (of either political party, I don’t care who) should take their $600.00 threshold and apply it to all political contributions to their campaign funds.
Typical tax s**t show…
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None of the reporting stuff is about the masses. It’s about data collection to find the big fish and make an example out of them to scare the masses into cooperation. It’s always been a big racket.
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I completely agree. Nice to know that the tax system is based on fear and intimidation of the masses who pay the bills. Do they really think they are going to get the “big fish” anyway? The big fish, ( I can think of one really big fish in the news recently…a really, really, really smart one. Maybe the smartest one ever) are just going to cut holes in the net to swim through.
Cannot wait for the news story of someone’s grandmother getting dinged by the IRS after cleaning out that garage and not reporting income.
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There is a legit reason for this, as much as it may pain you to believe it. I know many that pay via venmo (etc) regularly for housekeeping, yardwork, etc. All taxable business/employment income.
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Yeah, whatever happened to good old cash?!? If you can’t pay your house cleaner in cash then you should clean it yourself!!
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venmo is cash without bank macines!
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There is another thread that was started.
-Al
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Why $600?
Cost effective at $5k or $10k
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That is the same threshold that banks have to use for 1099 reporting for interest/rewards, so I suppose it was chosen out of consistency.
But setting that level when people use it for all kinds of random reimbursements (PTA, dinners out, etc.) is just creating a lot of reporting noise, and corrosive non compliance.
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Banks report 1099-INT at $10 in interest income. I suspect folks will get more this spring than in years past.
ETA, $600 is the minimum for a 1099-MISC you are to send and independent contractor.
This is a Festivus Miracle!
Was reading/scanning a link recently that was raising concern about some wave of 1099s that could catch people unexpectedly. Recall the new payment platforms noted being involved in the concern. Reading this thread, you realize $600 is not that big a number (anymore?). So to read that the IRS is or is considering postponing is not too surprising.
I’ve used some these new ones and would hate to see the added complication added on. Not sure what a good threshold would be? $2,500???
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Historically, 1099s of this type have been sent for things like interest or dividends where the entire amount should be income. 1099s for things like stock sales, etc., where someone has basis in the asset (and thus the entire amount would not be gain) are shown differently to reflect this (and generally when coming from a brokerage house these days show basis and net amount of gain). 1099s generally are not required for transactions that do not involve income (like repaying a loan).
Thankfully, being a retiree and not having to pay attention to this stuff anymore, I don’t have to worry about these issues anymore so I have not been paying attention to this and don’t know anything about it. But, if the rule is as described above, it seems to have an issue as described above that is going to cause a lot of issues for taxpayers and the IRS. This seems to cover some transactions where there would be basis in the asset and thus the amount reflected in the 1099s would be different from the amount of income or gain (net of basis) and other situations where there would be payments that would not reflect income. I wonder if the IRS is starting to realize these types of issues are involved and is rethinking the rules on these issues as what you guys say they are proposing could be an administrative nightmare causing both IRS agents and taxpayers to waste lots of time.
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I believe most are missing the point here. This is intended to force accountability with self employed and contract/gig workers and money laundering. Once use of cash (or check) to pay these types of people transitioned to plastic a paper trail (they paid a transaction fee to maintain) was created that forced them to be fully accountable to the IRS for their income. Venmo and the like became a way to avoid the fees of plastic payments and disguise the payments as peer to peer and avoid claiming it and income. These reporting changes will assist in putting an end to being able to avoid the paper trail. Also, if you’re looking to launder money or collect payment from sin commerce this will make you look for another avenue. It is never the drug sales or bookmaking they get you on, it’s the tax evasion.
I doubt the IRS is that concerned with you flipping bottles back and forth among whinos unless something else in your return triggers an audit.
Now, if you’re a a professional wine seller that requests payment via Venmo or PayPal’s friends and family feature this could impact you.
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