ROCKFORD, Ill. (WTVO) — The Internal Revenue Service wants their share of your eBay profits.
As of 2023, if you sell over $600 worth of products in 2023, you will need to report it to the IRS on a Form 1099-K, which eBay will send you.
In prior years, the tax reporting only applied if a seller sold more than $20,000.
According to the Pew Research Group, one in four Americans makes money by selling items online.
The IRS issued a notice of the change in the reporting threshold on December 23rd, 2022, after a one-year delay designed to help ease the transition for taxpayers.
The new, lower threshold applies across all online marketplaces, not just eBay. It would also apply to Etsy, Uber, DoorDash, Facebook Marketplace, or other digital platforms which will have their income reported to the IRS.
“If you’re an online seller and you’re buying supplies or even driving your car to pick up items or ship items out, you should keep track of those [expenses],” Lisa Greene-Lewis, a CPA at TurboTax, told CBS MoneyWatch.
Accountants say receiving a 1099 doesn’t necessarily mean you’ll owe more in tax, but chances are the reporting obligations could come as a shock to casual sellers or digital platform workers who haven’t kept track of their expenses, such as shipping costs, boxes, and packing materials.
The American Rescue Plan of 2021 lowered reporting thresholds for business transactions to $600 per year; changed from the previous threshold of more than 200 transactions per year, exceeding an aggregate amount of $20,000.
Companies including eBay, Airbnb, Etsy, and PayPal have formed the “Coalition for 1099-K Fairness,” which is lobbying Congress to relax the $600 reporting rule.
eBay said in a statement, “We’ll continue to advocate for Congress to enact a permanent solution to reduce confusion and prevent burdensome and unnecessary reporting requirements in the future.”
FAQs
Changes for you in tax year 2023
Do I need to report eBay income in 2023? ›
Recap of the IRS reporting changes
For tax year 2023, eBay and other online payment platforms are only required to report transactions to the IRS once you hit an annual threshold of $20,000 in gross payments and at least 200 transactions.
Do I need to report my taxes if I sold over $600 on eBay? ›
You pay taxes on your profit, not on what you sell. If you sell more than $600, you will have to report what you sold and your profit, if any, on your taxes.
What is the $600 rule for 2023? ›
The agency is making 2023 another transition year to implement the new requirements under the American Rescue Plan that changed the Form 1099-K reporting threshold for payments taxpayers get selling goods or providing a service over $600. The previous reporting thresholds will remain in place for 2023.
Do I have to pay taxes on reselling items in 2023? ›
If you make a profit through these activities, it's considered taxable income. You can use the Form 1099-K, along with other records, to determine how much tax you owe. Remember that all income, no matter the amount, is taxable unless the law says otherwise – even if you don't get a Form 1099-K.
Will I get a 1099 from eBay in 2023? ›
Starting on January 1, 2024, IRS regulations require all businesses that process payments, including online marketplaces like eBay, to issue a Form 1099-K to sellers who receive $600 or more in gross payouts.
What is the IRS rule for $600 on eBay? ›
However, due to a tax law change, a single transaction on a payment network of just $600 could trigger a 1099-K. Some people call this the “600 rule.” The IRS delayed the rule Implementation last year, but that change and the most recent 1099-K delay for the 2023 tax year continue to cause confusion.
Does IRS look at eBay sales? ›
Beginning this year, the tax agency will no longer allow third-party sellers to self-report their income. NOVATO, Calif. (KGO) -- If you're among the nearly 4 million people who sell items on eBay, Amazon or Etsy, the IRS is watching you.
Is selling personal items on eBay considered income? ›
Not every eBay sale is subject to income tax, but most are. If you use the site to get rid of household articles you've used in the past, you may qualify for "occasional garage or yard sale" treatment.
What happens if I sell more than $600? ›
The new ”$600 rule”
Under the new rules set forth by the IRS, if you got paid more than $600 for the transaction of goods and services through third-party payment platforms, you will receive a 1099-K for reporting the income.
As a result, for tax year 2023, only eBay sellers who exceed the current reporting threshold of $20,000 and 200 transactions, had backup withholding applied in 2023, or are residents of states that have a lower reporting threshold will receive a Form 1099-K.
What is the new IRS $600 rule? ›
However, the IRS has lowered the reporting threshold to $600 starting in 2022. Under this new reporting rule, if you received over $600 through an online platform, you would get a Form 1099-K, and so would the IRS.
What is the IRS limit on eBay? ›
IRS regulations require all payers, including online marketplaces like eBay, to issue a Form 1099-K for all sellers who meet the reporting threshold, namely $20,000 and 200 transactions in 2023.
Do I have to report eBay income in 2024? ›
You owe taxes on your sales whether you receive a Form 1099 or not. The limit for 2024 at the moment is $600 which may change at the whim of the IRS or Congress.
Do I have to report income from reselling? ›
Tax implications of reselling
Even if you don't get a 1099 or other tax document from your marketplace (Amazon, PayPal, eBay, etc.), you are still required to report all your income and pay income tax on the portion that is taxable.
Does selling personal items count as income? ›
If you sell at a gain--that is, you get more than you paid for the item--you have income. If you sell an item for less than you paid for it, you have a loss.
Do I have to report my eBay income to the IRS? ›
If you sell and buy articles on eBay in order to earn money, the IRS will likely classify your sales activities as a business. This means you will have to report net income from eBay sales.
Do I have to report eBay income on my taxes? ›
Income tax
Sellers are required by law to declare and pay taxes on income earned from their eBay sales.
How much money can you make without filing taxes 2023? ›
If you have income below the standard deduction threshold for 2023, which is $13,850 for single filers and $27,700 for those married filing jointly, you may not be required to file a return.
What is the 1099 threshold for 2023? ›
This will reduce the potential confusion caused by the distribution of an estimated 44 million Forms 1099-K sent to many taxpayers who wouldn't expect one and may not have a tax obligation. As a result, reporting will not be required unless the taxpayer receives over $20,000 and has more than 200 transactions in 2023.
