Selling RC in 2023 and navigating the IRS

[OSRC]

As a lot of you do I'm sure, I like to buy and sell old projects online. It's not a business for me, just a hobby. Apparently I need to be a tax lawyer too.

After selling a vehicle, I've gotten the "we need your tax ID" e-mail from Paypal. Welcome to 2023! After $600 in sales, the info gets sent to the IRS where apparently it is considered income unless you explain somehow that it isn't.

Selling projects for 1/2 their value sucks enough, but it's what we do. Pretending that's income and getting taxed on it sucks worse.

In addition, since I'm not a business, I have to plug in my SSN, which paypal says is not correct. Apparently I don't know my first and last name or SSN. I've reached out to CS, we'll see what they say, but basically since it won't take my SSN, I cannot sell more than $600 worth of stuff this year or 24% of my sales will automatically go to the feds or possibly my account will be frozen.

There was a thread here somewhere on this, but wanted to bring it up as a heads up to anyone buying and selling since it has clearly taken effect.

Note: I've read the IRS has pushed this off 1 year, but not according to PP.

From PP:

Add your tax ID to avoid backup withholding

Tax laws have changed, but we’ll help you keep getting paid easily

The IRS requires us to send you a 1099-K when you receive $600 or more for goods and services each year.

Because of a change to tax laws, you’ll need to provide us with your tax ID, too.

What happens if we don’t have your tax ID

When you reach $600, your payments will go on hold. If we still don’t have your tax ID after 60 days, we’ll start sending 24% of your payments to the IRS for backup withholding.

Learn more about how this tax ID hold may affect you.

Or, log in to PayPal and add your tax ID to avoid a hold and 24% backup withholding when you’re paid.

And from the IRS:

If you receive a Form 1099-K for a personal item sold at a loss, report the information on Form 1040, Schedule 1, Additional Income and Adjustments to Income with offsetting transactions. For example, if you receive a Form 1099-K for selling your couch online for $700 you will report:

Part I – Line 8z – Other Income – Form 1099-K Personal Item Sold at a Loss $700
Part II – Line 24z – Other Adjustments - Form 1099-K Personal Item Sold at a Loss $700
The net effect of these two adjustments on adjusted gross income would be $0.

Highly recommended to anyone selling this year to keep track of what they sold, original price, and sale price. You're going to need it.

 

[Greatscott]

Yup, we all have to be a tax lawyer now...

I am not a tax lawyer, but having done a little bit of research on this, you are responsible for "profit" you make off of your rigs. You will need to document what you sell, what you paid for it, what you did to upgrade it, and what you sold it for. You subtract the first from the latter, and that is the profit you made on it, and that is what you are supposed to get taxed for. So, if you have a rig worth $200, and you put another $100 worth of parts and labor on to it, and sold it for $400, you are responsible for that $100 you made off of your truck. When doing your taxes, you will need to have documentation off of all this, otherwise your good friends at the IRS will want to tax you on the whole $400.

Yes, this is insane, and after enough people get bitten on the ass over it, and after enough people hear those horror stories, the buying and selling of smalls like our beloved toys, from one private party to another using cash services like PayPal will come to a crashing halt. We can only hope some sanity is realized and they throw this reporting rule out...

 

[B-MOW71]

Welcome to 2023! After $600 in sales, the info gets sent to the IRS where apparently it is considered income unless you explain somehow that it isn't.

This sucks and sorry to hear you have to deal with this horse sh**! I remembering hearing about this, but wasn't exactly sure how they were going to screw us!

Thanks for the heads up!"thumbsup"

Yup, we all have to be a tax lawyer now...

I am not a tax lawyer, but having done a little bit of research on this, you are responsible for "profit" you make off of your rigs. You will need to document what you sell, what you paid for it, what you did to upgrade it, and what you sold it for. You subtract the first from the latter, and that is the profit you made on it, and that is what you are supposed to get taxed for. So, if you have a rig worth $200, and you put another $100 worth of parts and labor on to it, and sold it for $400, you are responsible for that $100 you made off of your truck. When doing your taxes, you will need to have documentation off of all this, otherwise your good friends at the IRS will want to tax you on the whole $400.

