1099-K and the new rules
So I buy stamps and sell stamps. I sell my leftovers as I upgrade my collection. When there is meat on the bone I buy stamps just to sell to make a little profit to sustain my collection without having to spend out of my regular income. This has made my wife much happier as I don't hear the complaints any longer about how much I spend on stamps or coins. I understand with the new 1099-K rules that stamps and coin sales will be taxed at 28% and you can't take any deductions as it is considered a hobby. Is the 28% on the net profit if you keep close enough track to know what that is and can prove your numbers? Or do they just tax the gross? I keep every receipt and envelopes with stamps (postal history someday). This is going to be a lot of work to figure out what I paid for some stamps. I assume if I bought a stamp 2 years ago and I have the receipt I can use that value on 2022 taxes. I don't know, I may just throw in the towel. So much for trying to be a little entreprenurial in life.
Comments
Hobby income was always supposed to be declared to begin with. (The only thing they changed with the new 1099 laws is they lowered the the threshold amount when they would send out the 1099's)
The 28% is based on the capitol gains tax for collectables.
Those that are running a business are under different rules than the rules that govern capitol gains. If the person is running it as a business the income from that is classified as business income. If not than the income from selling collectables is classified as capitol gains.
This is a somewhat simplified answer
https://turbotax.intuit.com/tax-tips/investments-and-taxes/5-things-you-should-know-about-capital-gains-tax/L0m06D9lI
5 Things You Should Know about Capital Gains Tax
A capital gain occurs when you sell something for more than you spent to acquire it. This happens a lot with investments, but it also applies to personal property, such as a car. Every taxpayer should understand these basic facts about capital gains taxes.
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Business income isn't a capital gain
If you operate a business that buys and sells items, your gains from such sales will be considered—and taxed as—business income rather than capital gains.
For example, many people buy items at antique stores and garage sales and then resell them in online auctions. Do this in a businesslike manner and with the intention of making a profit, and the IRS will view it as a business.
The money you pay out for items is a business expense.
The money you receive is business revenue.
The difference between them is business income, subject to employment taxes.
That's just a general rule of thumb and again talk to a tax consultant to be able to understand your situation.