1099 from PayPal and Venmo beginning tax year 2022

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Aguilar
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1099 from PayPal and Venmo beginning tax year 2022

Post by Aguilar »

I’ve read how PayPal and Venmo, owned by PayPal, are required to file 1099s with the IRS beginning this tax year. I have some questions about this.

- if I’ve sold an item for a loss on one of these payment platforms, and it’s reported in a 1099, how would I file it so I’m not taxed on the proceeds?

- are payments made between spouses on the platforms subject to 1099 reporting?

- I paid for some healthcare expenses out of pocket this year and was reimbursed 100% by my medical insurance provider but the reimbursement checks were sent to my spouse who then paid me via PayPal. How would I file this so I’m not taxed on the reimbursement?

- will PayPal file one 1099 covering payments on PayPal and Venmo or will there be two 1099s, one per platform?

Thanks
Aguilar
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nps
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by nps »

Aguilar wrote: Fri Aug 05, 2022 6:22 pm I’ve read how PayPal and Venmo, owned by PayPal, are required to file 1099s with the IRS beginning this tax year. I have some questions about this.

- if I’ve sold an item for a loss on one of these payment platforms, and it’s reported in a 1099, how would I file it so I’m not taxed on the proceeds?

- are payments made between spouses on the platforms subject to 1099 reporting?

- I paid for some healthcare expenses out of pocket this year and was reimbursed 100% by my medical insurance provider but the reimbursement checks were sent to my spouse who then paid me via PayPal. How would I file this so I’m not taxed on the reimbursement?

- will PayPal file one 1099 covering payments on PayPal and Venmo or will there be two 1099s, one per platform?

Thanks
Aguilar
Personal payments won't be reported. That should cover any transfers to your spouse.

For your tax return, are you referring to a sale of personal property? If so I believe you can just report the sale of personal property as other income and then include an identical (but negative) amount as cost of personal property to offset the income.

You would also only receive a form if you received at least $600 total in payments for goods and/or services during the calendar year.
Topic Author
Aguilar
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Joined: Fri Jan 24, 2020 11:01 pm

Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by Aguilar »

nps wrote: Fri Aug 05, 2022 8:24 pm
Aguilar wrote: Fri Aug 05, 2022 6:22 pm I’ve read how PayPal and Venmo, owned by PayPal, are required to file 1099s with the IRS beginning this tax year. I have some questions about this.

- if I’ve sold an item for a loss on one of these payment platforms, and it’s reported in a 1099, how would I file it so I’m not taxed on the proceeds?

- are payments made between spouses on the platforms subject to 1099 reporting?

- I paid for some healthcare expenses out of pocket this year and was reimbursed 100% by my medical insurance provider but the reimbursement checks were sent to my spouse who then paid me via PayPal. How would I file this so I’m not taxed on the reimbursement?

- will PayPal file one 1099 covering payments on PayPal and Venmo or will there be two 1099s, one per platform?

Thanks
Aguilar
Personal payments won't be reported. That should cover any transfers to your spouse.

For your tax return, are you referring to a sale of personal property? If so I believe you can just report the sale of personal property as other income and then include an identical (but negative) amount as cost of personal property to offset the income.

You would also only receive a form if you received at least $600 total in payments for goods and/or services during the calendar year.
Where in my taxes do I report cost of the personal property?

Do you know if the $600 is per payment platform or across the two? I’ve done some ESL teaching with proceeds around $500 per platform.
pshonore
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by pshonore »

Aguilar wrote: Sat Aug 06, 2022 10:05 am
nps wrote: Fri Aug 05, 2022 8:24 pm
Aguilar wrote: Fri Aug 05, 2022 6:22 pm I’ve read how PayPal and Venmo, owned by PayPal, are required to file 1099s with the IRS beginning this tax year. I have some questions about this.

- if I’ve sold an item for a loss on one of these payment platforms, and it’s reported in a 1099, how would I file it so I’m not taxed on the proceeds?

- are payments made between spouses on the platforms subject to 1099 reporting?

- I paid for some healthcare expenses out of pocket this year and was reimbursed 100% by my medical insurance provider but the reimbursement checks were sent to my spouse who then paid me via PayPal. How would I file this so I’m not taxed on the reimbursement?

- will PayPal file one 1099 covering payments on PayPal and Venmo or will there be two 1099s, one per platform?

Thanks
Aguilar
Personal payments won't be reported. That should cover any transfers to your spouse.

For your tax return, are you referring to a sale of personal property? If so I believe you can just report the sale of personal property as other income and then include an identical (but negative) amount as cost of personal property to offset the income.

You would also only receive a form if you received at least $600 total in payments for goods and/or services during the calendar year.
Where in my taxes do I report cost of the personal property?

