1099-K confusion for 2022 taxes, thanks to seemingly contradictory non-grandfathered decisions in DEC 2022 by IRS

[Mark Schmieder]

https://www.irs.gov/businesses/understanding-your-form-1099-k

 

I thought I was home free, as did many of us here, but it appears we have to take the 100+ hours to gather original receipts (when available) or other proof and itemize every single minute transaction that involved electronic funds and was reported on 1099-K forms before the retroactive decision in DEC 2022 to forestall the new reporting requirements of $600 and any number (i.e., 1+) transactions vs. the old limit of $20,000 and/or 200 transactions.

 

As the 1099-K forms were sent out BEFORE the IRS or Congress decided to delay the insane new rules, the information at the recently revised IRS page above seems to indicate that we MUST fill out all the related information on Schedule 1, just as we will from this year forward (if they don't stall the new rules again and 1099-K's are sent out for those who sold things at a loss and aren't running a business).

 

Given how many other complications I have this year from disaster recovery (local and not on the federal list) and no tax accountant willing to take me on ("difficult" clients are not welcome as most are overburdened and behind schedule due to work slowdowns since the pandemic started), I have no choice but to ignore this or maybe make a short verbal statement in my usual attached explanation sheer, but thought I should let others know as we discussed this topic a few months ago and people were under the impression that we don't yet have to go through all the trouble of offsetting our losses (the net result is zero vs. a tax break, as opposed to paying capital gains, so it's a lot of unnecessary bureaucracy and will slow down the IRS as well).

 

It's not just music gear for me; I also have difficult-to-determine original prices on individual comic books sold. What a nightmare! It's the equivalent of adding income tax upon sales tax upon personal losses, to the use of a flea market. But mostly it's just many hours of wasted time on everyone's part, for no real purpose. I wonder who came up with this hare-brained idea? I suppose they thought it would pull in extra tax revenue, which I doubt it will.

[stoken6]

Got to say, as a non-USAian, I saw that title, and I thought a spambot had got onto the forum again!

 

Good luck with your taxes, Mark.

 

Cheers, Mike.

[jazzpiano88]

2 hours ago, Mark Schmieder said:

https://www.irs.gov/businesses/understanding-your-form-1099-k

 

I thought I was home free, as did many of us here, but it appears we have to take the 100+ hours to gather original receipts (when available) or other proof and itemize every single minute transaction that involved electronic funds and was reported on 1099-K forms before the retroactive decision in DEC 2022 to forestall the new reporting requirements of $600 and any number (i.e., 1+) transactions vs. the old limit of $20,000 and/or 200 transactions.

 

As the 1099-K forms were sent out BEFORE the IRS or Congress decided to delay the insane new rules, the information at the recently revised IRS page above seems to indicate that we MUST fill out all the related information on Schedule 1, just as we will from this year forward (if they don't stall the new rules again and 1099-K's are sent out for those who sold things at a loss and aren't running a business).

 

Given how many other complications I have this year from disaster recovery (local and not on the federal list) and no tax accountant willing to take me on ("difficult" clients are not welcome as most are overburdened and behind schedule due to work slowdowns since the pandemic started), I have no choice but to ignore this or maybe make a short verbal statement in my usual attached explanation sheer, but thought I should let others know as we discussed this topic a few months ago and people were under the impression that we don't yet have to go through all the trouble of offsetting our losses (the net result is zero vs. a tax break, as opposed to paying capital gains, so it's a lot of unnecessary bureaucracy and will slow down the IRS as well).

 

It's not just music gear for me; I also have difficult-to-determine original prices on individual comic books sold. What a nightmare! It's the equivalent of adding income tax upon sales tax upon personal losses, to the use of a flea market. But mostly it's just many hours of wasted time on everyone's part, for no real purpose. I wonder who came up with this hare-brained idea? I suppose they thought it would pull in extra tax revenue, which I doubt it will.

 

Imagine how all of this works if you do all transactions in Bitcoin.

 

I've heard that the IRS is treating Bitcoin essentially equivalent to a stock.  So that every bitcoin transaction has to be accounted for with a cost basis of the coin used, and a market value of the coin on the date of the transaction.  Imagine every personal monetary transaction (like buying groceries) is treated as a loss or a gain. 

[stoken6]

10 hours ago, JazzPiano88 said:

I've heard that the IRS is treating Bitcoin essentially equivalent to a stock.  So that every bitcoin transaction has to be accounted for with a cost basis of the coin used, and a market value of the coin on the date of the transaction.  Imagine every personal monetary transaction (like buying groceries) is treated as a loss or a gain. 

How does the IRS consider foreign currencies? I would have expected crypto to be treaated in the same way.

 

Cheers, Mike.

[jazzpiano88]

2 hours ago, stoken6 said:

How does the IRS consider foreign currencies? I would have expected crypto to be treaated in the same way.

 

Cheers, Mike.

Nope.  Crypto is treated as a digital asset and accounted for the same as property, having a short term or long term capital gain. 

 

“Digital assets are not real currency (also known as “fiat”) because they are not the coin and paper money of the United States or a foreign country and are not digitally issued by a government’s central bank.” 

“The IRS treats cryptocurrency as property, meaning that when you buy, sell or exchange it, this counts as a taxable event and typically results in either a capital gain or loss.”

 

https://turbotax.intuit.com/tax-tips/investments-and-taxes/your-cryptocurrency-tax-guide/L4k3xiFjB

[Threadslayer]

16 hours ago, Mark Schmieder said:

https://www.irs.gov/businesses/understanding-your-form-1099-k

 

I thought I was home free, as did many of us here, but it appears we have to take the 100+ hours to gather original receipts (when available) or other proof and itemize every single minute transaction that involved electronic funds and was reported on 1099-K forms before the retroactive decision in DEC 2022 to forestall the new reporting requirements of $600 and any number (i.e., 1+) transactions vs. the old limit of $20,000 and/or 200 transactions.

 

When I was self-employed in the 1970s-1990s IIRC I had to report anything over $600 on a 1099. When did the $20k/200 rule come in? In any event, the basic rules of self-employment are: 

1. Keep all receipts

2. To live outside the law, you have to be honest

 

[Mark Schmieder]

I ended up writing a short note with my taxes before sealing them tonight, explaining the contradictory information on whether we need to file and itemize after e-Bay stated they sent the form in error (due to the retroactive change to the rules).

 

I stated that everything was a huge loss even after amortization and that it isn't worth the time as well as difficulty of finding paperwork from so long ago in many cases. We don't have to do this for flea markets and the like, which is what eBay is these days.. full of fleas.

 

At any rate, I have everything at the ready in case they ask me to file a 1040-X later on.

 

[Mark Schmieder]

12 hours ago, Threadslayer said:

When I was self-employed in the 1970s-1990s IIRC I had to report anything over $600 on a 1099. When did the $20k/200 rule come in? In any event, the basic rules of self-employment are: 

1. Keep all receipts

2. To live outside the law, you have to be honest

 

 

Yeah, but that's income from working, not flea market sales that just waste taxpayer dollars creating unnecessary paperwork for what at best is a zero sum and at worst is more money the IRS has to pay back to us. 🙂