DallasTeleAg said:
I see that, but they have been sending notices out that they will start requiring your tax info before remitting any payments over $600. I think this may be a 2024 thing. Either that, or maybe things have changed since they first announced it.
Here is the scoop on the 1099K reporting:
Quote:
The IRS will treat 2023 as a transition year.
- For the 2024 tax year (returns normally filed in early 2025), the agency says it's planning a $5,000 1099-K reporting threshold.
- The $5,000 number is seen as a phase-in to implementing the $600 reporting threshold enacted in the American Rescue Plan.
https://www.kiplinger.com/taxes/irs-1099-k-tax-change-for-online-sellingThere is some effort in congress to raise the threshold either permanently to $5k/year or up to $10k or $20k/year with a minimum number of transactions. It was 200 transactions for a total of $20k in a year before 2022. With 2024 being an election year, there are plenty of pols who need to score some points to keep their seats, so I am a little optimistic...
BTW, the $600 threshold would also apply to gig work, so if you are working at multiple gigs throughout the year and making over the threshold, then that amount would be owed. Kinda like tip income, not sure the government has a way to hunt you down over it as long as it is not over the threshold at any one place.
Also, as far as buying and selling gear, if you are selling gear that you still have receipts for and didn't make a profit, there would not be a taxable event. If you are making money selling the gear, then you can treat this like a business, but would need to do some of the paperwork like creating a DBA (Doing Business As) at your local County office, and keeping track of your books to write off any of your expenses.
For the activity to not be considered a hobby, you would have to be profitable (i.e. pay taxes) on the business three out of five years or be able to justify that you are putting in the effort to grow a business. In other words, the years that you don't show a profit are counted as a loss which can be deductible on your taxes, but you have to make some profit every now and then otherwise it is simply a hobby. The deductible items include purchase of a vehicle, a van, guitar, gear, etc. which might decline in value, your mileage, travel expenses, etc. etc.
Hope this helps. I am not an accountant, but have had my own side businesses and main business enough times that these are the things I have learned along the way. Best thing to do is find a CPA and discuss in an intro meeting and see if he/she can help you.