Do you know if the $600 is per payment platform or across the two? I’ve done some ESL teaching with proceeds around $500 per platform.
Not sure about "combining" platforms, but its likely you'll get some kind of other tax document (like a 1099 NEC) as some would consider ESL teaching as SE income.
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windaar
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by windaar »

nps wrote: Fri Aug 05, 2022 8:24 pmFor your tax return, are you referring to a sale of personal property? If so I believe you can just report the sale of personal property as other income and then include an identical (but negative) amount as cost of personal property to offset the income.
I sometimes sell unwanted personal items on eBay and the annual total amount is usually more than $600. These items are sold for less than their original cost. Example: I sell some stereo speakers for $50 that cost me $200 twenty years ago. The 1099 from eBay will show that as "income" but I'm actually selling at a loss. Any sales receipts from 2002 are long gone. What do I do?
Nobody knows nothing.
rkhusky
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by rkhusky »

windaar wrote: Sat Aug 06, 2022 10:40 am
nps wrote: Fri Aug 05, 2022 8:24 pmFor your tax return, are you referring to a sale of personal property? If so I believe you can just report the sale of personal property as other income and then include an identical (but negative) amount as cost of personal property to offset the income.
I sometimes sell unwanted personal items on eBay and the annual total amount is usually more than $600. These items are sold for less than their original cost. Example: I sell some stereo speakers for $50 that cost me $200 twenty years ago. The 1099 from eBay will show that as "income" but I'm actually selling at a loss. Any sales receipts from 2002 are long gone. What do I do?
I would ignore it or put a zero on line 8i of 1040 Schedule 1.

IRS FAQ for 1099-K's:
I received Form 1099-K. How do I report it on my tax return?

Separate reporting of these transactions is not required. However, you should follow the return instructions on the form you are completing to report your gross receipts or sales. You should report items that qualify as a trade or business expense on the appropriate line item of Schedules C, E and F.
If you have a business or make money from a hobby, there is a form to fill out. Otherwise, there is no applicable form.
AnEngineer
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by AnEngineer »

windaar wrote: Sat Aug 06, 2022 10:40 am
nps wrote: Fri Aug 05, 2022 8:24 pmFor your tax return, are you referring to a sale of personal property? If so I believe you can just report the sale of personal property as other income and then include an identical (but negative) amount as cost of personal property to offset the income.
I sometimes sell unwanted personal items on eBay and the annual total amount is usually more than $600. These items are sold for less than their original cost. Example: I sell some stereo speakers for $50 that cost me $200 twenty years ago. The 1099 from eBay will show that as "income" but I'm actually selling at a loss. Any sales receipts from 2002 are long gone. What do I do?
You can't claim a loss selling personal property. I would report the sale on form 8949 with the basis and reporting no gain or loss. I know of no requirement that you must have the receipt to file your taxes. If the IRS comes asking I'd explain the situation. Without a receipt it might be harder to convince them, but I doubt it would come to that.
rkhusky
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by rkhusky »

AnEngineer wrote: Sat Aug 06, 2022 12:03 pm I would report the sale on form 8949 with the basis and reporting no gain or loss.
Form 8949 is for the reporting of Sales and Other Dispositions of Capital Assets. Are clothes, toys, knickknacks, etc capital assets?

One IRS page has this definition:
Almost everything you own and use for personal or investment purposes is a capital asset. Examples include a home, personal-use items like household furnishings, and stocks or bonds held as investments.


Here are a few more web definitions:
Capital assets are significant pieces of property such as homes, cars, investment properties, stocks, bonds, and even collectibles or art. For businesses, a capital asset is an asset with a useful life longer than a year that is not intended for sale in the regular course of the business's operation.
A capital asset is property that is expected to generate value over a long period of time. Capital assets form the productive base of an organization. Examples of capital assets are buildings, computer equipment, machinery, and vehicles.
For tax purposes, a capital asset is all property held by a taxpayer, with the exceptions of inventory and accounts receivable.
According to 26 U.S. Code § 1221 definition, it is the property of taxpayer regardless of whether it is connected with his business or trade, excluding items like property held for sale in the ordinary course of business, and stock in trade or other property suitable to classify as inventory of the taxpayer at the end of the financial year. Examples are an office building, manufacturing unit, and goodwill.
Perhaps the solution depends on whether the taxpayer has a hobby of selling things online, in which case the items would be inventory. If not, it does appear that the taxpayer is selling their personal possessions, which appear to be classified as capital assets. This is different than ordinary assets, which are assets used in the ordinary course of the taxpayer’s business or trade, like inventories or property held for the purpose of sale.