Yes, this is insane, and after enough people get bitten on the ass over it, and after enough people hear those horror stories, the buying and selling of smalls like our beloved toys, from one private party to another using cash services like PayPal will come to a crashing halt. We can only hope some sanity is realized and they throw this reporting rule out...

Yes that is insane!:evil: So are they also going to pay us for our loss too??:roll:

 

[Thorsteenster]

We'll have to start dealing in crypto with direct wallet to wallet transactions, no exchanges.
Suck it IRS!
They're days are numbered anyway...

 

[OutLore]

Selling projects for 1/2 their value sucks enough, but it's what we do. Pretending that's income and getting taxed on it sucks worse.

If you're selling them for less than you paid for them - you're going to be able to use that as a write off, you shouldn't pay any tax on it at all - just keep all your purchase receipts. It might actually work out better in the long run

 

[smog]

So much for Paypal. I sense alot of money exchanges get sent 'Friends and Family' to steer clear of the 'Goods and Services' label. Apparently there are a few reasons to do this...sadly it casts buyers out to the thieves
At the end of the day it is petty level control...and a pain in the ass.

 

[Timmahh]

**** the IRS. Commie Crooks from the Start, just like their Parent Company the Federal Reserve Bank, which is not Federal, has no reserves, nor is it a Bank.

It's a Private Corporation just named The Federal Reserve. Like Federal Express, or Prime Reserve Ale. Just Corpse-Orations, aka the talking dead.

Did you not know how Conscription works?

 

[HumboldtEF]

I sense alot of money exchanges get sent 'Friends and Family' to steer clear of the 'Goods and Services' label.

Yeah this is a nice way to do it except if something happens there are no refunds or safety nets from PP.

 

[indybama]

Its a bunch of bullcrap n on top of that, invasion of privacy. The government just wants more of our money, n the only way to do it is tax the crap out of us. Its none of thier business wat we buy or sell as individuals. People are goina get fed up with the dumb crap n its not goina be pretty

 

[tigris99]

Hey how many here voted for Biden and democrats.

Got what you begged for.

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[tigris99]

If you're selling them for less than you paid for them - you're going to be able to use that as a write off, you shouldn't pay any tax on it at all - just keep all your purchase receipts. It might actually work out better in the long run

Doesn't quite work like that, look up tax codes. You have to loose more than 12k to be able to write it off unless you're incorporated.

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[OutLore]

Doesn't quite work like that, look up tax codes. You have to loose more than 12k to be able to write it off unless you're incorporated.

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So unless you lose 12k you can't offset the cost of purchase vs. selling price? If I buy a box of widgets for 20k and sell them for 21k I get taxed on 21k not the profit of 1k?

 

[Fallen]

This is one of the reasons I don't buy online from private parties anymore. Because PayPal is in bed with the gov't.

And the US government's current leaders want my guns, kids and freedom. And PayPal wants to help give it to them. There is legitimate purpose for government (I am a government official), but in many ways it has way overstepped those bounds.

So many of you have posted stuff in the classifieds that I would have bought, but as of 6 months ago I no longer have a PayPal or VenMo account.

 

[Gula]

I remember not having to pay taxes on online purchases from out of state or out of country.
That changed, and now we all do that.
Then came the paying sales tax for anything coming overseas as well. Now we have this crick of shit. Looks like bartering is coming back. That, or analog only sales, craigslist, asspace marketplace, etc. I've come to realize that selling an RC is always at a loss. That's why I don't sell anymore.

 

[tigris99]

So unless you lose 12k you can't offset the cost of purchase vs. selling price? If I buy a box of widgets for 20k and sell them for 21k I get taxed on 21k not the profit of 1k?

Not to be terribly rude but trying to process the ignorance you just typed is hurting my brain, I can't turn off enough brain cells. Helps if you read my ENTIRE post.

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[ferp420]

Hey how many here voted for Biden and democrats.

Got what you begged for.

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i was wondering when some one was gona bring up the real problem



87000 new people to enforce this new insanity

brandon wants to make sure you pay your share and his share and there shares



but this will only affect billionaires

 

[kincer]

I've pretty much stopped selling whole rigs online because shipping has went up quite a bit over the years, but this new Paypal crap has totally stopped me from selling anything online, I'll sell local for cash or do trades but that's it for me, if it doesn't sell oh well i'll just keep it.

 

[Mopar man]

**** Biden him and his voters.

 

[OSRC]

Love reading the responses, this is a pretty ugly thing happening to our hobby, and lots of others too.

Yes, this is insane, and after enough people get bitten on the ass over it, and after enough people hear those horror stories, the buying and selling of smalls like our beloved toys, from one private party to another using cash services like PayPal will come to a crashing halt. We can only hope some sanity is realized and they throw this reporting rule out...

Long rant coming....

No it won't. Your average American is, I'm sad to say, lazy and ignorant when it comes to issues such as these. They don't like being hit in the pocketbook, but otherwise they tune it all out. By design I might add. Making political discussions so vitriolic that no one engages in them means you can do what you want - no one is paying attention anymore. And that's exactly where we are.

I've had a few trucks listed for sale since September, as well as some non RC items. Not a single hit, not even an asshat lowball. It's odd, 1-2 years ago I had bidding wars for stuff, now - nada. Starting late summer last year, everything seemed to just stop. People are hunkering down.

I can understand, in the past 2 years, my school tax has jumped the max percentage both years (odd since we have thrown a ton of money at schools in the past 2 years, but I digress), yearly truck registration has tripled, electric bill has gone up 20% as Jan 1 - can't wait for that bill, I'm getting the highest heating oil bills I've ever gotten, trash service went up 25%, gas is still high compared to 2 years ago ($3.58 across the street) and don't even get me started on grocery bills with 2 kids that are eating me out of house and home. I don't give a RA what the fed says, I calculate we are spending 48% more than we were 2 years ago. Wife wants a new car, I have no idea how we're going to swing it.

We are a single income family (by choice) for a few years now, wife makes good money and we do nothing. Nothing. RC is my only vice. We don't go out to eat, we never go to movies, we never shop for stuff, no credit cards, cars and small 1400 sq. ft home are paid off, YET financially, we're somehow going backwards at an alarming rate.

BUT Thankfully, we've gotten a 2% COL raise each year the past 2 years....at least it might cover eggs. FFS.

My 74 year old mother is debating getting a job after retiring a few years ago - she's watching her 401k/savings disappear and she's freaking out. That was the deal, right? Work hard, pay your taxes, and enjoy retirement... after 40 years with the same company and 4 years of retirement all was well. After just 2 years under this administration, she can't even afford to go out to eat anymore. Groceries and heating bills are really getting to her.

Frankly, if you were trying to crash a country I don't see what you'd be doing different.

and now, if you're trying to do something on the side to make ends meet, there's an IRS agent watching over your shoulder. We don't do that per-se in this hobby, but a lot of people do. Of course that was going to happen - anyone who believes we can just tax the hell out of the rich to pay for all our spending as a nation has their head up their ass. OF course they were going to come for the (shrinking) middle class, it's where the bulk of the $$ is.

Sorry, end rant. It's been piling up since I got that PP e-mail, I'm pissed. Does this law apply to people looting the stores (as long as it's under $950 of course) and selling online as well? Or just us hardworking honest folks? Asking for a friend.

In any case, I had planned to do a pretty big sell off this year. Things have piled up - I have ~25 crawler rigs here, not to mention touring, bashers, monster trucks, and odds and ends. Unfortunately my knee is disintegrating and trail runs are getting more painful than enjoyable. When I do go out there's just a handful of rigs I run on a regular basis, the rest are just collecting dust. I'm way, way out of room and could certainly use the cash. I've got to rethink this, if I sell 20 or so vehicles, I'll have to list them out, initial cost, accessories, sale price, and document the loss...some of these I've had for decades, so receipts are long gone. And just hope the feds agree.

Not sure what to do at this point.

 

[kincer]

Come to think of it OS, I've put a couple rigs on here over the last two years and got nothing, not even a low ball offer, things have really changed, I remember putting a bunch of parts on here and they'd all be sold in a day, a rig maybe a couple days. I'm just gonna keep what I got, sell local if I absolutely have to, I paid sales tax for a majority of what I have so I'm not paying tax to sell it when it's already a losing proposition. It's a real shame too, used to be fun to sell one and buy another once you got bored with a rig or just wanted something else but not go and buy something brand new.

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