Here is a link to 26 U.S. Code § 1221:
https://www.law.cornell.edu/uscode/text/26/1221
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windaar
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by windaar »

Not understanding all advice here. If you sell $601 of your old socks on eBay they're going to send you a 1099 that will indicate that this was income. (In previous years the 1099 threshold was 20K.) Some are saying "ignore it" but you can't just ignore a 1099 that's sent to you, can you??
Nobody knows nothing.
rkhusky
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by rkhusky »

windaar wrote: Sat Aug 06, 2022 2:51 pm Not understanding all advice here. If you sell $601 of your old socks on eBay they're going to send you a 1099 that will indicate that this was income. (In previous years the 1099 threshold was 20K.) Some are saying "ignore it" but you can't just ignore a 1099 that's sent to you, can you??
It’s not income, it’s gross proceeds. It doesn’t include cost. It might just be an exchange of money, ie reimbursement for a portion of a shared dinner. ( The latter is not likely if coming from EBay). The point is, if it is payment for goods or services, you need to report it properly.

First you have to determine, is this a business, it it a hobby, am I just selling personal property?
AnEngineer
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by AnEngineer »

rkhusky wrote: Sat Aug 06, 2022 3:33 pm
windaar wrote: Sat Aug 06, 2022 2:51 pm Not understanding all advice here. If you sell $601 of your old socks on eBay they're going to send you a 1099 that will indicate that this was income. (In previous years the 1099 threshold was 20K.) Some are saying "ignore it" but you can't just ignore a 1099 that's sent to you, can you??
It’s not income, it’s gross proceeds. It doesn’t include cost. It might just be an exchange of money, ie reimbursement for a portion of a shared dinner. ( The latter is not likely if coming from EBay). The point is, if it is payment for goods or services, you need to report it properly.

First you have to determine, is this a business, it it a hobby, am I just selling personal property?
Yeah, the most solid advice I've seen on this lines up with that question.
AnEngineer wrote: Mon Jan 31, 2022 9:32 am Some googling found this advice: https://taxschool.illinois.edu/post/1099k/
rkhusky
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by rkhusky »

AnEngineer wrote: Sat Aug 06, 2022 6:01 pm
AnEngineer wrote: Mon Jan 31, 2022 9:32 am Some googling found this advice: https://taxschool.illinois.edu/post/1099k/
If the 8949 is the appropriate route for the personal items sold at a loss, I would differ from the advice in the reference, in that I would put the best estimate for a cost basis in column (e) and then use code L in column (f), with an amount in column (g) that makes the loss/gain = 0.
rkhusky
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by rkhusky »

windaar wrote: Sat Aug 06, 2022 2:51 pm Some are saying "ignore it" but you can't just ignore a 1099 that's sent to you, can you??
You can ignore a 1099-K if nothing is concerning goods or services, like the reimbursement I mentioned previously. This would be more likely from something like Venmo. If from EBay or Etsy or something like that, I would put on my tax form. I might put everything on one line, unless there were some big ticket items.
AnEngineer
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by AnEngineer »

rkhusky wrote: Sat Aug 06, 2022 9:25 pm
AnEngineer wrote: Sat Aug 06, 2022 6:01 pm
AnEngineer wrote: Mon Jan 31, 2022 9:32 am Some googling found this advice: https://taxschool.illinois.edu/post/1099k/
If the 8949 is the appropriate route for the personal items sold at a loss, I would differ from the advice in the reference, in that I would put the best estimate for a cost basis in column (e) and then use code L in column (f), with an amount in column (g) that makes the loss/gain = 0.
I think your IRS definition quote above supports that it is the correct place. I agree with what you say about how to fill out the form. Better to put the correct basis.
Circe
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by Circe »

This was very good:
AnEngineer wrote: Mon Jan 31, 2022 9:32 am Some googling found this advice: https://taxschool.illinois.edu/post/1099k/
As far as ignoring any 1099, do so at your peril. Today our pals in DC are voting to add 87,000 new IRS agents. What do you think they'll be doing?
billaster
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by billaster »

This has come up before. If it is the sale of personal property, then it does not need to be reported as it is not taxable. Congress required these new 1099-K forms as informational. The IRS isn't stupid and it's up to the IRS to decide what to do with them if most are nontaxable. You could just ignore the 1099-K and see what happens. Worst case the IRS sends you a letter a couple of years from now saying you owe a few dollars more and then you can respond with a letter saying it was nontaxable personal property.

If you are the cautious type, you may want to get ahead of the game by reporting the sale as Other Income on Schedule 1. You put two entries to the left of line 8z. One entry that says "1099-K Personal Property Sales $1000" and just beneath it "1099-K Cost of Personal Property $-1000." Then in box 8z you put zero. This fully documents your 1099-K and zeroes out the net income.
Here are instructions for a test entry I did using TurboTax.
viewtopic.php?p=6718411#p6718411

Two things you don't want to do that are often suggested:
1. If this is just occasional sale of personal property, it is not a business and should not be reported on Schedule C.

2. If this is personal property, it is not a capital gain and not reported on Schedule D. There is a good reason for this. Personal property sales cannot be deducted as a loss and if reported on Schedule D, it would be reported as a loss, which is not allowed.
AnEngineer
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by AnEngineer »

billaster wrote: Sun Aug 07, 2022 3:08 pm This has come up before. If it is the sale of personal property, then it does not need to be reported as it is not taxable. Congress required these new 1099-K forms as informational. The IRS isn't stupid and it's up to the IRS to decide what to do with them if most are nontaxable. You could just ignore the 1099-K and see what happens. Worst case the IRS sends you a letter a couple of years from now saying you owe a few dollars more and then you can respond with a letter saying it was nontaxable personal property.

If you are the cautious type, you may want to get ahead of the game by reporting the sale as Other Income on Schedule 1. You put two entries to the left of line 8z. One entry that says "1099-K Personal Property Sales $1000" and just beneath it "1099-K Cost of Personal Property $-1000." Then in box 8z you put zero. This fully documents your 1099-K and zeroes out the net income.
Here are instructions for a test entry I did using TurboTax.
viewtopic.php?p=6718411#p6718411

Two things you don't want to do that are often suggested:
1. If this is just occasional sale of personal property, it is not a business and should not be reported on Schedule C.

2. If this is personal property, it is not a capital gain and not reported on Schedule D. There is a good reason for this. Personal property sales cannot be deducted as a loss and if reported on Schedule D, it would be reported as a loss, which is not allowed.
Do you have a source on this being non taxable, or do you mean that since sold for a loss there is no tax?

There are other things reported on 8949 and schedule D that you cannot take a loss on, like wash sales, but see the instructions for code L in that rkhusky pointed out.
Asyouwish
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by Asyouwish »

There is an IRS program called AUR (Automated Underreporter) that matches documents with numbers on the return. The IRS has been document matching the 1099-K for years. Ignoring a 1099 form is not recommended. https://www.irs.gov/businesses/understa ... orm-1099-k

https://www.irs.gov/taxtopics/tc652

The IRS does not know if it’s business income, hobby income, personal income, sold for a loss or sold for a gain. It’s up to the taxpayer to report this correctly on their tax return. Not reporting the 1099 is guaranteed to generate a CP2000 Notice about 1-2 years after the return is filed. Be sure you keep your records in case you need to prove to the IRS this is not taxable.
billaster
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by billaster »

AnEngineer wrote: Sun Aug 07, 2022 3:45 pm Do you have a source on this being non taxable, or do you mean that since sold for a loss there is no tax?
Yes, I meant personal items sold for a loss. You cannot deduct losses on personal or household items you typically sell at a loss like clothing, used appliances, bicycles, electronics, cars, yard sales, etc. You do not typically reports these sales on your return.

Many people sell these types of things on eBay and until the 1099-K issue came up, never reported the sales. They still may not need to. We will have to wait and see what the IRS does with all these non-profit 1099-Ks.
AnEngineer
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by AnEngineer »

billaster wrote: Sun Aug 07, 2022 4:39 pm
AnEngineer wrote: Sun Aug 07, 2022 3:45 pm Do you have a source on this being non taxable, or do you mean that since sold for a loss there is no tax?
Yes, I meant personal items sold for a loss. You cannot deduct losses on personal or household items you typically sell at a loss like clothing, used appliances, bicycles, electronics, cars, yard sales, etc. You do not typically reports these sales on your return.

Many people sell these types of things on eBay and until the 1099-K issue came up, never reported the sales. They still may not need to. We will have to wait and see what the IRS does with all these non-profit 1099-Ks.
I'm really hoping that the IRS issues some direct guidance on this, as many people think they have to pay taxes the full 1099 amount based on discussions I've seen online (not here).
rkhusky
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Re: 1099 from PayPal and Venmo beginning tax year 2022

Post by rkhusky »

rkhusky wrote: Sat Aug 06, 2022 9:42 pm
windaar wrote: Sat Aug 06, 2022 2:51 pm Some are saying "ignore it" but you can't just ignore a 1099 that's sent to you, can you??
You can ignore a 1099-K if nothing is concerning goods or services, like the reimbursement I mentioned previously. This would be more likely from something like Venmo. If from EBay or Etsy or something like that, I would put on my tax form. I might put everything from each vendor on one line, unless there were some big ticket items.
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